BSX Gets Watchman with Atritech - Analyst Blog

Leading medical devices player, Boston Scientific Corporation (BSX) has decided to acquire privately held Atritech Inc for an upfront payment of $100 million. In addition, milestone payment of up to $275 million will be made on achieving certain revenue-based targets till 2015.

Atritech has developed a device, Watchman, which is meant to close the left atrial appendage in patients with atrial fibrillation (AF) who are at risk of ischemic stroke. The transaction, expected to be closed in the first quarter of 2011, will dilute the company's earnings by 1-2 cents for the next three years and be accretive thereafter. 

Atritech's Watchman offers an alternative to anticoagulant drugs, which are associated with an increased risk of bleeding in AF patients, who are at a higher risk of stroke. Results from a clinical trial conducted with 800 patients found that the Watchman device resulted in a 38% relative risk reduction of stroke, cardiovascular death compared to long-term warfarin therapy.

Although the device has received CE Mark approval and was commercialized outside the US in 2009, it is yet to receive approval in the US. Currently, patient enrollment is ongoing for the PREVAIL study, which is being conducted to seek approval from the US Food and Drug Administration (FDA).

In the recent past, Boston Scientific has been re-aligning its business, which involved both sale and acquisition of  businesses. Earlier this month, the company acquired Boston based Intelect Medical for $78 million. Intellect is presently developing advanced neuromodulation technologies for deep brain stimulation therapy.

The company also completed the acquisition of Sadra Medical, which is developing percutaneous aortic valves replacement to treat patients with severe aortic stenosis. Meanwhile, Boston Scientific sold its neurovascular unit for $1.5 billion to Stryker Corporation (SYK).   

Boston Scientific is currently focused on expanding its product portfolio, concentrating more on non-DES and non-CRM areas. The company is quite upbeat about the recent acquisition banking on which it will be able to cater to the markets of atrial fibrillation and structural heart therapy.

We are currently Neutral on Boston Scientific which is also supported by the Zacks #3 Rank (Hold).

 
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