When Boston Scientific shut down TriVascular all appeared to be lost for the one-time hard-charging start-up that took on the daunting abdominal aortic aneurysm market. But TriVascular's core investors and evangelical executive team have given the company new life.
TriVascular's Sequel Could Be a Blockbuster
Article preview from IN VIVO- April 2010
When Boston Scientific shut down TriVascular all appeared to be lost for the one-time hard-charging start-up that took on the daunting abdominal aortic aneurysm market. But TriVascular's core investors and evangelical executive team have given the company new life.
The news came over the phone and out of the blue. In 2006, Michael Chobotov, PhD, who had co-founded TriVascular Inc. with two other mechanical engineers, got the word from the top that Boston Scientific Corp. was mothballing the aortic aneurysm endograft company, which it had just acquired the prior year. Boston Scientific had paid $65 million for TriVascular, along with the potential of performance-based earn-outs that could have put the price at close to $1 billion.Since the acquisition, Boston Scientific poured tens of million of dollars into the TriVascular business, tripling the company's quarters, doubling the workforce to 290 in 14 months and, most importantly, investing tens of million of dollars in manufacturing equipment specifically designed to construct TriVascular's endovascular grafts.
But then along came Guidant. Boston Scientific executives, having outbid Johnson & Johnson for Guidant, now had to reconfigure their company to absorb their $27 billion prize. As part of the reconfiguration, Boston Scientific executives decided TriVascular no longer fit into its long-term plans. It wasn't personal or exclusive. Boston Scientific would undergo a series of slimming exercises including, a year later, wide-ranging cost-cutting and capital-raising moves designed to focus the company's efforts while paying off debt. In the slimming down, Boston Scientific would sell its entire vascular business, and its cardiac division as well, to Getinge AB for $750 million. Boston Scientific included Guidant's cardiac surgery unit in the sale as well as its own vascular business.
Chobotov says he had no idea the hit was coming. Having co-founded the company nearly a decade earlier, the news obviously was devastating. But he understood. "It would be years, not months, before there'd be any contribution in terms of revenue from that program, and it's an expensive program," Chobotov says. "AAA [abdominal aortic aneurysm] is a big market. But it's a complex therapy and the average selling prices of the devices are high, $10,000 to $15,000. Everything about it requires significant investment, but there's also a very large opportunity in the space, and I think Boston Scientific appreciated both sides of that. They'd been in AAA before meeting us with their Vanguard program and the like. So it's a costly therapy. It's a PMA. And the manufacturing sophistication and infrastructure needed to build these devices is significant."
But understanding is a far way from acceptance. That phone call from Boston Scientific unleashed nearly two years of telephoning, e-mails and formal negotiations between TriVascular's founders, past investors in TriVascular who had already seen a decent return on the sale, new investors and Boston Scientific. Each principal entered the talks with distinct points of view and priorities, but all shared the goal of saving TriVascular and its endografts from slipping into oblivion. The 21-month scramble worked. In March 2008, TriVascular became TriVascular once again. Delphi Ventures and Kearny Venture Partners (which shares management roots with TriVascular's original investor, ABS Ventures) committed once again to the company they'd backed a decade earlier, participating in a $65 million round along with the deep pockets of MPM Capital and New Enterprise Associates.
-Tom Salemi
Purchase this article online as a PDF and receive it immediately via email. Questions? Call (800) 332-2181. 100% Satisfaction Guaranteed.
Elsevier Business Intelligence announces the publication of a new Special Report "Bigger, Tougher,Faster"- Preparing for the New FDA. When the inspector comes calling ... will you be ready?
This 16-page report originally published in "The Silver Sheet". Learn more...
Limited-time offer: Single-incision laparoscopy or natural orifice surgery: Which will win the day, or is there room for both? Are You Ready For The New Scarless Surgery Revolution? Download you FREE report now
Companies mentioned in this article
California Institute of Technology
Subscribe to IN VIVO.
IN VIVO delivers:
- Revealing, in-depth coverage of your competitors' strategies
- Incisive projections of future industry trends and their implications for your business
- Expert analysis of key industry developments
- Exclusive interviews with top industry executives and analysts
- In-depth examination of dealmaking, marketing, R&D, regulatory, and finance strategies -- those that were successful and those that missed the mark
.jpg)
.jpg)
Comments