PrintMedtronic and Boston Scientific, two leading medical device companies, announced separate deals to acquire cardiovascular medical device start-ups in which they have already made significant venture investments.
Medtronic will acquire Ardian for $800 million in upfront cash, plus commercial milestones equal to the annual revenue growth through the end of Medtronic’s fiscal year 2015. Medtronic already has an 11 percent stake in the company.
Mountain View, California-based Ardian develops catheter-based therapies to treat hypertension and related conditions. It is developing a catheter-based treatment for uncontrolled hypertension that has been approved for sale in Australia but is not yet approved for sale in the United States.
“We view renal denervation for the treatment of uncontrolled hypertension as one of the most exciting growth markets in medical devices,” says Sean Salmon, vice president and general manager of the Coronary and Peripheral Business at Medtronic. “Ardian’s investigational catheter-based treatment for uncontrolled hypertension through renal nerve denervation complements Medtronic’s expertise in catheter design and ablation technologies, and augments Medtronic’s interventional therapies.”
Ardian is the eighth company created by The Foundry, a leading medical device incubator based in Menlo Park, California. Ardian’s investors include Morgenthaler Ventures, Advanced Technology Ventures, Split Rock Partners, Medtronic and Emergent Medical Partners. The transaction is expected to close in Medtronic’s third fiscal quarter of 2011, and is subject to customary closing conditions, including U.S. and foreign regulatory clearances.
Boston Scientific is acquiring Sadra Medical for an upfront payment of $193 million plus additional potential payments of up to $193 million upon achievement of specified regulatory and revenue-based milestones through 2016. The purchase price assumes no cash or debt on Sadra’s balance sheet at closing. Boston Scientific already has a 14 percent ownership interest in Los Gatos, California-based Sadra, valuing the company at $450 million.
Sadra 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 guidance and placement of the valve.
“This acquisition represents another critical step in the execution of our strategy to realign Boston Scientific's portfolio,” says Ray Elliott, president and CEO of Boston Scientific. “Percutaneous aortic valve replacement is a fast-growing market within structural heart therapies, and we expect it to be an important part of our growth plan. 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.”
Boston Scientific has been a strategic investor in Sadra Medical since 2006. The company will use cash on hand for the acquisition which is expected to be completed in the fourth quarter of 2010 or first quarter of 2011.
In other dealmaking, f-star Biotechnologie signed a drug discovery collaboration agreement with Boehringer Ingelheim that could potentially bring $1.6 billion to the Austrian biotech. F-star will use its Modular Antibody Technology platform against up to seven targets in a variety of therapeutic areas selected by Boehringer Ingelheim, which will then further develop and commercialize any discoveries either as Fcab therapeutic products in their own right or as modules for the generation of bispecific mAb2 products.
f-star will receive an initial technology access fee, research-based funding, and will be eligible to receive additional license fees, development, regulatory and commercial milestones that could reach up to $241 million per successfully commercialized therapeutic. It will also be eligible to receive undisclosed tiered royalties on sales.
Just as Big Pharma is moving into emerging countries like India, so too is an Indian pharma moving into developed countries, such as the United States. Dr. Reddy’s Laboratories, one of the biggest Indian pharmaceuticals, is buying GlaxoSmithKline’s oral penicillin franchise in the United States. It includes a penicillin manufactiruing facility in Tennessee and U.S. rights for the Augmentin and Amoxil brands in the United States. GSK will retain the existing rights for these brands outside the United States. This transaction is targeted to close within the first half of the calendar year 2011. Further financial terms and conditions of the agreement were not disclosed.
“We are excited about this acquisition, as it allows us to enter the United States penicillin-containing antibacterial market segment and serve the needs of our customers and patients through manufacturing capabilities that did not previously exist within Dr. Reddy's,” says Abhijit Mukherjee, president and head, Global Generics Business, Dr. Reddy's. “This acquisition is in line with our strategy to significantly scale up our generics business in North America while providing an opportunity to explore additional synergy with our other businesses.”
Finally, three biotechs went public in the short week before Thanksgiving. They all had to drop their offering price significantly after failing to entice investors the week before—a sign that enthusiasm for high risk companies remains anemic.
