Neuromodulation Returns

Press reports that Boston Scientific Corp. is contemplating the sale of its neuromodulation business sent shock waves through the industry earlier this month. As one of the three major players in the neuromodulation device space, along with Medtronic and St. Jude Medical, BSX has contributed to the perception of growth and maturity for the industry since it purchased Advanced Bionics in 2004. Johnson & Johnson and Abbott Labs have been mentioned as possible buyers of the business unit, although there are probably other candidates from within the medical device industry.

The sale, if it were to take place, would offer both positive and negative implications for the neurotechnology industry. On the minus side, it could depress valuations of future acquisitions if buyers perceive that BSX lost money on its original transaction. The company paid $740 million for Advanced Bionics in 2004 plus later payments of over $1.1 billion. They sold Advanced Bionics’ cochlear implant business back to Al Mann in 2007 for $150 million (Mann later resold that business to Sonova for $489 million).

On the plus side, the sale of Boston Scientific’s neuromodulation business to a more financially sound medical device player could help move new products to market more swiftly. Though the company’s Precision Plus spinal cord stimulation system is well regarded by many clinicians because of its independent current control for each of its leads, BSX has been slow to develop other neuromodulation therapies in application areas like migraine, epilepsy, incontinence, and deep brain stimulation, where its arch competitors MDT and STJ have seized opportunities. Several former Boston Scientific neuromodulation employees contacted by NBR have expressed frustration with corporate management’s reticence to move forward with new product development.

One new product area that has languished at BSX is the Bion injectable microstimulator obtained (at least for neuromodulation applications) from Advanced Bionics in 2004. Though the company showed a newer multi-electrode version of the Bion at one point, BSX has yet to obtain FDA approval for any applications nor do any appear to be imminently forthcoming. This despite numerous offers of collaboration from potential research and commercial partners.
Some of the tardiness can be attributed to the dissension with Advanced Bionics founders that followed the 2004 acquisition. At the 2009 J.P. Morgan Healthcare Conference, then-CEO James Tobin pointed to Al Mann’s departure as a positive driver for its neuromodulation business, since it could control its own destiny.

Whatever happens with the BSX neuromodulation unit, it is our hope that whoever runs the business can help it realize its full potential.

James Cavuoto
Editor and Publisher



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