Article preview from Start-Up - May 1, 2011
Transcatheter heart valve (TAVI) companies are hot. A market that was worth $20-$30 million just two or three years ago, based on devices with an average selling price of $23,000, was worth more than $400 million in 2010, and to date these products are only approved in Europe. A major stumbling block to widespread penetration exists however: the higher risk of stroke seen with TAVI as compared to surgical valve replacement. Thus, investors are spreading the net out further, to scoop up companies developing embolic protection devices, to solve some of the potential neuro problems that can result from TAVI.
Article preview from Start-Up - May 1, 2011
Large acquiring device companies, in recent years, have increasingly adopted a "show me" attitude toward innovative device start-ups, requiring the small companies to minimize as much risk as possible by validating their products and markets, even going so far in some cases as to look for significant revenues before taking them into the fold. There is a notable exception in structural heart disease, however, where strategic acquirers have shown their willingness to pay up for companies in the transcatheter aortic heart valve segment before these start-ups have even gained FDA approval.
Edwards Lifesciences Corp. was the first to employ this strategy in 2003, buying Percutaneous Valve Technologies early in its development, for $125 million-plus and additional $30 million in earn-outs. Since then, others have followed suit. Medtronic Inc. bought Ventor Technologies and CoreValve (now Medtronic CoreValve LLC) for $325 million plus earn-outs and $700 million plus earn-outs, respectively, in 2009. CoreValve had gained the CE mark in 2007, but has yet to be approved in the US. At the end of 2010, Boston Scientific Corp., which has had a strategic investment in Sadra Medical Inc. since 2006, paid $193 million in cash plus the possibility of another $193 million in earn-outs to gain its heart valve, pre-US approval.
Such is the promise of transcatheter heart valves (or "TAVI," for transcatheter aortic valve implantation), the minimally invasive alternative to open heart surgery to replace diseased and calcified aortic valves.
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