Volcano Buys AtheroMed to Expand PAD Offerings

In a move to broaden its holdings and diversify its product portfolio, Volcano Corp. (San Diego, CA) has announced that it has entered into an agreement to purchase privately held AtheroMed Inc. (Menlo Park, CA) for $115 million, plus a potential milestone payment of $15 million in November.

AtheroMed is the maker of the recently FDA approved Phoenix Atherectomy System, This catheter-based system, which also received the CE Mark in 2013, is used in the treatment of peripheral artery disease (PAD) and will augment Volcano's earlier acquisitions of the Medtronic Pioneer Plus re-entry catheter and Crux Vena Cava Filter for patients at risk for recurrent pulmonary embolism. The milestone payment will happen if improvements to the currently approved device get the go-ahead from FDA by November 15. The device will also be eligible for sales-based milestone payments.

"This transaction is an important milestone in Volcano's strategy to offer a growing and diversified portfolio of therapeutic devices that provide clinical and economic benefits as we continue our evolution from a leader in coronary and peripheral intravascular imaging and physiology to a company providing a broad range of diagnostic and therapeutic solutions," president & CEO Scott Huennekens said in a statement. "We believe the potential of Phoenix to both grow the atherectomy market and achieve a strong market share position will facilitate our revenue, gross margin and operating income expansion goals."

Volcano describes the Phoenix device as a peripheral atherectomy system "designed to provide physicians with a safe, versatile, easy-to-use primary therapy for treating PAD to restore blood flow to the ankle and foot." Phoenix's over-the-wire system "uses a rotating, front-cutting element located at the distal tip of the catheter to shave material directly into the catheter. The debulked material is then continuously captured and removed by an internal Archimedes Screw running the length of the catheter." It is available in multiple sizes to treat diseased vessels above and below the knee.

Volcano, which two months ago was included in our "10 MedTech Firms That Could Struggle in 2014," began as a maker of ultrasound imaging systems centered on coronary and peripheral artery disease. Since beginning its diversification into the catheterization space, the company doesn't seem to have been able to get a break from the market.

Volcano posted an adjusted first-quarter loss of 12 cents per share. For the full year 2014, Volcano expects adjusted loss per share to lie in the range of 16-19 cents. Share prices, which hit an all-time high of just over $33 in August 2011, have trended downward ever since and, despite a short-lived uptick following the announcement of this latest acquisition, are currently trading in the $17.50 range.

Stephen Levy is a contributor to Qmed and MPMN.