When it comes to treating atrial fibrillation -- an irregular and often chaotically fast heartbeat -- Boston Scientific has the tools to do the job. Problem was, it didn't have the 3-D imaging technology that can help do it better. Until now.
Boston Scientific Corp. has agreed to buy privately held Rhythmia Medical Inc., which makes mapping and navigation technology to guide wires to problem areas of the heart. Those wires deliver heat through a catheter to destroy, or ablate, heart tissue that causes the condition.
Boston Scientific will pay $90 million up front and up to another $175 million through 2017 -- contingent on certain regulatory, commercial and sales-based milestones. The deal is expected to close by Friday.
"The acquisition of Rhythmia Medical is a decisive step forward for Boston Scientific in the electrophysiology ablation business," Boston Scientific CEO Hank Kucheman said in a statement. "Electrophysiology is a $2.5 billion market and growing at a double-digit pace, representing a key growth opportunity for us."
Thomas Gunderson, a senior analyst with Piper Jaffray & Co. who focuses on medical technology companies, said the move makes sense.
"They have good tools, good balloons," he said of Boston Scientific. "But Johnson & Johnson and St. Jude also have that -- and they have the mapping technology. That's the white space for Boston Scientific and that's what they filled with this Rhythmia acquisition."
Atrial fibrillation occurs when rapid, disorganized electrical signals cause the heart's two upper chambers to contract very fast and in an irregular way. As a result, blood is not pumped completely into the heart's two lower chambers, called the ventricles. As a result, the heart's upper and lower chambers don't work together as they should. Symptoms of atrial fibrillation include heart palpitations, shortness of breath and weakness. Approximately 15 million people worldwide are affected.
Catheter ablation, using a catheter to guide a wire that uses heat to treat tissue that is causing the problem, works better when guided by three-dimensional mapping and navigation.
"Rhythmia Medical's revolutionary mapping technology is expected to significantly enhance physician treatment options and ultimately facilitate and improve what today are long and complicated procedures," said Doron Harlev, co-founder and co-chief executive officer of Rhythmia Medical. "Our system is expected to become a very promising tool for physicians to treat patients with complex cardiac arrhythmias. We are excited to combine our mapping system with Boston Scientific's strong catheter platform and commercialization capabilities."
Boston Scientific is based in Natick, Mass., and employs about 5,000 people in Minnesota. The company expects the mapping system will soon gain approval from the U.S. Food and Drug Administration and from European regulators. Once that happens, Boston Scientific said it expects to begin a limited market launch of the system in 2013 and full market launch in 2014.
Boston Scientific said the Rhythmia transaction will have little impact on adjusted earnings per share in 2013 and 2014, and the deal is expected to break even or better thereafter.
James Walsh 612-673-7428