M&A Rumors Send ‘Shockwaves’ Through the Industry

Shockwave Medical's stock is up 15% so far this week after the Wall Street Journal reported Johnson & Johnson may be close to announcing a deal.

The Santa Clara, CA-based cardiovascular device company has long been among the 25 Most Attractive Medtech M&A Targets, and the industry’s heavy hitters have certainly taken notice. At one point last year, Boston Scientific, Medtronic, and J&J all were reportedly courting Shockwave Medical. It was also reported last year that talks with Boston Scientific had fallen through because the companies couldn't agree on price.

Shockwave went public in 2019 with an upsized initial public offering that scored $97 million. Today the company’s market value is nearly $12 billion.

Shockwave has developed an intravascular lithotripsy (IVL) technology that uses shockwaves to crack calcium within the vessel wall, thus enabling arteries to expand under low pressure and become more compliant.

Image courtesy of Shockwave Medical via MD+DI archives

According to the latest speculation, J&J and Shockwave could be finalized in the coming weeks if talks don’t fall apart. Citing people familiar with the matter, the WSJ also reported the possibility that another suitor could emerge. The report did not mention a potential value of the deal.

J&J could be particularly well suited to acquire Shockwave, given J&J’s 2022 acquisition of Abiomed, which has a close relationship with Shockwave. Abiomed invested about $15 million in Shockwave in 2018, and the two joined forces on a training program in the United States and Germany related to the complimentary use of their respective technologies.

J&J executives have previously said the company is agnostic to sector and agnostic to size when it comes to M&A. The company has also shown a preference for areas in which it has internal capabilities and know-how. In other words, strategic merit matters more to J&J than size when evaluating potential deals.

Shockwave’s L6 catheter is a ‘game changer’

Last year Shockwave launched its L6 peripheral intravascular lithotripsy (IVL) catheter, which has been well received by the market. The company developed the L6 specifically to expand the capabilities of its peripheral portfolio and to address difficult-to-crack classification and larger vessels such as the iliac and common femoral arteries.

Isaac Zacharias, Shockwave’s chief commercial officer, touted the design of the L6 catheter during an earnings call in May 2023.

"Our engineers were able to achieve delivery of a more uniform high energy profile to these large vessel lesions by developing a compact emitter array that is distinct from our other products," Zacharias said. "In addition to the improved energy profile, the larger diameter balloons are better able to facilitate energy delivery and dilate up to the target vessel diameter."

Zacharias said the L6 offers a strong clinical and economic value proposition.

"The results in clinical practice are surprising us and our customers," he said. "What we are hearing most often is how impressed physicians are with the angiographic results after L6, noting in many cases that the artery looks as good as if it we are stented."