Deal gives it access to new ICDs that do not use wires running into the heart.
Boston Scientific Corp. said Thursday that it is exercising an option to buy a private California company that has developed the world's only commercially available implantable defibrillator that does not need wires running through blood vessels into the heart.
Cameron Health's S-ICD sits just below the skin and leaves the heart and blood vessels untouched. The system, which shocks the heart if it detects an irregular heartbeat, has been approved for sale in Europe and other countries since 2009.
Boston Scientific, which employs about 5,000 people in Minnesota, said it anticipates U.S. Food and Drug Administration approval to sell the device in the United States in the first half of 2013.
Boston Scientific will pay $150 million upfront, and a possible additional $150 million upon FDA approval of the S-ICD System. In addition, Boston Scientific will pay up to an additional $1.05 billion upon achievement of specified revenue-based milestones over a six-year period after FDA approval.
The deal is expected to close, pending antitrust clearance, in the second or third quarter of 2012.
Officials with Boston Scientific were not available for comment Thursday. But, at a time when competitors are dealing with problems involving some of the leads that connect the devices to the heart, this purchase signals a major commitment to technology that Cameron Health says reduces "complications associated with traditional ICD electrical wires."
Thom Gunderson, an analyst with Piper Jaffray & Co., said he doesn't believe the move is a response to recent lead problems. Rather, he said, the option to buy Cameron was due to expire soon "and it was time to fish or cut bait" on a deal that had been in the planning stages for years.
"They've decided to fish," he said. "I think it's a big commitment to the future, and I think it's a strategy to separate Boston Scientific and their new cardiac management division from the crowd."
Coming up with a device that did not rely on leads going into the heart was the idea that forged Cameron Health in 2001, said Kevin Hykes, president and CEO of the company.
The S-ICD operates in the same way as implantable defibrillators and the defibrillators that are mounted on the walls of businesses and schools, Hykes said. Because its electrode rests under the skin above the breastbone, the S-ICD uses more energy to deliver a jolt than implantable devices, he said, but less than the paddles of external defibrillators.
"Defibrillation therapy is arguably the most successful medical technology ever developed," Hykes said. "And it could be even more widely adopted if it weren't for this Achilles heel [of leads]."
Noting that the wires that run to traditional implantable defibrillators flex 40 million times a year, are submerged in fluid and need to be soft and supple to make their way through blood vessels, he said, "It's no surprise that they wear out."
James Walsh • 612-673-7428