SAN DIEGO, May 27, 2014 /PRNewswire/ -- Volcano
Corporation (Nasdaq: VOLC), a leading developer and manufacturer of
precision guided therapy tools designed to enhance the diagnosis
and treatment of coronary and peripheral vascular disease, said
today it has signed an agreement to acquire AtheroMed, Inc., a
privately-held company that has developed the Phoenix® Atherectomy
System used in the treatment of peripheral artery disease
(PAD).
The Phoenix, which received
510(k) clearance in January 2014 and
has a CE Mark, enables physicians to treat PAD with a low profile
peripheral atherectomy catheter that continuously removes diseased
material as it is debulked. The device has reimbursement in the
U.S. and select countries in Europe.
Under terms of the agreement, Volcano will pay $115.0 million in cash at closing, which is
expected to occur in the current quarter. In addition, Volcano will
make a $15 million milestone payment
if a Phoenix device currently
before the FDA receives clearance by November 15, 2014. This application covers design
for manufacturing improvements to the currently approved device. In
addition, the agreement calls for potential future revenue-based
milestone payments by Volcano to AtheroMed.
The Phoenix is a peripheral
atherectomy system that has been designed to provide physicians
with a safe, versatile, easy to use primary therapy for treating
PAD to restore blood flow to the ankle and foot. The over-the-wire
system uses a rotating, front-cutting element located at the distal
tip of the catheter to shave material directly into the catheter.
The debulked material is then continuously captured and removed by
an internal Archimedes Screw running the length of the catheter.
The device is available in multiple sizes to treat diseased vessels
both above and below the knee.
It is estimated that the global atherectomy market is in the
range of $350-$400 million and
growing at least seven percent annually.
"This transaction is an important milestone in Volcano's
strategy to offer a growing and diversified portfolio of
therapeutic devices that provide clinical and economic benefits as
we continue our evolution from a leader in coronary and peripheral
intravascular imaging and physiology to a company providing a broad
range of diagnostic and therapeutic solutions," said Scott Huennekens, president and chief executive
officer.
"The Phoenix System is a technology-leading device that enhances
our presence in a growing peripheral market where we will be
offering three highly differentiated therapeutic devices—the
Phoenix, Pioneer Re-Entry catheter
and Crux vena cava filter—the latter two of which we acquired in
the past 18 months," he added.
"We believe the potential of Phoenix to both grow the atherectomy market
and achieve a strong market share position will facilitate our
revenue, gross margin and operating income expansion goals,"
Huennekens noted.
Huennekens said the company plans to initiate a limited market
release of the Phoenix by the end
of 2014 and a full market release in early 2015. The company plans
to initiate manufacturing at AtheroMed's facility in Menlo Park, California, but will transition
manufacturing activities to Volcano's manufacturing facility in
Costa Rica in late 2015.
"Phoenix is a unique
atherectomy device in that it continuously cuts, captures and
clears debris without the need for capital equipment," said
Neil Hattangadi, MD, Volcano's
executive vice president, peripheral vascular and global clinical
affairs. "Data from the pivotal Endovascular Atherectomy Safety and
Effectiveness (EASE) study demonstrated a high level of safety and
effectiveness, with 95.1 percent of the lesions treated achieving
technical success and 94.3 percent of patients free from major
adverse events at 30 days. We believe these kinds of results,
combined with its ease of use and versatility in treating a broad
range of lesion types and vessel diameters, position the
Phoenix to achieve a significant
market share position in PAD therapy, especially below the knee.
Importantly, we see strong synergy with our peripheral IVUS
(Intravascular Imaging), FFR (Fractional Flow Reserve) and
SyncVision Co-Registration technologies that will provide
compelling clinical value and differentiation in the atherectomy
market," he added.
"We are delighted to be joining Volcano to advance this
important treatment of PAD, which affects more than 18 million
patients in the U.S.," said Mike
MacKinnon, president and chief executive officer of
AtheroMed. "Volcano has built a strong and rapidly growing presence
in the peripheral therapeutic arena and we believe their
manufacturing, distribution and clinical capabilities will
establish a strong market presence for the Phoenix System," he
stated.
