Medtronic (Minneapolis) is set to pump up its cardiovascular business by agreeing to buy two heart valve companies for a combined value of $1.025 billion. The company said it would pay $700 million plus additional milestone payments for CoreValve (Irvine, California) and that it would buy Ventor Technologies (Netanya, Israel) for $325 million. Medtronic is targeting a leadership role in aortic transcatheter valves, according to a company statement.
CoreValve was not trying to sell the company, Daniel Lemaitre, president/CEO of CoreValve, told Medical Device Daily, but when Medtronic approached the company with an offer, CoreValve's board listened to what the med-tech giant had to say.
Privately-held CoreValve has developed the ReValving system, a transcatheter, transfemoral aortic valve replacement product designed to offer high or prohibitive surgical-risk patients an opportunity to have their aortic valves replaced using a catheter inserted through an artery in the groin. The company received CE mark approval for the system in 2007.
"The reality is that in this environment, as you can imagine, a lot of our investors were fairly keen for a liquidity event and the opportunity to have a portfolio company like CoreValve sell ... Medtronic initiated the conversations and our board was receptive because there are no other deals being done right now in this backdrop," Lemaitre said.
The CoreValve ReValving system has achieved 2,600 implants at 125 centers in 25 countries around the world, Lemaitre noted.
"We are highly cognizant that as much as we thought we were knocking the cover off the ball by launching this product in Europe ... you combine what we have with Medtronic and there is no doubt that it will go farther and faster within the Medtronic construct."
The ReValving system is comprised of a porcine pericardial tissue valve, mounted on a self-expanding frame and implanted via a low-profile (18F) delivery catheter. Sofinnova Partners led the Series A financing and is CoreValve's largest shareholder. Other institutional investors include HealthCap, Apax Partners SA and Maverick.
Lemaitre emphasized that this acquisition does not reflect a vote of no confidence by CoreValve in its technology.
"We really have had some extraordinary success by launching this product in Europe in a very thoughtful way ... there is a real sense that our group was performing at a very high level, but at the end of the day we still were private, we still don't have the resources that Medtronic can bring to bare to really make sure that this product is really brought out the way this product can be to the world."
"This acquisition of CoreValve gives additional momentum to our strategies for growth and will improve the quality of care for more than 300,000 people worldwide with severe aortic stenosis," Bill Hawkins, CEO/chairman of Medtronic, said in a company statement. "Our manufacturing and global distribution strengths will accelerate the use of this life-saving technology."
In a separate deal, Medtronic also agreed to acquire privately-held Ventor Technologies, a developer of transcatheter heart valve technologies for the treatment of aortic valve disease, for $325 million.
Current standard of care for patients with aortic stenosis is open-heart valve surgery; however, many patients are ineligible for surgery because of their deteriorating health. Transcatheter valves offer a non-surgical alternative for patients who need their valve replaced but may not be good surgical candidates, Medtronic noted.
The acquisition of Ventor adds two technologies to Medtronic's transcatheter valve portfolio: a minimally invasive, surgical transapical technology and a next generation percutaneous, transfemoral technology. According to Medtronic, these complementary technologies offer compelling clinical benefit to distinctly different subsets of patients with aortic stenosis who are at high or prohibitive risk for surgery.
"The combination of Ventor Technologies and our strengths in research and development, operations, medical education and market development will improve patient outcomes and expand physician adoption among both surgeons and interventional cardiologists," Hawkins said.
Ventor has developed the transapically-implantable Ventor Embracer, which is under clinical investigation in Europe. According to Ventor, the transapical approach is particularly suited to the minimally-invasive skills of cardiac surgeons, and provides a valuable option when a non-femoral approach is preferred because of factors such as peripheral artery disease.
"We are delighted to be joining Medtronic, especially given our complementary expertise and shared commitment to aortic transcatheter valve technology," said Guy Ezekiel, MD, president/CEO of Ventor. "Together, we look forward to improving the quality of care for more than 300,000 people worldwide with severe aortic stenosis."
Venkat Rajan, a research analyst at Frost & Sullivan's healthcare group, specializing in the medical device industries, told MDD that Medtronic's acquisitions of CoreValve and Ventor make sense from an industry perspective. The transcatheter valve market is fairly robust and is limited by some of the current technology, he said, adding that there is a lot of interest around percutaneous transcatheter valves because it offers advantages to open surgery. The mechanical heart valve market has been declining, Rajan said, noting that one of its downsides is that the patient has to be on blood thinners for the rest of their life, which increases their risk for complications.
Rajan said Edwards Lifesciences (Irvine, California) currently controls the lion's share of this market, and that Medtronic and St. Jude Medical (St. Paul, Minnesota) are posturing to capture some of the market share as well. Edwards' Sapien transcatheter heart valve received the CE mark in 2007. That year the company also initiated its PARTNER trial in the U.S. to evaluate the Sapien valve in patients who are considered high risk or inoperable for conventional open-heart surgery.
"There were rumors that J&J [Johnson & Johnson (New Brunswick, New Jersey)] might be interested in this market, so I think it may have been a defensive move in part," Rajan said. "Medtronic is expanding its product pipeline but at the same time, they kept someone like J&J out of it."
Although these deals may come as a surprise in light of the economic climate, Rajan said larger companies like Medtronic are able to take advantage of the market and buy a company for less than it would have been able to a couple of years ago.