Following its purchase of a portion of Milipede earlier in 2018, Boston Scientific BSX has been exercising its option to buy the remaining stakes of this privately-held developer of IRIS Transcatheter Annuloplasty Ring System for the treatment of severe mitral regurgitation (MR). This decision comes close on the heels of the recent successful completion of a first-in-human clinical study.The deal is expected to close in the first quarter of 2019, subject to customary closing conditions.
Notably, in January 2018, Boston Scientific purchased $90 million of existing and newly-issued Millipede shares. The company also kept an alternative to acquire the remaining interests in Millipede (for $325 million at closing with a $125-million payment becoming available) at any point of time prior to the closure of a first-in-human clinical study that meets certain parameters.
The acquisition will integrate Millipede’s IRIS Transcatheter Annuloplasty Ring System in Boston Scientific’s Structural Heart portfolio.
Post wrap-up, the transaction is expected to be dilutive to Boston Scientific’s adjusted earnings per share (EPS) for each of the next several years. However, the company expects this dilutive effect to be absorbed via internal trade-offs, resulting in no net adjusted EPS impact.
Notably, MR occurs by a leaking mitral valve causing blood to regurgitate from the left ventricle to the left atrium of the heart. This condition can gradually trigger heart failure and heart rhythm problems. Patients with severe MR often complain of compromised heart functions and cannot tolerate open-heart surgery for the repair or replacement of the leaking valve.
Management is optimistic about the large patient population in this space, which is unfortunately underserved at the moment. Hence, this area represents a lucrative market to tap into. The unattended patient population could benefit from a fully-percutaneous transcatheter procedure that can fix the dilated mitral annulus and reduce regurgitation without undergoing surgery.
Encouragingly, the Millipede IRIS annuloplasty ring claims to be highly customizable to a specific patient's anatomy and disease state. This device is supplied via a transcatheter-transseptal delivery system and follows the standard surgical approach to mend and decrease the size of a dilated mitral annulus.
On a positive note, the global transcatheter mitral valve replacement market is witnessing a stupendous CAGR of approximately 22% over the 2016-2020 period per the data provided by Technavio.
Share Price Performance
Over the past year, shares of Boston Scientific have surged 39.9% versus the industry’s 4.9% decline.
Boston Scientific currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are Integer Holdings Corporation ITGR, Surmodics, Inc. SRDX and Veeva Systems VEEV.
Integer Holdings has an earnings growth rate of 31.2% for the first quarter of 2019. The stock has a Zacks Rank #2 (Buy).
Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank of 2 currently.
Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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