Danish biotech Zealand Pharma priced at the low end of its expected range to raise $58 million in its offering, a third of what it had originally hoped to raise. The company is developing a diabetes drug in partnership with Sanofi Aventis.
Zogenix ended up pricing its shares at $4, one third its initial target price of $12 to $14 a share, and more than doubled the number of shares offered. The San Diego biotech, which has one commercial product, raised $56 million to further development of its treatments for central nervous system disorders and pain.
Anacor Pharmaceuticals raised $60 million in its initial public offering by reducing its share price to $5 from the $16 to $18 range it had planned to offer and increasing the offering to 12 million shares, up from the 6 million planned. Anacor has used its boron chemistry platform to develop five clinical anti-infective and anti-inflammatory compounds [See story].
| Deals for the Week Ending November 24, 2010 | |||
| Global Venture Financings | |||
| Company | Location | Amount Raised (USD M) | Principal Focus |
| ImThera Medical | San Diego, CA | 1.0 | Medical devices |
| Helix Therapeutics | New Haven, CT | 2.5 | Gene modification |
| Galleon Pharmaceuticals | Philadelphia, PA | 10.0 | Respiratory therapies |
| Access Scientific | San Diego, CA | 2.0 | Medical devices |
| Xention | Cambridge, UK | 12.6 | Cardiovascular therapies |
| Total Raised US | 15.5 | ||
| Total Raised Non-US | 12.6 | ||
| Grants | |||
| Company | Funding/Contracting Agency | Amount Raised (USD M) | Principal Focus |
| XenoPort | Michael J. Fox Foundation | 0.2 | Parkinson's disease |
| Total Grants | 0.2 | ||
| PUBLIC FINANCINGS | |||
| Company | Ticker | Amount Raised (USD M) |
Financing Type |
| Zogenix | ZGNX | 56.0 | IPO |
| Anacor Pharmaceuticals | ANAC | 60.0 | IPO |
| Zealand Pharma (Denmark) | ZEAL.KO | 58.0 | IPO |
| biOasis Technologies (Canada) | TSX-V:BTI | 1.0 | PIPE |
| BioCancell Therapeutics (Israel) | TASE:BICL | 5.1 | PIPE |
| Anavex Life Sciences | OTC:AVXL | 1.1 | PIPE |
| IsoRay | ASR | 4.3 | PIPE |
| Somaxon Pharmaceuticals | SOMX | 26.0 | Follow on |
| Bacterin International | OTC:BIHI | 9.0 | Asset based lending facility |
| DiaGenic (Norway) | OSE:DIAG | 4.9 | Warrant exercise |
| Grifols (Spain) | Madrid:GRF | 3,100.0 | Term loans to acquire Talecris |
| Grifols (Spain) | Madrid:GRF | 300.0 | Revolving credit facility |
| TOTAL PUBLIC FINANCINGS-US | 156.4 | ||
| NON-US | 3,469.0 | ||
| M&A | |||
| Acquirer | Target | Deal Value (USD M) |
Focus |
| Medtronic | Ardian | 800.0 | Cardiovascular |
| Boston Scientific | Sadra Medical | 386.0 | Medical devices |
| Baxter International | Archemix | 315.0 | Hemophilia |
| Omeros | Patabios Limited (Canada) | 10.5 | Technology |
| Dr Reddy's Laboratories (India) | GlaxoSmithKline's oral penicillin franchise in the United States | N/A | Infectious |
| Alliances | |||
| Company/Licensee | Company/Licenser | Deal Value (USD M) |
Focus |
| Boehringer Ingelheim (Germany) | f-star Biotechnologische (Germany) | 1.6 | Drug discovery license and collaboration |
| Selcia Limited (United Kingdom) | Convergence Pharmaceuticals (United Kingdom) | N/A | Chronic pain collaboration |
| Pfizer | SIRS-Lab (Germany) | N/A | Sepsis diagnostics collaboration |
| Roche (Switzerland) | Genzyme | N/A | Lung cancer technology license |
| Roche (Switzerland) | OSI Pharmaceuticals | N/A | Companion Diagnostics collaboration |
| Merck KGaA (Germany) | Evotec (Germany) | N/A | Neurology collaboration |
November 24, 2010
http://www.burrillreport.com/article-med_device_giants_snap_up_a_pair_of_start_ups.html
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