CryoLife ($CRY) will pay an initial $17 million in cash for Hemosphere so it can grab the company's HeRO graft to treat end-stage renal disease. The Atlanta medical device and tissue processing enterprise will have to kick in up to $4.5 million more as the product reaches revenue-based milestones.
The deal between CryoLife and Eden Prairie, MN-based Hemosphere amounts to one of synergy. In short, CryoLife is focusing more now on "higher margin medical devices for cardiac and vascular surgery," CryoLife president and CEO Steven Anderson said in a statement. And HeRO fits right in.
He notes that the company already sells preserved human veins and artery arteriovenous grafts for use on end-stage renal disease patients, and that it would be able to boost the use of HeRO in the U.S. as a result. The overall market for the graft, a "high margin medical device," surpasses $250 million globally, the companies believe.
CryoLife booked $32.3 million in revenue during its 2012 first quarter, up 7% compared to a year ago, thanks to market growth for its revascularization technologies, which the company terms as having that "high margin potential." (There's the use of "high margin" again.)
HeRO gained FDA 510(k) clearance in 2008 and a CE mark in 2011. HeRO is indicated for end-stage renal disease patients who are dependent on a catheter and on long-term kidney dialysis and have exhausted other treatment options. Hemosphere promotes the grant as one that is implanted under the skin and helps maintain long-term access for dialysis patients who have central venous stenosis, or the narrowing of blood vessels. Once implanted, the product is accessed similar to regular grafts and has shown in studies to lead to fewer infections. Also important: CMS and private insurers cover the product in the U.S. Hemosphere said it generated $5.3 million in revenues from the product in 2011.
Both companies say they expect the deal to close in May.
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