Boston Scientific to Acquire Cameron Health

Boston Scientific Corp. purchased Cameron Health Inc., which, according to leadership at both companies, has developed the world’s first and only commercially available subcutaneous implantable cardioverter defibrillator.

Unlike tradisional implantable cardioverter defibrillators (ICDs) that require thin, insulated wires (leads) to pass through the venous system and into the heart, Cameron’s system—called the S-ICD— sits just below the skin and leaves the heart and blood vessels untouched. The technology has the potential, BSX executives hope, to expand the reach of ICD therapy, offering physicians and patients—though it’s not suited to all patients—a new alternative to traditional ICDs, while strengthening Boston Scientific’s arrhythmia management portfolio.

The agreement calls for an upfront payment of $150 million, payable upon transaction closing, an additional potential $150 million payment upon FDA approval of the S-ICD System, plus up to an additional $1.050 billion of potential payments upon achievement of specified revenue-based milestones over a six-year period following FDA approval.

The S-ICD System has received CE Mark in Europe and has been commercially available in select geographies, including several major European countries, since 2009. The system has been clinically evaluated in a variety of studies and has been implanted in more than 1,000 patients worldwide. San Clemente, Calif.-based Cameron Health received expedited review status and submitted its premarket approval application to the U.S. Food and Drug Administration (FDA) in December 2011.

FDA approval for the S-ICD System is expected in the first half of 2013.

Rick Wise, an analyst for Boston, Mass.-based firm Leerink Swann categorized the purchase as a positive move for Boston Scientific, “with the potential to transform the longer-term outlook for BSX’s lagging CRM business” Right now, cardiac rhythm management is approximately 28 percent of the company’s business.

“Over the last two years, BSX has been building a portfolio of compelling and differentiated early stage technologies—including the Asthmatx/Alair bronchial thermoplasty system, the Sadra/Lotus transcatheter valve, the Watchman LAA closure device, and now Cameron Health’s ICD technology,” Wise wrote. “By mid-decade, these technologies could help transform BSX’s portfolio, in our view, driving significant top-line growth and leveraging BSX’s—by then—more efficient cost structure. Though near-term cardiology market conditions remain challenging, to us, BSX’s turnaround remains substantially under way.”

“With Cameron, we gain a strong, experienced team of professionals who are pioneers in this novel technology, and we are thrilled to welcome them to Boston Scientific,” said Hank Kucheman, CEO of Natick, Mass.-based Boston Scientific. “The acquisition of Cameron Health builds on Boston Scientific’s commitment to introducing innovation in the CRM space and represents an important part of our strategy to generate top-line revenue and market share growth. We believe that the S-ICD System represents a breakthrough treatment for patients at risk of sudden cardiac arrest and strengthens our ability to deliver value to physicians, their patients and healthcare systems around the world. We expect that the S-ICD System, combined with recent ICD and CRT-D launches, upcoming pacemaker launches, and the recently acquired Watchman left atrial appendage closure device, will create a compelling and highly differentiated portfolio of arrhythmia management products.”

Kenneth A. Ellenbogen, M.D., and professor of medicine and director of the electrophysiology laboratory at the Medical College of Virginia, said the S-ICD system represents a new category of rhythm management devices that is “unlike anything available today.”

He added: “This system provides physicians with a new alternative in the treatment of patients at risk for sudden cardiac arrest and should become first-line therapy for patients who may benefit from not having a lead in the heart.”

Boston Scientific expects to fund the purchase payments through the cash flow of its business.