HeartWare eyes market expansion in acquiring Israeli firm
HeartWare International has agreed to acquire Valtech Cardio, and through that deal, the Framingham-based medical device firm sees a big opportunity to expand its reach in the structural heart market, according to a statement issued this week.
With manufacturing operations in Florida and Sydney, Australia, there is a “several-billion-dollar market opportunity” that HeartWare will be positioned to jump on by acquiring the Israeli-based firm, according to the company.
Valtech, founded in 2005 and headquartered in Or Yehuda, Israel, specializes in mitral and tricuspid valve repair and replacement for use in patients with mitral valve regurgitation (MR) and tricuspid valve regurgitation (TR).
The Valtech portfolio is complementary to HeartWare’s products: Patients with advanced heart failure who receive a ventricular assist device (VAD), such as HeartWare's patented HVAD System, commonly undergo a therapeutic mitral or tricuspid valve procedure as well. The Valtech acquisition provides HeartWare with a “highly complementary portfolio of technologies to broaden the treatments it offers heart failure patients and enhance patient outcomes,” the company said.
Approximately 4.2 million patients are affected by mitral valve disease in the U.S., which represents a several-billion-dollar market opportunity. TR is estimated to affect 1.6 million patients in the U.S. and complements the mitral patient population, as a significant percentage of patients suffer from both MR and TR.
"We have been actively monitoring the mitral space for several years, given the overlap of patient population and referral channel with our … business," HeartWare President and CEO Doug Godshall said in a statement.
In fact, this interest in Valtech’s portfolio led HeartWare to invest in the company in 2013. That led to a “strong relationship” between to the two companies, which have jointly developed new products for the advanced heart failure population and patients with degenerative heart diseases, according to Valtech founder and CEO Amir Gross.
“By joining HeartWare, we can more quickly and fully realize the potential of our pipeline technologies and further influence the underpenetrated markets that we serve. HeartWare's existing market development experience and commercial infrastructure provide a compelling platform from which to launch multiple products worldwide,” Gross said in a statement.
HeartWare plans to maintain Valtech as a separate business unit following the acquisition, while leading the commercialization of its portfolio. In the near term, this will include the launch of Valtech’s Cardioband product, which is used in mitral and tricuspid repair procedures. Cardioband is expected to receive its CE Mark from the European Union this year. The company expects it will be commercially available in Europe in late 2015.
Terms of the deal
Valtech shareholders will receive an up-front consideration of 4.4 million shares of HeartWare common stock; 800,000 shares of HeartWare common stock, contingent upon CE Mark approval for Cardioband; and 700,000 shares of HeartWare common stock upon placement of the first implants for either Cardioband tricuspid or CardioValve, depending on which happens first.
The transaction also includes warrants to purchase 850,000 shares of HeartWare common stock at a price of $83.73 per share when the company reaches $75 million in net sales of Valtech products, and an earn-out payment of $375 million, payable in cash or stock, when the company hits $450 million in net sales.
The deal was approved by the boards of directors of both companies, with support from a majority of shareholders. The transaction is subject to regulatory approval, as well as further HeartWare stockholder and Valtech shareholder approvals. The deal is expected to close late this year.
Image source: Freedigitalphotos.net
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