MEDTECH BUCKS!

The good news for emerging med-tech companies dealing with obesity and diabetes is hot, with the big guys still needing to look outside for innovations in obesity.

The nature of large strategic in obesity and diabetes is starting to steam up. FDA’s new take on considering un-met clinical needs on a fast track approval process have opened doors for med tech companies. Still the primary approach is out side USA for most of the med tech companies. M&A sector is soaring, the deals that use to be “fear based’ are now ‘value based’  exits. Historically, cash upfront deals with fairly token back-ends have been common, and needless to say much appreciated by the acquired company and their (often weary) investors. Increasingly, though, pharma-style “biobucks” are making their way into "Medtech Bucks" device deals, e.g. generous total deal values with a good portion of that value based on years-away regulatory and commercial milestones.

For the strategics, who see growing market adoption and payment risk, structured acquisitions make a lot of sense. Having returned to the M&A scene in the last couple of years, though with a devalued currency and lower risk appetite,  Boston Scientific  is leading the way in back-ended deals. Two companies acquired by Boston Scientific this year,  Rhythmia  & Orange County based  Cameron Health, were both pre-commercial, and they both got heavily backended deals from BSC. While the eye-catching Cameron Health headline read “Boston Scientific To Acquire Cameron Health, Inc for $1.35 Billion,” only $150M of that was upfront. Sounds like Biobucks to me. Rhythmia’s deal was a little less drastic, with $90M upfront and $175M in milestones, but the theme is the same. This might change very soon as more companies go public. The deals may be cash upfront for the most part with a less drastic milestone payment. One thing is for sure, both the IPO and the M&A market is starting to become hot.