Continuing a strong push into the device realm – and thereby further expanding its opportunities for innovative device/drug combinations – Angiotech Pharmaceuticals (Vancouver, British Columbia) yesterday unveiled its plans to acquire privately held American Medical Instruments Holdings (AMI; Lake Forest, Illinois), a company of several manufacturers of medical devices.
It is purchasing AMI from RoundTable Healthcare Partners (Lake Forest) and the Marmon Group (Chicago) for about $785 million in cash.
Best known for supplying the drug portion of Boston Scientific's (Natick, Massachusetts) Taxus drug-eluting stent, Angiotech now becomes a seller of its own products, according to William Hunter, MD, the company's president and CEO.
In a Wednesday morning conference call, Hunter said the transaction produces “a very exciting and important day” for the company. “To this point in our evolution we've been largely an R&D and intellectual property-based company. For the first time we are a fully integrated company capable of many more things than we were yesterday.”
He called the purchase rationale “compelling,” giving Angiotech “a commercialization platform to capitalize on and really extract full value from our significant R&D pipeline and our drug delivery capabilities.”
He noted that previous acquisitions had built company capabilities largely on the drug side of the equation, leaving Angiotech dependent “on medical device partnerships to execute on the end game.”
With the acquisition of AMI, and its diverse set of products “we really feel we have a whole bunch of things to complete the last piece of the puzzle,” he said.
Besides providing new opportunities for developing new products, Angiotech said in a statement that it diversifies its revenue bases and gives it “global manufacturing, marketing and sales capabilities.”
Hunter said transaction close is targeted for the second quarter. It is expected to be immediately accretive to its 2006 and 2007 results.
AMI has global operations in 12 locations and four countries, including more than 550,000 square feet of manufacturing operations. Post-transaction, Angiotech will have two specialty sales forces operating on a worldwide basis: one focused primarily on general surgery, plastic surgery, and ophthalmic surgery; the other focused on vascular surgery, interventional radiology and tumor biopsy.
Thomas Bailey, CFO of Angiotech, called the deal “the culmination of our efforts to establish a platform to commercialize our product candidates and R&D initiatives. The addition of AMI is a cost-effective solution to accelerate our strategy and brings to Angiotech significant commercial resources in manufacturing facilities and specialty sales forces.” He predicted “a rapid and smooth integration” of the firms.
AMI revenues are estimated to be about $174 million for the year ended Dec. 31, about 46% of the estimated combined 2005 revenues of the two companies. In addition, Angiotech said it anticipates that the transaction will be immediately accretive to its 2006 adjusted earnings per share.
AMI has two sales organizations for physician products. These sales teams could potentially sell the stand-alone Lifespan vascular graft products, which Angiotech acquired late last year from Edwards Lifesciences (Irvine, California); Angiotech's Vascular Wrap paxlitaxel-eluting mesh; drug-loaded surgical sealant products; drug-eluting central venous catheter, currently in clinical trials; and the anticipated new product offerings.
These new offerings will combine Angiotech's various biomaterials and drug technologies and will see rapid development and launch, it said.
Mike Hudson, AMI's CEO, and Richard Adloff, that company's CFO, will assist in the integration process, Angiotech said. Peter Molinaro, president of the Surgical Specialties division, Robert Pietrafesa, president of the InterV division, and Kirk O'Brien, president of the OEM division, will join Angiotech's management team.
For the year ended Dec. 31, 2005, it is estimated that the combined company would have total revenues of about $375 million.
AMI's revenue base is highly diversified from both a product and customer perspective, its catalogue serving areas such as vascular surgery, interventional radiology, general surgery, wound closure, ophthalmology and minimally invasive cosmetic surgery.
With close of the transaction, AMI will be a division of Angiotech, with operations in Illinois, Pennsylvania, New York, Florida, Denmark and the UK. It will consist of three specific operating business units: Surgical Specialties, InterV and an OEM division.
AMI was created in 2003 through the purchase of several healthcare companies by RoundTable Healthcare Partners from the Marmon Group, which have equity positions of 65% and 35%, respectively, in the company. Marmon Group is the primary holding company for Chicago's Pritzker family.
Merrill Lynch & Co. is acting as financial advisor and Sullivan & Cromwell as legal counsel to Angiotech. Credit Suisse and Merrill Lynch & Co. have provided the financing commitments to complete the transaction.