Atricure lassoes Sentreheart for $40m

Ablation company takes on a new tech, and responsibility for an expensive clinical trial.


Some medtechs wait for a potential acquisition target to obtain US approval for its main product before pulling the trigger on the deal. Not so Atricure, which has bought Sentreheart for $40m upfront before the pivotal trial of its flagship device is even fully enrolled. 

The device in question is Lariat, a left atrial appendage closure product designed to reduce the chance of stroke in atrial fibrillation (AF) patients. The deal is intended to allow Atricure, best known for cardiac ablation devices, to diversify its product offering – no bad thing since the independent Cabana trial last year suggested that cardiac ablation as a technique might be no better than drug therapy for AF patients. 

Approval in 2022?

A left atrial appendage (LAA) is a sac in the muscle wall of the left atrium. Blood can pool here and form clots than can break away and cause strokes. Lariat is intended to block the LAA off from the heart using a suture loop; after around three months the LAA atrophies and disappears. 

Currently, 535 of a planned 600 patients are enrolled in the device’s US pivotal trial, Amaze. This is testing LAA closure using Lariat in conjunction with pulmonary vein isolation, a procedure used to stop abnormal electrical signals in the heart that cause rhythm problems. The control group is pulmonary vein isolation alone. 

Full enrolment of these patients, who have either persistent AF or long-standing persistent AF, is expected to occur in the first half of next year. If the study hits its primary endpoint by showing a reduction in episodes of AF a year after treatment in the Lariat-treated patients, premarket approval could come in 2022.

Atricure already has an LAA device, AtriClip, which walls off the LAA in a similar way to Lariat. But this may only be used in patients undergoing open concomitant coronary artery bypass grafting or valve replacement or repair, as it requires surgical exposure of the heart. Lariat is minimally invasive, so the acquisition gives Atricure a competitor to Boston Scientific’s catheter-delivered Watchman LAA device.

Back-end loaded

Atricure is hedging its bets with Sentreheart. The $40m cash-and-stock upfront is dwarfed by the $140m in milestone payments tied to clinical success in Amaze and premarket approval, and the $120m payout if Sentreheart’s devices get reimbursement.

According to Stifel analysts, the transaction will impact near-term profitability, but the company says that it will not need to raise more cash to support the transaction or to achieve total company EBITDA profitability. 

The acquisition ought to close in the next few days. Atricure says its 2019 revenues will come in between $224.5m and $228.5m, and the increased clinical trial costs mean it will make an EBITDA loss of $7-9m compared with its previous expectation of $2m profit.

Atricure investors must hope that Lariat gets its approval on schedule. Last year's Cabana trial did not test any of Atricure’s ablation devices, instead using catheters made by Johnson & Johnson, Medtronic and Boston, among others (Ablation groups scramble to cope with Cabana, May 11, 2018).

But the lacklustre results were worrisome for the sector as a whole, and the consensus forecasts compiled by EvaluateMedTech see Atricure’s revenues from its minimally invasive ablation technologies dropping slightly from 2018 to 2019. The company will have to wait another three years before Lariat starts to add to the top line. 

    WW annual sales ($m)  
Segment EvaluateMedTech classification 2018 2020e 2022e 2024e CAGR
AtriClip Left atrial appendage closure devices 62 90 121 154 +16%
Open heart products Cardiac ablation catheters 93 109 125 142 +7%
Minimally invasive products Cardiac ablation catheters 44 36 42 48 +1%
nContact Electrosurgical devices 0 16 22 27 N/A
Estech valve business Cardiopulmonary bypass devices 2 2 2 2 +1%
  Total company revenues 202 253 311 373 +11%
Source: EvaluateMedTech.

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