New Bos Sci acquisition raises question: Will the Lotus (valve) ever blossom?

This article was originally published here

Boston Scientific has long expected to be the third wheel to Medtronic and Edwards Lifesciences in the U.S. transcatheter aortic valve replacement (TAVR) marketplace.

It has sung the praises of it Lotus TAVR valve but the product line stands pulled from Europe because of device malfunctions. and has suffered delays in its regulatory pathway in the U.S. And now, while senior management of the company argue that Lotus valve’s introduction in the U.S. is still on track for mid 2018, a transaction announced last week may allow the company to introduce a wholly different TAVR device to the marketplace.

On Thursday, Marlborough, Massachusetts-based Boston Scientific shelled out $435 million in cash to purchase structural heart company Symetis. The Swiss company makes the Accurate and  Accurate neo/TF valve systems for patients suffering from severe and symptomatic aortic valve stenosis and those who have a high-risk of undergoing open-heart surgery.

“The steps we are taking reflect our commitment to being a leader in TAVI and structural heart technologies now and over the long-term, as we broaden our portfolio and pipeline to address the needs of our global health care providers and their patients,” said Ian Meredith, M.D., executive vice president and global chief medical officer, Boston Scientific in a news release. “The ACURATE family of valve products is strongly complementary to our cornerstone Lotus valve platform, and this compelling combination of technologies will allow us to provide interventional cardiologists and cardiac surgeons with multiple TAVI offerings for varying patient pathologies and anatomy.” [TAVR is termed transcatheter aortic valve implantation (TAVI) inEurope]

Some analysts did not fully buy the line on Lotus being the cornerstone TAVR product

“… with Lotus being delayed multiple times, taken off the market in Europe, and with BSX yet to launch all five sizes, one has to wonder if this is a backup plan and if Lotus may not be as ready to go as the company hopes,” wrote Sean Lavin, an analyst with BTIG, in a research note on Thursday. “While BSX paid a hefty multiple and this deal may indicate Lotus isn’t quite ready at this point, we see having a backup option as a positive in this multibillion dollar growth market.”

Boston Scientific paid 12 times the 2016 revenue of Symetis, which was $38.2 million last year.

Another analyst — Danielle Antalffy of Leerink Partners —said that the purchase will provide “air cover” for the six-plus months that the Lotus valve is expected to be off of the market. Still, most analysts viewed the deal positively.

The transcatheter aortic valve space is dominated by Medtronic and Edwards Lifesciences in the U.S. though in Europe the two heavyweights have smaller rivals. It is also a place that has seen numerous legal fights over patent infringement.

Edwards Lifesciences prevailed over Medtronic in 2014 in its long battle and the saga ended with the Irish medtech company agreeing to pay royalty payments of at least $750 million to Edwards Lifesciences.

Meanwhile Boston Scientific and Edwards are in the midst of their own legal battle over TAVR. In Nov. 2015, the Massachusetts company slapped a  lawsuit against Edwards in Germany related to its European patents pertaining to outer seals of transcatheter heart valves. Edwards countersued, alleging patent infringement by the Lotus valve.

On March 3, a U.K court ruled that the Lotus valve did infringe on one of Edwards’ patents surrounding its TAVR valves but not the other. It also noted that the Sapien 3 valve from Edwards infringes two of Boston Scientific’s patents for outer seals of transcatheter heart valves. A German patent court issued a similar ruling days later. Edwards has promised to appeal.

In other words, the ” TAVI space is fluid and litigious,” wrote Lavin in the research note and he concluded that “With all the various IP issues, manufacturing issues, doctor preference, and different valves offering different benefits, the reasons for buying Symetis could be multifactorial.”

Photo: Ian Fung Koo / EyeEm, Getty Images

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