Leading medical devices maker
C.R. Bard
(
BCR
) has scooped up Minnesota-based Lutonix, Inc. for roughly $225
million. The deal also calls for an additional milestone payment of
$100 million, to be paid upon the U.S. premarke t approval ("PMA")
of Lutonix's drug-coated percutaneous transluminal angioplasty
("PTA") balloon.
Lutonix is currently conducting an FDA-approved investigational
device exemption ("IDE") study ("LEVANT 2") using drug-coated
balloons for treating peripheral arterial disease, a condition
affecting roughly 8 to 12 million people in the U.S.
The trial is comparing Lutonix's d rug-coated balloon (dubbed
Moxy) with standard balloon angioplasty. The multi-center pivotal
study will enroll 476 patients with significant stenosis (narrowing
of a blood vessel) in previously unstented superficial femoral
artery or popliteal artery lesions (up to 150 mm in length) across
55 sites in the U.S. and Europe.
These patients will be monitored for five years, following
which, a PMA application will be filled with the FDA after a year,
which Lutonix currently expects to occur in 2014. The company has
already received European CE Mark for its drug-coated balloon. C.R.
Bard expects to commence selling the device in Europe in
second-half 2012.
Drug-coated balloons are gaining attention recently as surgeons
look for effective means to treat diseased arteries without having
to leave a permanent implant. Similar to the drug-eluting stents
("DES") used in the heart, the drug-coated balloon delivers a
powerful restenosis (reoccurrence of stenosis)-fighting drug to the
artery. However, unlike DES, it is removed from the body after
use.
The worldwide peripheral vascular market for drug-coated
balloons is forecast to hit roughly $1 billion annually over the
next ten years. Currently, there are no approved drug-coated
balloons available for us e in the U.S.
The acquisition is a strategic fit for C.R. Bard, enabling it to
expand into a large and lucrative market. The company, however,
envisions the transaction to dilute its adjusted earnings per share
for 2012 by roughly 25 cents.
C.R. Bard's well-diversified end-markets and vast product
portfolio insulate it from fluctuations in any single therapeutic
category. The company's resource depth and focused innovation are
its major competitive advantages.
We expect new products to drive organic revenue growth and help
C.R. Bard to meet its sales objective. However, heightened
competition and pricing/procedure volume pressure remain areas of
concern. C.R. Bard faces tough competition from larger players such
as
Boston Scientific
(
BSX
) and
Johnson & Johnson
(
JNJ
). Our Neutral recommendation on the stock is in tandem with a
short-term Zacks #3 Rank (Hold).
BARD C R INC (
BCR
): Free Stock Analysis Report
BOSTON SCIENTIF (
BSX
): Free Stock Analysis Report
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research