Boston Scientific Buys Venous-Stent Maker VENITI
Boston Scientific recently announced an agreement to acquire privately-held VENITI, Inc. for $160 million. According to the press release, VENITI submitted a pre-market approval application with the U.S. Food and Drug Administration in June 2018 for the VICI stent system for treating obstructive venous disease. The VICI stent system received CE Mark approval in 2013.
According to the press release, venous obstructive disease affects more than 1.1 million people in the United States and Western Europe annually. Jeff Mirviss, Senior Vice President and President of Peripheral Interventions at Boston Scientific, commented:
Along with our leading AngioJet thrombectomy platform and venous product pipeline, we look forward to meeting the needs of physicians treating both chronic and acute venous disease.
According to the Worcester Business Journal, Boston Scientific announced over $1.5 billion in acquisitions this year alone. Other notable Boston Scientific acquisitions in 2018 include Millipede ($540m), NxThera ($306m), nVision Medical Corporation ($275m), Claret Medical ($270m), and Cryterion Medical ($202m).
Boston Scientific expects the acquisition of VENITI to be immaterial to adjusted earnings per share (EPS) in 2018 and 2019, and accretive thereafter. Nonetheless, shares of Boston Scientific opened trading the day of the announcement up more than 3 percent.
Potential Repeal of Medical Device Tax
With the upcoming Republican-dominated Presidency and Congress in 2017, the Affordable Care Act, or at least parts of it, look to be on the chopping block. One of the changes that may be forthcoming is a repeal of the 2.3% medical device excise tax. While currently being suspended through 2017, under the present law the medical device tax would be reinstated in 2018.
Some producers of medical devices hope that the tax is never reinstated. Mark Throdahl, president and CEO of OrthoPediatrics Corp., a northern Indiana based orthopedic company, has said that the suspension of the tax allowed the company to hire new workers and hopes for a full repeal after the Republican transition. According to Throdahl, the tax led to a hiring freeze, and suspension of the tax allowed for them to resume “an aggressive pace of hiring and investment.” Complaints from companies like OrthoPediatrics, as well as medical device associations like AvaMed, were what led to the initial temporary suspension of the tax.
Immediately after Donald Trump‘s election victory, AvaMed President Scott Whitaker wrote in a letter to Vice President-elect Mike Pence:
The medical device tax has been a significant drag on medical innovation, and resulted in the loss or deferred creation of jobs, reduced research, spending and slowed capital expansion.
According to some lawmakers, lobbyists, and industry executives, Trump and U.S. lawmakers will likely repeal the tax which could help some of the larger medical device manufacturers such as Medtronic, Boston Scientific, St. Jude Medical, and Johnson & Johnson. Senate Republican Leader Mitch McConnell has stated that repealing the Affordable Care Act will be one of the first order of business starting in January. Senator John Barrasso (R-Wyoming) has also stated that the medical device tax would likely be repealed.
There are still a number of decisions on how to approach the repeal of the medical device tax, whether in one single bill to repeal the Affordable Care Act or a number of smaller bills removing different parts of the Act. We should be receiving more clarity once President-elect Donald Trump officially takes office.
Repeal of the tax may remove approximately $2.5 billion of annual federal funding.
Boston Scientific Files Second IPR Petition Against UAB Patent
Boston Scientific Corporation (“Boston Scientific”) filed a petition with the Patent Trial and Appeal Board on April 10, 2015 requesting inter partes review of U.S. Patent No. 6,266,563 (“the ’563 Patent”). The petition states that the ’563 Patent is owned by the UAB Research Foundation. The petition has been assigned Case No. IPR2015-01038.
The ’563 Patent is entitled “Method and Apparatus for Treating Cardiac Arrhythmia,” and lists as inventors Bruce H. KenKnight, Raymond E. Ideker, Robert S. Booker, III, and Stephen J. Hahn. The ’563 Patent states that it “relates to methods and an implantable apparatus for treating cardiac arrhythmia, particularly ventricular fibrillation.” Figure 1 from the ’563 Patent is shown below.
The petition seeks review of all twenty of the ’563 Patent’s claims “as obvious under 35 U.S.C. § 103 based on U.S. Patent No. 5,181,511 (‘Nickolls’), U.S. Patent No. 5,433,729 (‘Adams’), and the knowledge of a person of ordinary skill in the art.”
The petition states that the ’563 Patent has been asserted by the Board of Trustees of the University of Alabama at Birmingham and the UAB Research Foundation against Boston Scientific and Cardiac Pacemakers, Inc. in a lawsuit filed on September 22, 2014 in the U.S. District Court for the Northern District of Alabama. The complaint alleges that Boston Scientific and Cardiac Pacemakers, Inc., a wholly owned subsidiary of Boston Scientific, infringe the ’563 Patent by making, using, offering to sell or selling cardiac resynchronization therapy defibrillators (“CRT-Ds”), “including but not limited to the Incepta, Enrgen, Cognis, and Livian CRT-Ds . . . .”
The petition also states that Boston Scientific previously filed a petition requesting inter partes review of the ’563 Patent, alleging that all twenty claims were invalid as anticipated under 35 U.S.C. § 102(b) by U.S. Patent No. 5,797,967 to KenKnight. The prior petition was filed on March 23, 2015, and was assigned Case No. IPR2015-00918.
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