Boston Scientific Corp. continued its journey down the acquisition highway with its announced plan to acquire stroke-prevention products maker Silk Road Medical Inc. for $27.50 a share, or approximately $1.16 billion.

The per share price represents an approximate 38% premium to the volume-weighted average share price of Silk Road’s common stock over the past 60 days. The board of directors of Silk Road has unanimously approved the transaction and recommend that Silk Road stockholders adopt the merger agreement.

Silk Road has developed a platform of products to prevent stroke in patients with carotid artery disease (CAD) through a minimally invasive procedure called transcarotid artery revascularization (TCAR).

Carotid artery disease is the cause of nearly one-third of all strokes and a condition in which the carotid arteries in the neck become narrowed or blocked due to the buildup of plaque. Treatment options for this disease include medical therapy management, placement of a stent, or surgery to reduce the risk of stroke.

TCAR offers unique CAD treatment approach

TCAR is a minimally invasive procedure that starts through a small incision in the neck that's a bit above the collarbone, known as transcarotid access. Silk Road's Enroute transcarotid stent system is placed via that incision during a temporary high-rate blood flow reversal that is created by the Enroute transcarotid neuroprotection system (Enroute NPS) to push embolic debris away from the brain during the procedure. The remaining Enroute stent provides long-term stroke reduction, while Enroute NPS enables protection from stroke during the procedure and within the month immediately after it.

"The TCAR platform developed by Silk Road Medical is a notable advancement in the field of vascular medicine, which has revolutionized stroke prevention and the treatment of carotid artery disease," said Cat Jennings, president, vascular, peripheral interventions, Boston Scientific. "We believe the addition of this clinically differentiated technology to our vascular portfolio demonstrates our continued commitment to provide meaningful innovation for physicians who care for patients with peripheral vascular disease."

The TCAR system gained U.S. Food and Drug Administration approval in 2015 and is supported by several studies demonstrating a reduced risk of stroke and other complications associated with traditional open surgery. The products sold by Sunnyvale, Calif.-based Silk Road Medical are the only devices commercially available for use during the TCAR procedure. Silk Road went public in 2019, raising more than $120 million at the time.

The traditional standard of care for treating CAD has been carotid endarterectomy (CEA). CEA carries a risk of several major adverse events including cranial nerve injury, heart attack, wound complications, stroke and death. Silk Road has also asserted that its TCAR technique is safer than another more recent alternative: transfemoral carotid artery stenting (CAS), which is less invasive than CEA but also involves an almost two-fold increased short-term stroke risk – perhaps due to inadequate protection of the brain.

Analyst thoughts

Wells Fargo research analyst Larry Biegelsen said in a research note that he was slightly surprised by the deal, but views this acquisition as a way for Marlborough, Mass.-based Boston Scientific to enhance its presence with vascular surgeons.

“The call point is vascular surgeons, an area where BSX has a limited presence today. BSX sees an opportunity to further penetrate open surgical procedures, which is the bulk of the treatment today for patients not medically managed with drugs. The TCAR procedure is competitive with carotid artery stenting, which is mainly done by interventional cardiologists,” Biegelsen said.

Currently Boston Scientific’s position in carotid artery stenting is limited with its Wallstent. Silk will be folded into its peripheral interventions segment, Biegelsen added.

TD Cowen analyst Willaim Plovic added that the deal “fits BSX's ongoing strategy to make tuck-in acquisitions of novel, high-growth assets.”

Deal expected to close in 2024

Boston Scientific said it expects to complete the transaction in the second half of 2024, subject to customary closing conditions. Silk Road has guided to net revenue of approximately $194-$198 million in 2024, representing 10%-12% growth over the prior fiscal year. The impact to Boston Scientific adjusted earnings per share is expected to be immaterial in 2024 and 2025, and accretive thereafter.

BofA Securities Inc. is serving as exclusive financial advisor, and Wilson Sonsini Goodrich & Rosati, P.C. is serving as the legal advisor to Silk Road Medical.