Boston Scientific Corporation : Boston Scientific To Buy Maker Of Alternative Defibrillators
03/08/2012| 06:48pm US/Eastern
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--Boston Scientific will buy Cameron Health
--Cameron developed alternative to traditional defibrillators
--Boston Scientific will pay $150 million upfront for Cameron
(Updates with analyst quotes and context in paragraphs five through seven; updates stock movement in final paragraph.)
By Anjali Athavaley and Nathalie Tadena
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Boston Scientific Corp. (BSX) will acquire privately held Cameron Health Inc., which has developed an alternative to traditional defibrillators.
Boston Scientific will pay $150 million upfront and an additional potential $150 million upon the U.S. Food & Drug Administration's approval of Cameron's S-ICD wireless system, the only commercially available subcutaeneous implantable defibrillator. The agreement also calls for up to an additional $1.05 billion in revenue-based milestone payments over a six-year period after FDA approval.
"The acquisition of Cameron Health builds on Boston Scientific's commitment to introducing innovation in the [cardiac rhythm management] space and represents an important part of our strategy to generate top-line revenue and market share growth," Chief Executive Hank Kucheman said.
Cameron's S-ICD system sits below the skin and doesn't touch the heart and blood vessels, while conventional implantable defibrillators require thin, insulated wires to pass through the venous system and into the heart.
The deal, expected to close in the second or third quarter this year, comes as the U.S. implantable-defibrillator market has been hurt in the last year by a Department of Justice investigation into hospital practices and a negative medical journal article.
For Boston Scientific, defibrillators are "major part of their business," said Michael Matson, an analyst at Mizuho Securities. "They can't really exit that business. The best thing they can do is to try to make themselves as competitive as possible."
Cameron's S-ICD is "something that's differentiated," Matson said. He estimates the annual market for S-ICDs to be more than $1 billion.
The system has been commercially available in several major European countries since 2009. Cameron received expedited-review status and submitted its application to the FDA in December. Boston Scientific anticipates FDA approval in the first half of 2013.
Last month, Boston Scientific reported fourth-quarter earnings fell 55% on sales declines in its heart-rhythm and drug-eluting stents businesses as the medical-device maker struggles to increase its revenue at a time of weakness in key markets.
Shares closed at $5.93 Thursday and were up fractionally after hours to $5.95. The stock is up 11% so far this year.
-By Anjali Athavaley and Nathalie Tadena, Dow Jones Newswires; 212-416-4912; anjali.athavaley@dowjones.com
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