Atherectomy is a minimally invasive surgical method of removing plaque buildup from large blood vessels.
AtheroMed is privately-held and based in Menlo Park, Calif. The company develops technology for treating peripheral artery disease to restore blood flow and improve the lives of the 18 million Americans suffering PAD and save the limbs of the 3.5 million Americans with critical limb ischemia, the most severe form of PAD. Major investors in AtheroMed include U.S. Venture Partners, Kaiser Permanente and the Vertical Group.
The Phoenix, which received U.S. Food and Drug Administration (FDA) 510(k) clearance in January and has CE mark, enables physicians to treat PAD with a low-profile peripheral atherectomy catheter that continuously removes diseased material as it is debulked. The device has reimbursement in the United States and select countries in Europe.
Under terms of the agreement, Volcano will pay $115 million in cash at closing, which is expected to occur in the current quarter. In addition, Volcano will make a $15 million milestone payment if a Phoenix device currently before the FDA receives clearance by November 15 this year. This application covers design for manufacturing improvements to the currently approved device. The agreement also calls for potential future revenue-based milestone payments by Volcano to AtheroMed.
The Phoenix is a peripheral atherectomy system that has been designed to provide physicians with, according to AtheroMed, a "safe, versatile, easy to use primary therapy" for treating PAD to restore blood flow to the ankle and foot. The over-the-wire system uses a rotating, front-cutting element located at the distal tip of the catheter to shave material directly into the catheter. The debulked material is then continuously captured and removed by an internal Archimedes screw running the length of the catheter. The device is available in multiple sizes to treat diseased vessels both above and below the knee.
It is estimated that the global atherectomy market is in the range of $350 million-$400 million and growing at least 7 percent annually, according to figures cited by Volcano officials.
"This transaction is an important milestone in Volcano's strategy to offer a growing and diversified portfolio of therapeutic devices that provide clinical and economic benefits as we continue our evolution from a leader in coronary and peripheral intravascular imaging and physiology to a company providing a broad range of diagnostic and therapeutic solutions," said Scott Huennekens, president and CEO of Volcano.
"The Phoenix System is a technology-leading device that enhances our presence in a growing peripheral market where we will be offering three highly differentiated therapeutic devices—the Phoenix, Pioneer Re-Entry catheter and Crux vena cava filter—the latter two of which we acquired in the past 18 months," he added."We believe the potential of Phoenix to both grow the atherectomy market and achieve a strong market share position will facilitate our revenue, gross margin and operating income expansion goal."
Huennekens said the company plans to initiate a limited market release of the Phoenix by the end of 2014 and a full-market release in early 2015. The company plans to initiate manufacturing at AtheroMed's facility in Menlo Park, but will transition manufacturing activities to Volcano's manufacturing facility in Costa Rica in late 2015.
"Phoenix is a unique atherectomy device in that it continuously cuts, captures and clears debris without the need for capital equipment," said Neil Hattangadi, M.D., Volcano's executive vice president, peripheral vascular and global clinical affairs. "Data from the pivotal Endovascular Atherectomy Safety and Effectiveness study demonstrated a high level of safety and effectiveness, with 95.1 percent of the lesions treated achieving technical success and 94.3 percent of patients free from major adverse events at 30 days. We believe these kinds of results, combined with its ease of use and versatility in treating a broad range of lesion types and vessel diameters, position the Phoenix to achieve a significant market share position in PAD therapy, especially below the knee. Importantly, we see strong synergy with our peripheral IVUS (Intravascular Imaging), FFR (fractional flow reserve) and SyncVision co-registration technologies that will provide compelling clinical value and differentiation in the atherectomy market."
"We are delighted to be joining Volcano to advance this important treatment of PAD, which affects more than 18 million patients in the U.S.," said Mike MacKinnon, president and chief executive officer of AtheroMed. "Volcano has built a strong and rapidly growing presence in the peripheral therapeutic arena and we believe their manufacturing, distribution and clinical capabilities will establish a strong market presence for the Phoenix System," he stated.