Boston Scientific acquires Sadra Medical for $386 mn

Hit by an industry-wide slowdown in its major markets for cardiac stents and cardiac rhythm devices, Boston Scientific yesterday announced its acquisition of California-based development-stage Sadra Medical, Inc for $386 million.

The deal gives Boston Scientifiic an entry into the $2-billion market for implantable heart valves using transcather techniques that do away with open hear surgeries.

Privvately-held Sadra Medical, founded in 2003, is developing the first fully repositionable device for percutaneous aortic valve replacement to treat patients with severe aortic stenosis.

Under the terms of the agreement, Boston Scientific will make an upfront payment of $225 million from its cash reserves folowed by additional potential payments of up to $225 million upon reaching specified regulatory and revenue-based milestones till the end of  2016.

However, since Boston Scientific already owned a 14-per cent stake in Sadra as a strategic investor since 2006, its actual upfront cash payment would be $193 million plus additional potential milestone payments up to $193 million, it said in a statement.

The other investors in Sadra include Accuitive Medical Ventures, Finistere, Firstmark Capital, HealthCor Partners, Incept LLC, Oakwood, ONSET Ventures and SV Life Sciences.

The purchase price assumes no cash and no debt on Sadra's balance sheet at closing and Boston Scientific said that it expected the transaction to be approximately one to two cents dilutive to GAAP and adjusted earnings per share in 2011, 2012 and 2013, and accretive thereafter.

Closing of the transaction is expected in the fourth quarter of 2010 or first quarter of 2011.

According to Ray Elliott, Boston Scientific's president and CEO of the acquisition  was in keeping with its strategy to realign the company's portfolio.

"Sadra's innovative technology is a natural fit with Boston Scientific's core competencies in stents and catheter-based delivery systems, allowing us to leverage our clinical expertise and existing sales channels," he said.

Elliott also said percutaneous aortic valve replacement is a fast-growing market within structural heart therapies, and the company expects it to be an important part of Boston's future growth.

Sadra has recently completed a series of European feasibility studies of its Lotus Valve System, which consists of a stent-mounted tissue valve prosthesis and catheter delivery system for guiding and placing the valve.

The low-profile delivery system and introducer sheath are designed to enable accurate positioning, repositioning and retrieval at any time prior to release of the aortic valve implant.

"Structural heart disease -- and in particular percutaneous valve replacement -- is an important emerging technology for interventional cardiologists, and we believe the Lotus Valve System can offer significant competitive advantages over existing technologies," says Hank Kucheman, executive vice president and group president, cardiology, rhythm and vascular for Boston Scientific.

Ken Martin, Sadra's president and CEO said, "...the unique ability to reposition and retrieve the Lotus Valve provides interventional cardiologists with greater control and allows them to determine if the valve is accurately placed and working properly prior to completing the procedure."