Boston Scientific Corp.’s latest acquisition in Orange County came with a premium price that bolsters the local market’s reputation as a center of innovation for the medical-device industry.
The Natick, Mass.-based company recently announced plans to purchase Laguna Hills-based Vessix Vascular Inc. for $125 million, with as much as $300 million in possible milestone payments. The deal for the 9-year-old company is expected to close by the end of the month.
Boston Scientific paid a premium for Vessix compared with recent deals by renal-denervation device rivals Medtronic Inc. and Covidien PLC, according to Bernstein Research analyst Derrick Sung.
Sung said in a research note he was surprised by the Vessix buy because Boston Scientific management had indicated it working on its own renal-denervation program.
“Boston Scientific’s acquisition of Vessix suggests to us that [its] program may not have been as far along as management had given us to believe,” Sung said.
The deal is tacit “recognition by Boston [Scientific] that Vessix has the best products in renal denervation,” said Vessix Chief Executive Raymond Cohen.
Vessix’s flagship product is a renal-denervation device—not yet approved by the Food and Drug Administration—that’s designed for use when hypertension is unresponsive to drugs.
The device is inserted in a catheter-based procedure that’s familiar to interventional cardiologists.
“It is, essentially, very similar to angioplasty,” said Jeff Mirviss, global president for Boston Scientific’s Minneapolis-based peripheral-intervention business.
Vessix and its work force of about 35 will remain in Laguna Hills for the near term, Mirviss said.
Cohen will leave the company after the completion of the deal, which marks the second time he’s guided an OC company to a sale to a larger competitor. He previously was chief executive of Cardiac Science Inc., an Irvine-based defibrillator maker sold to Bothell, Wash.-based Quinton Cardiology in 2005.
The deal for Vessix is Boston Scientific’s second sizable acquisition this year in OC, which is home to a field of medical device makers that ranges from long-established companies to startups. The company—which had $7.6 billion in 2011 sales and a recent market value of $7 billion—earlier this year bought San Clemente-based heart-defibrillator maker Cameron Health Inc.
Boston Scientific paid a premium for Cameron, too, with $150 million upfront, another $150 million upon regulatory approval of its defibrillator, plus milestone payments that could eventually reach the $1 billion mark over a six-year period.
Cameron makes the S-ICD implantable cardioverter defibrillator used to prevent sudden heart attacks. It’s differentiated by an absence of guide wires. S-ICD was approved by the FDA five weeks ago, and Boston Scientific now is in the early stages of selling the device.
Boston Scientific retained Cameron’s 200 employees at its operations in San Clemente operations, which are spread over two sites and include manufacturing, research and development, marketing and general business operations.
Kevin Hykes, who joined Cameron in 2010, remains chief executive of Cameron and is the local general manager for Boston Scientific.
Boston Scientific has “been very clear with the manufacturing team there,” said Joe Fitzgerald, group president of cardiac rhythm management. “In the short and medium term, we have no intention of transferring the manufacturing of S-IC [from San Clemente].”
