Boston Scientific Consummates Purchase of Rubicon Medical

April has been an eventful month for device maker Rubicon Medical Corp. (Salt Lake City). At mid-month, Rubicon announced that its Rubicon Filter embolic protection system had received the CE mark, making it eligible for marketing in the European Union. And on the same day, Boston Scientific Corp. (Natick, MA) exercised its option to purchase Rubicon for $71.7 million, plus up to $83.7 million more if postacquisition milestones are met.

Boston Scientific had been eyeing Rubicon as an attractive acquisition since at least 2003, when the two companies entered into a definitive agreement. Under the terms of the deal at that time, Boston Scientific bought $15 million in Rubicon stock and the option to buy a majority stake in the company from Rubicon’s two largest shareholders. The 2003 option was set to expire 90 days after FDA approval of the Rubicon Filter. A year later, the agreement was extended to allow Rubicon an additional 18 months—until March 2006—to meet three performance milestones.

According to the agreement’s most-recent incarnation, Rubicon will receive earn-out payments upon FDA clearance of the Rubicon Filter, and again if net sales of the product exceed $50 million and $100 million within a 12-month period in the following five years. Rubicon also agreed to lower its initial price per share from $2.00 to $1.50.

Rubicon CEO Linder: On the move.

“While the price to the Rubicon stockholders has been reduced, Rubicon no longer bears the risk that the option will not be exercised or the challenge of operating the company through FDA approval with no certain sources of revenue or additional capital,” said Rubicon president and CEO Richard Linder. “The price was reduced in part to induce Boston Scientific to exercise the option prior to our receipt of FDA approval and in part to offset the payments we made to acquire additional intellectual property rights.”

Last summer, the two companies expressed interest in joining the Rubicon Filter with Boston Scientific’s Taxus Liberté paclitaxel-eluting stent system in diseased saphenous vein grafts, and said they would jointly conduct a randomized clinical trial in support of FDA premarket approval for the devices. In December, however, Rubicon said it would amend the investigational device exemption application filed with FDA and pursue clearance through a conventional single-device clinical trial instead. At the time, Linder said a standalone device trial would stand a better chance of gaining FDA’s blessings sooner than one that paired the two products.

Still, Linder has said that he sees promise in simultaneously testing the products, and although the companies have opted to seek independent market approvals, there remains every indication that they are committed to developing complementary technologies.

At the end of 2003, Boston Scientific received the CE mark for a bare-metal version of the Taxus Liberté. More recently, the bare-metal platform for the paclitaxel-eluting stent system received an FDA go-ahead. It seems little coincidence that Boston Scientific’s announcement of the approval fell on the same day it said it would buy Rubicon.

© 2005 Canon Communications LLC

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