Boston Scientific will acquire the Watchman minimally invasive stroke-prevention device for patients with atrial fibrillation through its Jan. 19 purchase of Atritech for up to $375 million.

Privately-held Atritech anticipates PMA approval of the system in 2013. Watchman gained a CE mark in July 2009 and is currently available overseas.

Boston Scientific plans to leverage its existing electrophysiology and interventional cardiology sales forces to commercialize the Watchman. The device also will dovetail with Boston’s existing cardiac offerings ranging from drug-eluting stents to defibrillators, as well as ablation catheters under development for atrial fibrillation.

Atritech submitted a PMA for the Watchman in August 2008, and an FDA advisory panel narrowly endorsed approval in April 2009. However, FDA told the firm in March 2010 that a confirmatory safety and efficacy study would be needed to support approval. That study (PREVAIL) is ongoing and expected to be completed in mid-2012. (See “ Also see "Panel Endorses Atritech Watchman Stroke-Prevention Device In Close Vote" - Medtech Insight, 27 April, 2009. ” – “The Gray Sheet” April 27, 2009.)

Watchman is designed to be permanently implanted at the opening of the heart’s left atrial appendage to trap blood clots, which are prone to formation in this area in patients with atrial fibrillation.

Atritech expects to gain PMA approval in 2013 for its Watchman left atrial appendage closure device. (Photo: Atritech)

Atritech expects to gain PMA approval in 2013 for its Watchman left atrial appendage closure device. (Photo: Atritech)

Intended as an alternative to anticoagulant drugs such as warfarin, the Watchman minimally invasive implant consists of a self-expanding nitinol frame with fixation barbs and a permeable polyester fabric covering the atrial facing surface. The implant is available in five sizes to accommodate each patient’s unique anatomy.

The overall system is comprised of three parts, including the implant, a transseptal access sheath and a delivery catheter.

The left atrial appendage (LAA) closure market is anticipated to offer significant growth opportunity for Boston Scientific. “We see the global left atrial appendage market as a $25 million to $30 million market in 2011 growing to approximately $200 million in 2015,” Wells Fargo analyst Larry Biegelsen states in a Jan. 19 report.

Despite the U.S. approval delay, Watchman appears ahead of St. Jude Medical’s competing Amplatzer cardiac plug in the race for U.S. approval of an LAA closure system for stroke prevention in AF patients. The latter device gained a CE mark in December 2008 and is already available in Europe; a U.S. feasibility study began in June 2010. St. Jude acquired Amplatzer developer AGA Medical last fall for $1.3 billion. (See “ Also see "AGA Purchase Gives St. Jude Structural Heart Leadership, Growth Potential" - Medtech Insight, 25 October, 2010. ” – “The Gray Sheet” Oct. 25, 2010.)

“The U.S. launch of St. Jude’s Amplatzer cardiac plug for LAA closure is at least three to five years away and we estimate that the Watchman device could be launched in the U.S. in early 2014,” Biegelsen said.

Similarly, JP Morgan analyst Michael Weinstein anticipates Watchman will have “at least a one-year head start” in the U.S. market, according to a Jan. 18 report.

Watchman Safety Improves With Time

Atritech’s 800-patient PROTECT randomized clinical trial demonstrated a 38% relative risk reduction for stroke, cardiovascular death and systemic embolism compared to long-term anticoagulation drug therapy with warfarin.

The FDA panel review of the device, however, had raised concerns about up-front procedural risks and long-term performance. (See “ Also see "Maisel Urges Caution In Adoption Of Atritech’s Watchman Anti-Stroke Device" - Medtech Insight, 1 June, 2009. ” – “The Gray Sheet” June 1, 2010.)

Updated results published online Jan. 17 in the journal Circulation, which included results from a continued access registry, concluded that “there is a significant improvement in the safety of Watchman ... with increased operator experience.”

“Despite a higher overall complication rate associated with LAA closure than warfarin treatment, the functional impact of these events favors LAA closure,” the study states. “Together, these data suggest a favorable safety profile for Watchman implantation.”

The “positive” longer-term follow-up “suggests the device is beneficial relative to warfarin and will eventually make it to market in the U.S.,” Morgan Stanley analyst David Lewis said in a Jan. 19 report.

Deal Is Fourth Acquistion In As Many Months

The Atritech purchase is Boston Scientific’s fourth acquisition in the last four months as the firm presses ahead with plans to reorganize and recharge its product pipeline to focus on higher long-term growth. (See “ Also see "Boston Scientific Lays Out Near-Term Growth Plan" - Medtech Insight, 29 November, 2010. ” – “The Gray Sheet” Nov. 29, 2010.)

Earlier this month, Boston Scientific paid $60 million for Intelect Medical, gaining access to that firm’s development-stage deep brain stimulation technology. (See “ Also see "News In Brief" - Medtech Insight, 10 January, 2011. ” – “The Gray Sheet” Jan. 10, 2011.)

In November 2010, Boston entered the transcatheter aortic heart valve market with its purchase of Sadra Medical for up to $450 million. And last September, the firm agreed to pay up to $443.5 million to acquire asthma device maker Asthmatx. Other recent strategic moves include Boston Scientific’s divestiture of its neurovascular unit to Stryker for $1.5 billion in November. (See “ Also see "Stryker Buys Target Neurovascular Biz From Boston Scientific For $1.5 Billion" - Medtech Insight, 1 November, 2010. ” – “The Gray Sheet” Nov. 1, 2010.)

Under the terms of the Atritech deal, Boston Scientific agreed to pay $100 million up front, with additional potential payments of up to $275 million based on certain regulatory and revenue-based milestones through 2015.

Considering all four acquisitions together, Boston has committed to nearly $550 million in upfront payments and about $700 million in potential earn-out payments, Morgan Stanley’s Lewis noted. “We find it encouraging that the company has structured incentive-based earn outs in many of their transactions, a dynamic we have not seen with other large cap peers.”

“In total, these deals are expected to be $0.04-$0.05 dilutive” to earnings per share in 2011, the analyst noted. Boston Scientific says it expects the Atritech deal alone will be dilutive by one to two cents this year and in 2012 and 2013.

Boston Scientifc expects the Atritech deal to close by March 31.

By Rebecca Kern

Boston Scientific Buys Atritech For Watchman Stroke Prevention Device

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