Shockwave Medical's heart disease business gets a jolt with $100M Neovasc buy

In a deal that might as well be termed a heart-to-heart, Shockwave Medical has made a bid to combine Neovasc’s cardiac device business with its own.

Shockwave has offered up $27.25 in upfront cash for each of Neovasc’s outstanding shares—a price that weighs in 27% higher than the shares’ closing price at the end of last week and nearly 70% over their average price throughout the preceding month.

Along with unspecified “deal-related costs,” Shockwave’s offer adds up to a total deal value of $100 million.

After Shockwave announced the proposed acquisition on Tuesday morning, Neovasc’s stock jumped more than 30% from its $21.54 closing price last week; it began trading on Tuesday above $28 per share. Shockwave’s share price, meanwhile, took an 8% hit, dropping from nearly $202 on Friday afternoon to about $185 as the market opened on Tuesday.

The deal has already been unanimously approved by Neovasc's board of directors and is expected to close in the first half of this year.

Shockwave is particularly interested in Neovasc’s Reducer system, a small device that’s implanted in the coronary sinus, the major vein that takes blood away from the heart muscle. Once in place, the Reducer helps adjust the flow of blood to the heart to treat refractory angina, in which reduced blood flow to the heart causes chest pain that hasn’t been successfully treated by other therapies.

The Reducer received CE mark clearance in Europe more than a decade ago and was tapped for a breakthrough device designation from the FDA in 2018. Neovasc is now in the process of recruiting patients for a randomized clinical trial that would support its application for full FDA approval of the device.

“Our team at Shockwave has proven that we excel at developing products and markets for large, underserved patient populations and commercializing innovative solutions for these patients. We believe the Reducer is an excellent fit for Shockwave as it enables us to apply our capabilities to address another large, unmet need within cardiology—refractory angina,” Shockwave CEO Doug Godshall said in Tuesday’s announcement.

Godshall said the acquisition won’t require any short-term changes to Shockwave’s U.S. sales organization, but noted that the company will likely dive immediately into growing the Reducer’s international reach as the U.S. study continues.

Shockwave is the maker of ultrasound catheters that use the company’s own intravascular lithotripsy technology, which emits sonic pressure waves to break up calcified plaque in the coronary and periphery arteries, a symptom of atherosclerotic cardiovascular disease.

Alongside its acquisition plans, Shockwave also reported preliminary financial results for 2022 in Tuesday’s announcement. It’s expecting to report full-year revenues between $489 million and $490 million—more than double 2021’s $237 million haul, which was itself a 250% increase over 2020.

And the company is expecting that staggering growth to continue into 2023—if slightly slowed—with forecasted revenues between $660 million and $680 million, about 37% higher than last year’s tally.