Volcano Diversifies its Product Line with $115M Buyout of AtheroMed

Xconomy San Diego — 

San Diego-based Volcano (NASDAQ: VOLC), a medical device maker focused mostly on diagnosing and treating coronary and peripheral vascular disease, is acquiring privately held AtheroMed of Menlo Park, CA, for at least $115 million.

AtheroMed received FDA clearance five months ago for its Phoenix atherectomy system, which treats peripheral artery disease by opening up narrowed coronary arteries, increasing blood flow. The system, which is also approved in Europe, uses a catheter with a rotating, front-cutting element to shave plaque-like material that builds up along the inner walls of major blood vessels. An Archimedes screw within the catheter collects the shaved material.

The deal is expected to close by the end of June, and Volcano plans to initiate a limited market release of the Phoenix device in the U.S. by the end of 2014, with a full market release scheduled in early 2015. Volcano said it would pay an additional $15 million if the FDA clears AtheroMed’s second-generation Phoenix system by Nov. 15.

In a statement yesterday, Volcano CEO Scott Huennekens said the Phoenix system diversifies the company’s peripheral vascular disease product line, which includes the Pioneer diagnostic ultrasound catheter and Crux vena cava filter—both of which Volcano acquired through buyouts within the past 18 months.

In the statement, Huennekens described the deal as a step in Volcano’s “evolution from a leader in coronary and peripheral intravascular imaging and physiology to a company providing a broad range of diagnostic and therapeutic solutions.”

The company plans to initiate production of the Phoenix system at AtheroMed’s facility in Menlo Park, but will transition those activities to Volcano’s manufacturing hub in Costa Rica in late 2015.

Volcano generated almost $394 million in revenue last year. Sales of the company’s single-procedure disposable catheters and guide wires accounted for $306.9 million, or nearly 80 percent of Volcano’s medical segment revenues.

The deal is subject to customary closing conditions, including approval by AtheroMed’s shareholders.