Boston Scientific Bids on a Medtronic Foe

Boston Scientific kicked off one of the most important healthcare conferences of the year (J.P. Morgan) with a $3.7 billion deal to bolster its urology portfolio.

The Marlborough, MA-based company has agreed to acquire Axonics, a longtime adversary of Medtronic in the sacral neuromodulation space, for $71 a share in cash. This price reflects an equity value of about $3.7 billion and an enterprise value of about $3.4 billion.

Mike Matson, a medtech analyst at Needham & Co., has long considered Axonics to be among the 25 Most Attractive Medtech M&A Targets, and has even previously called out Boston Scientific as a potential suitor.

"We have long thought that [Boston Scientific] was the most logical acquirer of [Axonics] and we believe that the acquisition is complementary to both [Boston Scientific's] urology and neuromodulation businesses," Matson wrote in a note Monday morning.

The M&A announcement comes about a year after FDA approved the fourth-generation Axonics R20 neurostimulator, a rechargeable sacral neuromodulation (SNM) device with an expected battery life of 20 years or longer. The portfolio also includes the Axonics F15 recharge-free SNM system for the treatment of overactive bladder and fecal incontinence, and the Bulkamid Urethral Bulking System for the treatment of female stress urinary incontinence.

The SNM devices are designed to deliver mild electrical pulses to the sacral nerve to restore communication between the brain and the bladder. In clinical studies, Axonics Therapy has demonstrated meaningful improvement in patients' quality of life in follow-up out to two years, with no serious device-related adverse events reported.

"We are excited to add Axonics technologies to the Boston Scientific portfolio, a combination that we expect will further strengthen our ability to serve urologists who are treating patients living with these often-chronic conditions," said Meghan Scanlon, president of Boston Scientific's urology business. "This acquisition also enables our entry into sacral neuromodulation, a high-growth adjacency with opportunities to expand access to care for patients."

Boston Scientific expects to complete the transaction in the first half of 2024. Axonics expects to deliver net revenue of about$366 million in 2023, representing 34% growth over the prior fiscal year. Axonics' revenue growth profile is anticipated to be highly accretive to Boston Scientific's urology business in 2024.

“The success of Axonics is a testament to our mission-driven employees and their commitment to innovation, quality and teamwork," said Axonics CEO Raymond Cohen. "Our team is looking forward to the global impact we can make as part of Boston Scientific as we endeavor to bring these life-changing therapies to more patients than ever before."

A medtech feud for the ages

Medtronic held a monopoloy in the sacral neuromodulation market prior to Axonics winning its first FDA approval in 2019. That approval set the proverbial fire to an already-smoldering turf war between Medtronic and the smaller competitor.

Here are the key points to know about the contentious history between Medtronic and Axonics.