Abbott (Abbott Park, Illinois) has agreed to buy Evalve (Menlo Park, California), a company that makes devices for minimally invasive repair of cardiac mitral valves, for up to $410 million. Abbott says the acquisition gives it a presence in the growing area of non-surgical treatment for structural heart disease.
The agreement includes an upfront payment of $320 million in cash, plus an additional payment upon completion of certain regulatory milestones. The deal comes on the heels of another large purchase for Abbott — last week the company agreed to acquire intraocular lens maker Visiogen (Irvine, California) for $400 million in cash (Medical Device Daily, Sept. 4, 2009).
Larry Haimovitch, president of Haimovitch Medical Technology Consultants (Mill Valley, California) and a regular contributor to Medical Device Daily, said that among industry followers, the reaction to this acquisition has been similar to that of the Visiogen deal last week, which is simply "whew hoo!"
"We're happy to see these things because it's been a very rough environment out there for these companies ... it's encouraging and pleasing to see we're getting some acquisition activity again," Haimovitch told MDD. "If you're an observer of medical devices, you have a smile on your face today."
Abbott had somewhat of a home court advantage in that it already owned 10% of Evalve and therefore had a seat on the board, an investment it had through Guidant (Indianapolis). Abbott bought the vascular intervention and endovascular solutions businesses of Guidant in 2006 as part of the requirements for regulatory approval of the Guidant-Boston Scientific (Natick, Massachusetts) deal (MDD, April 21, 2006). Guidant had been an early investor in Evalve, explains Jonathon Hamilton, a spokesman for Abbott.
"Acquiring Evalve into Abbott gives us entry into what's really the next frontier in cardiovascular medicine," Hamilton told MDD. He called Evalve's minimally invasive heart valve repair technology "exciting," and said that the treatment option is going to enhance the quality of life for patients who would otherwise have to undergo open-heart surgery.
Mitral regurgitation, a condition that prevents the mitral valve from closing completely, is the most common type of heart valve insufficiency in Europe and the U.S., and affects millions of people worldwide, Abbott said. Traditionally, mitral regurgitation is treated through open-heart surgery. However, only about 20% of the 600,000 patients diagnosed in the U.S. and Europe each year undergo surgery, the company noted. That means, Hamilton said, there is a "pretty significant market that remains without the best treatment," perhaps because their too sick for open-heart surgery or are otherwise ineligible for the procedure.
Evalve's minimally invasive catheter-based MitraClip system, used to clip the leaflets of the mitral valve together to reduce regurgitation, is the first commercially available treatment option approved in Europe for non-surgical mitral valve repair for patients suffering from the effects of mitral regurgitation. The company obtained CE mark approval for the MitraClip system last year (MDD, March 27, 2008). The system is an investigational device in the U.S. and is currently in clinical trials.
"The acquisition of Evalve will provide Abbott with leading technology in the emerging field of minimally invasive heart valve repair and further broadens Abbott's medical devices portfolio," said John Capek, PhD, executive VP of Medical Devices at Abbott. "Evalve is on the cutting edge with its non-surgical approach to treating structural heart disease. With this breakthrough mitral valve repair technology, physicians will be able to offer their patients a minimally invasive alternative to open heart surgery – not unlike the opportunity that stents provided more than two decades ago for the treatment of coronary artery disease."
Abbott will acquire the remaining 90% of outstanding equity of Evalve that it does not already own for an upfront payment of $320 million, plus a $90 million payment if certain regulatory milestones are met. Hamilton could not specify what those regulatory milestones entail; however Haimovitch says it is most likely a PMA approval.
"One of the things that Abbott has done very well ... is identify interesting technologies, promising technologies, in relatively early stages of development and either acquire those companies or invest in those companies to help move their technology along," Hamilton said. He added that what Abbott brings to this transaction is its global presence, manufacturing expertise, and said that, "our intent would be to really accelerate the development [of MitraClip] and then bring it to market."
The transaction does not impact Abbott's previously issued earnings-per-share guidance for 2009, the company said. The deal is subject to customary closing conditions, including antitrust clearances. Abbott said it expects the transaction to close in the fourth quarter.
"Patients in Europe have benefited from having access to the MitraClip technology since it received CE mark last year," said Ferolyn Powell, president/CEO of Evalve, who will continue to lead the Evalve team and will report to Hance after the acquisition closes. "We look forward to becoming a part of Abbott and working together to accelerate our business and expand our global reach to patients around the world with our minimally invasive technologies."
The Foundry, a medical device incubator, and Fred St. Goar, MD founded Evalve in 1999. Previous major investors in Evalve include: New Enterprise Associates; Delphi Ventures; Split Rock Partners; Apothecary Capital; Cutlass Capital; ABS Ventures / Kearny Venture Partners; Saints Capital; Three Arch Partners; Emergent Medical Ventures; and Integral Capital Partners.
Amanda Pedersen, 229-471-4212;