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SPECTRANETICS MERGER WITH ADVANCED INTERVENTIONAL SYSTEMS

This article was originally published in The Gray Sheet

Executive Summary

SPECTRANETICS MERGER WITH ADVANCED INTERVENTIONAL SYSTEMS will combine the only two firms with excimer laser systems approved for coronary angioplasty. The two companies announced a definitive agreement for the merger on Oct. 7; the deal, which was cleared by the companies" boards but still requires shareholder approval, is expected to be completed in three or four months. Both firms market only excimer laser systems. LAIS received approval in January 1992 for its Dymer 200+ and in January of this year was granted supplemental approval of its LAISer II, a smaller version of the Dymer 200+. Both systems are indicated for patients who are acceptable for coronary angioplasty bypass graft surgery, have atherosclerotic lesions in coronary arteries that are crossable by a guidewire, and have lesions that are longer than 20mm ("The Gray Sheet" Jan. 25, In Brief). Spectranetics gained FDA approval this past March for its CVX- 300 ("The Gray Sheet" March 1, p. 9). The CVX-300 may be used in patients with saphenous vein grafts, lesions that are 20 mm or greater, balloon angioplasty failures, total occlusions crossable by a wire, ostial lesions and moderately calcified lesions. In the near term, the Spectranetics and LAIS devices will be marketed concurrently. Eventually, LAIS says, the firms will look to combine their technologies. The merger would resolve outstanding litigation between the two firms and eliminate related costs that both firms have been incurring. Shortly after approval of the CVX-300, LAIS filed suit against Spectranetics for patent infringement. In return, Spectranetics initiated a countersuit against LAIS, alleging trade libel, unfair competition and patent infringement ("The Gray Sheet" June 7, In Brief). Another advantage of the deal is that it would combine the firms' U.S. and European marketing strengths. While LAIS has placed more systems in the U.S., Spectranetics has penetrated the European market more extensively than LAIS. Both firms market in the U.S. via a direct sales force. LAIS currently uses distributors in Europe, while Spectranetics uses a direct sales force in certain countries, including France, the Benelux countries, Germany and the United Kingdom and is in the process of arranging for distributors in others. Under the merger agreement, Spectranetics will issue to LAIS shareholders approximately 0.87 shares of Spectranetics stock for every share of LAIS stock held. Approximately 8.7 mil. shares of Spectranetics stock should be issued for the roughly 10 mil. LAIS shares currently outstanding, valuing the deal at an estimated $25-30 mil. Following the transaction, between 18 mil. and 18.5 mil. shares in the combined company will be outstanding. LAIS posted FY 1992 sales of $14 mil., with a loss of $9.9 mil. In that period, Spectranetics had revenues of $3.9 mil. and a loss of $15 mil. The merged company will be headed by Robert DePasqua, currently Spectranetics president and chief executive officer. LAIS' Chairman, President and CEO, Robert Wall, "has agreed to serve as a consultant to the new board of directors for at least one year," according to the firms. LAIS currently employs just over 100 people; Spectranetics is slightly larger. Although some downsizing will occur, the firms have not decided where the reductions will take place. In addition, the companies have not decided whether the new firm, which does not yet have a name, will be based at LAIS' facilities in Irvine, California or at Spectranetics' headquarters in Colorado Springs, Colorado.
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