Boston Scientific announces the acquisition of Augmenix
Boston Scientific (BSX) has been executing on its inorganic growth strategy in 2018. The company has announced nine acquisitions year-to-date, with the latest acquisition announced on September 6.
On that date, Boston Scientific announced that it entered into an agreement to acquire Augmenix for an upfront payment of $500 million and additional sales-based milestone payments of up to $100 million. The acquisition is aimed at advancing Boston Scientific’s category leadership strategy in urology. The company’s Urology and Pelvic Health business reported operational sales growth of ~9.1% in the second quarter, as shown in the below table.
With the acquisition of Aegmenix, Boston Scientific adds its SpaceOAR system to its men’s health portfolio, which is part of BSX’s MedSurg segment. The MedSurg business had registered YoY (year-over-year) sales growth of ~10.4% in the second quarter. BSX stock rose the day after the acquisition announcement was made.
Augmenix develops and commercializes an adjunctive therapy called SpaceOAR system for patients undergoing prostate cancer radiotherapy. The therapy aims to reduce rectal radiation injury during radiotherapy. According to Boston Scientific, nearly 400,000 men out of 1.1 million men diagnosed with prostate cancer undergo radiotherapy every year around the world. Augmenix’s SpaceOAR hydrogel was approved in Europe in 2010 and in the United States in 2015.
The acquisition is expected to be completed by the fourth quarter. Boston Scientific noted that SpaceOAR sales are expected to reach $50 million this year and $90 million next year. The deal is expected to be neutral to adjusted earnings in 2018 and 2019 and increasingly accretive starting in 2020.
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