Dive Brief:
- Boston Scientific said Monday its approximately $4.2 billion acquisition of U.K. interventional medicine company BTG, first announced last November, is complete. The deal expands Boston Scientific's portfolio of devices used in minimally invasive procedures for people with cancer and vascular diseases.
- Finalization of the deal means Boston Scientific will soon close its sale of its drug-loadable microsphere and bland embolic bead products to Varian Medical Systems for $90 million, a deal announced in early July to address antitrust concerns raised by the Federal Trade Commission surrounding the combination with BTG.
- The company also said it plans to divest BTG's royalty stream tied to J&J pharma unit Janssen's prostate cancer treatment Zytiga by the end of 2019. According to BTG's 2018 annual report, licensing revenues for Zytiga during the prior fiscal year were 155.4 million pounds ($188.3 million).
Dive Insight:
Boston Scientific is betting that having BTG as a subsidiary will make it the "category leader" in interventional oncology tools and products, according to comments from CEO Michael Mahoney on the company's most recent earnings call. Executives said at a June investor day the medtech giant hopes to expand the geographical reach of BTG's products, about 90% of which had been sold in the U.S. The company also said it's looking to increase cancer indications for BTG's TheraSphere radiotherapy product and ICEfx cryoablation technology.
BTG's interventional portfolio will add approximately $400 million in high-growth revenue and move Boston Scientific's peripheral interventions unit closer to accounting for 15% of the company's total sales, Cowen analyst Josh Jennings wrote in a note to investors Monday.
Mahoney also noted to investors on the earnings call that over halfway through 2019, the company's only major acquisition this year has been the $465 million cash-plus-milestones deal for spinal implant maker Vertiflex, closed in June. That figure compares to the 10 deals Boston Scientific announced during 2018.
The exec said investors will see "significantly less [M&A] volume in 2019 versus 2018," allowing "nice capacity in 2020 for more tuck-in acquisitions," with "potentially one or two at the most" tuck-ins during the remainder of this year.
Boston Scientific anticipates the BTG deal to be immaterial to adjusted earnings per share in 2019, which it attributed to later-than-expected closure of the acquisition, as well as intended divestitures of the embolic microsphere portfolio and pharma licensing assets. In 2020, Boston Scientific expects the transactions to be four to five cents accretive on an adjusted basis.
Not including impact from the BTG deal, Boston Scientific's most recent guidance issued July 24 pegs full-year revenue growth for the company between 7% and 8%.
This story has been updated with analyst commentary.
