AngioDynamics acquired Eximo Medical in a $46 million upfront, cash-on-hand deal announced Thursday, giving it ownership of an FDA-cleared laser treatment for peripheral artery disease (PAD). An additional $20 million is on the table pending "certain technical and revenue milestones," the buyer said.
The deal was prompted by management's confidence Eximo's device stands out with its ability to target calcification without damaging vessel walls. The takeover moves AngioDynamics into a sector fought over by a clutch of companies including Philips.
AngioDynamics doesn't expect to generate significant revenues from the product this financial year, prompting it to keep its sales outlook unchanged at $280 million to $286 million, but it said it will see a "meaningful increase in revenue over the coming years."
Eximo received 510(k) clearance for its device one year ago, making it the first company to get the green light to sell a solid state, short pulse, 355nm laser system in the U.S. for vascular interventions, the company said. However, Eximo never built out the commercial footprint needed to compete in the market.
Now, AngioDynamics, which has a vascular interventions unit, has stepped in to commercialize the device. Eximo’s limited commercial activity means the competitiveness of its device against products such as Philips’ Turbo line of products and Ra Medical Systems’ Dabra hasn't been tested yet. But, based on its review of the . evidence, including clinical trial data, AngioDynamics is convinced it can compete.
"What sets it apart from the other laser technologies that are out there is it is very, very effective in terms of the highly calcified lesion and there's an element of tissue selectivity. It goes after calcification without damaging vessel walls," AngioDynamics SVP Steve Trowbridge said on a first quarter results conference call with investors.
AngioDynamics will build out a dedicated sales force to support the product. The forecasted commercial investment led AngioDynamics to cut the high end of its full-year earnings per share outlook in half, bringing it down to a range of $0.10 to $0.15.
The investment will equip AngioDynamics to start selling the PAD treatment in the second half of its financial year. AngioDynamics is yet to quantify the revenue it expects the Eximo laser to generate, meaning its investors face near-term costs and uncertain longer-term rewards.
Shares in AngioDynamics closed down 14% Thursday after news of the takeover became public.