Volcano said based on anticipated costs related to the
commercialization of the Phoenix System, it believes this
transaction on a stand-alone basis will be dilutive for two years
post-closing. However, these expenses of approximately $7.0 million in 2014 will be offset by a
reprioritization of spending in other areas of the company. As a
result, on a before purchase accounting basis, the company is not
changing its operating expense outlook for 2014, or GAAP and
non-GAAP EPS guidance for the second quarter and all of 2014. For
2015, the company expects operating margin dilution of this
transaction on a stand-alone basis, before purchase accounting,
will be approximately $12.0-$13.0
million. However, the company believes that a significant
portion of this dilution will be covered by a reprioritization of
existing projects.
Conference Call
The company will hold a conference call to discuss the AtheroMed
transaction today, May 27, at
1:30 p.m., Pacific Daylight Time
(4:30, Eastern Daylight Time). The call can be accessed by
calling (631) 291-4555, passcode 52083889, or via the company's
website at www.volcanocorp.com A replay of the call will be
available through Friday, May 30, by
dialing (404) 537-3406, passcode 52083889, and via the company's
website.
About Volcano Corporation
Volcano Corporation is revolutionizing the medical device
industry with a broad suite of technologies that make imaging and
therapy simpler, more informative and less invasive. Our products
empower physicians around the world with a new generation of
analytical tools that deliver more meaningful information. Founded
in cardiovascular care and expanding into other specialties,
Volcano is changing the assumption about what is possible in
improving patient outcomes by combining imaging and therapy
together. For more information, visit the company's website at
www.volcanocorp.com.
About AtheroMed
AtheroMed, Inc., a privately-held medical device company based
in Menlo Park, CA, is dedicated to
developing innovative technology for treating peripheral artery
disease to quickly, safely and effectively restore blood flow and
improve the lives of the 18 million Americans suffering PAD and
save the limbs of the 3.5 million Americans with Critical Limb
Ischemia (CLI), the most severe form of PAD. Major investors in
AtheroMed include U.S. Venture Partners, Kaiser Permanente and The
Vertical Group.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Any statements in this press release regarding Volcano's or
AtheroMed's business that are not historical facts may be
considered "forward-looking statements," including, but not limited
to, statements regarding the expected closing of the AtheroMed
acquisition; statements regarding milestone payments and additional
payments that Volcano may be obligated to make in connection with
the AtheroMed acquisition; statements regarding Volcano's
manufacturing and commercialization objectives and timelines
regarding the AtheroMed products; statements regarding Volcano's
intention to seek regulatory approval to market the Phoenix System
in combination with Volcano's IVUS technology; statements regarding
the PAD market size, potential population and mortality; statements
regarding the design, capabilities and advantages of the Phoenix
System, both independently and in combination with Volcano's IVUS,
FFR or SyncVision technologies; statements regarding Volcano's
growth strategy and the ability of AtheroMed products to help
Volcano achieve that strategy. Forward-looking statements are based
on management's current expectations and are subject to risks and
uncertainties that may cause Volcano's results to differ materially
and adversely from the statements contained herein. Some of the
potential risks and uncertainties that could cause actual results
to differ include the risk that the transaction described above is
not completed; the risk that the benefits of the transaction
described above are not realized; the risk that Volcano's financial
projections may turn out to be inaccurate or Volcano may encounter
unanticipated difficulty in achieving these projections; the effect
of competitive factors and Volcano's reactions to these factors;
purchasing decisions with respect to Volcano's products; the pace
and extent of market adoption of Volcano's products or devices; the
success of Volcano's growth strategies; risks associated with
Volcano's international operations; timing and achievement of
product development milestones; the outcome of ongoing or future
litigation; the impact and benefits of market development;
Volcano's ability to protect its intellectual property; dependence
upon third parties; unexpected new data, safety and technical
issues; market conditions; and other risks inherent to medical
device development and commercialization. These and additional
risks and uncertainties are more fully described in Volcano's
filings made with the Securities and Exchange Commission, including
Volcano's most recent quarterly report on Form 10-Q, and other
filings made with the Securities and Exchange Commission. Undue
reliance should not be placed on forward-looking statements, which
speak only as of the date they are made. Volcano disclaims any
obligation to update any forward-looking statements to reflect new
information events or circumstances after the date they are made,
or to reflect the occurrence of unanticipated events.
SOURCE Volcano Corporation