Endologix, TriVascular Technologies ink $211m merger

Endologix (NSDQ:ELGX) and TriVascular Technologies (NSDQ:TRIV) yesterday said they plan to merge in a cash-and-stock deal worth $211 million.

If consummated, the deal would unite 2 of the stent graft market’s smaller players. Both companies makes devices for treating abdominal aortic aneurysms; Irvine, Calif.-based Endologix makes 2 lines of stent grants, the Nellix and AFX devices, while Santa Rosa, Calif.-based TriVascular makes the Ovation stent graft.

The deal, which values TriVascular at $9.10 per share, calls for TRIV shareholders to receive a to-be-determined combination of ELGX shares and cash equal to 19.999% of Endologix’s outstanding shares. Once it closes, Endologix shareholders would own 84% of the new company, with TriVascular stockowners holding the remaining 16%, the companies said.

The new company is slated to operate under the Endologix banner, with TriVascular as a wholly-owned subsidairy. Endologix chairman & CEO John McDermott is expected to keep that role, with TriVascular president & CEO Christopher Chavez joining the board.

“This merger enhances the near and long-term growth potential of our business by bringing together two of the most innovative companies in the field of endovascular abdominal aortic aneurysm treatment. We believe the combined company will be uniquely positioned to provide physicians with 3 complementary products to treat a wide range of patient anatomies. These devices, the AFX, Ovation and Nellix systems, each offer unique clinical advantages and together will offer physicians the ability to choose the best solution for each patient – all provided by 1 company,” McDermott said in prepared remarks. “In addition to the existing products, the combined company will have a deep pipeline of new devices including AFX2 and the Ovation iX system that are both planned for market introduction by the first quarter of 2016. These new products are expected to be followed by additional new technologies including the launch of Nellix in the U.S., which is expected to receive PMA approval by the end of 2016.

“In addition to the strong product portfolio, the merger brings together two experienced endovascular AAA sales and clinical teams in the U.S. and Europe. The combined organizations will provide broader coverage, increased clinical support and convenience for physicians and hospitals who want to access multiple technologies through a single company and representative,” he added.

“Endologix and TriVascular are 2 entrepreneurial companies that share a strong strategic focus on providing physicians with innovative and less invasive technologies to make endovascular aortic repair safer and available to more patients, including the significant number of patients with challenging aortoiliac anatomy. We believe physician and patient access to the Ovation platform will be significantly enhanced from a combined larger, stronger and more experienced field sales and service organization. We look forward to combining our significant and complementary expertise and capabilities for the benefit of our customers, patients, employees and stockholders,” Chavez said.

The companies also released some 3rd-quarter numbers yesterday, with Endologix reporting its full results and TriVascular issuing its Q3 prelims. Endologix posted losses of -$10.9 million, or -16¢ per share, on sales of $38.2 million for the 3 months ended Sept. 30, paring losses by -21.7% on a top-line gain of 2.9%

Adjusted to exclude 1-time items, losses per share were -14¢, a penny ahead of expectations on Wall Street, where analysts were looking for sales of $38.1 million.

“We achieved solid 3rd-quarter results, highlighted by a 45% increase in European Nellix system sales. We are also pleased with FDA approval to restart enrolling patients in our continued access protocol for the IDE trial and look forward to providing physicians and patients in the U.S. with access to Nellix again later this year. On the regulatory front, we expect to submit the final PMA module in early 2016, with potential FDA approval by the end of the year. Lastly, we recently received FDA approval for AFX2 and plan to introduce this new device in the first quarter of 2016,” McDermott said.

TriVascular said it expects to post sales of 9.5 million for its 3rd quarter, which would come in just ahead of the $9.3 million expected on The Street. The company said it plans to issue its full Q3 results Nov. 9.

“Our 3rd-quarter revenue demonstrates continued adoption of the Ovation platform, a clinically proven, less-invasive solution for treatment of the broadest range of AAA anatomies,” Chavez said.

TRIV shares surged 55.0% to $7.81 apiece in pre-market trading today, after closing down -1.8% at $5.04 yesterday. ELGX shares closed down -.06% at $13.73 apiece yesterday.

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