With the completion of the Cameron Health acquisition,
) portfolio now includes subcutaneous implantable cardioverter
defibrillator, the S-ICD system. We believe the acquisition will
strengthen the company's Cardiac Rhythm Management ("CRM")
The S-ICD system scores over traditional ICDs with respect to
placement as the former can be placed beneath the skin and leaves
the heart and blood vessels untouched. The traditional ICDs, on the
other hand, require thin, insulated wires (leads) to pass through
the venous system and into the heart.
The S-ICD system received CE Mark approval in 2009 and ever
since approximately 1,300 devices have been implanted in patients
globally. The device has yet to receive approval in the US but the
prospect looks bright with the advisory panel of the US Food and
Drug Administration ("FDA") recommending the approval in April this
year. Boston Scientific anticipates FDA approval for the S-ICD
System in the first half of 2013.
At a recent conference in Boston, Cameron Health presented
positive data of the S-ICD system from a study conducted with 230
patients. The company also announced at the conference that the
device met both the primary safety and efficacy endpoints in the
investigational device exemption ("IDE") study of 330 patients.
Boston Scientific paid $150 million at closing of the
transaction and a potential payment of $150 million is to be
made upon FDA approval of the S-ICD System. Over the six-year
period, following FDA approval of the device, an additional $1.050
billion of potential payments would be made contingent upon
achievement of certain revenue-based milestones. The transaction is
expected to dilute the 2012 bottom line (on an adjusted basis) by a
penny and almost achieve break-even in 2013.
Boston Scientific's focus on portfolio expansion is inevitable
in the face of severe headwinds in its core segments of stents and
defibrillators. Other players in the medical devices space such as
St Jude Medical
) are also resorting to various alternatives to revive their
flagging top line.
We have a Neutral recommendation on Boston Scientific. The stock
retains a Zacks #3 Rank (hold) in the short term.
BOSTON SCIENTIF (BSX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
To read this article on Zacks.com click here.