Medtronic enters mitral valve race with obscure $400m buy

With Edwards Lifesciences and Abbott Labs both buying transcatheter mitral valve technologies it makes sense for Medtronic to jump in too. But in spending $408m on Twelve the world’s best-known medtech group has bought one of the most enigmatic.

The private California group’s product does not seem to have a name and the company itself has no website – if this is stealth mode it is unimpeachable. So why has Medtronic gone for Twelve rather than a more open company like Neovasc, the only other small, independent group known to have a mitral valve in development? The answer could be related to intellectual property.

Neovasc is in litigation with one of the other mitral valve players, CardiAQ, with the latter having filed two separate lawsuits last summer. The first, filed in Massachusetts, concerns intellectual property rights ownership and alleges unfair trade practices and breach of contract relating to tech including Neovasc’s flagship Tiara mitral valve.

The second is a German suit in which CardiAQ won a victory last July, having obtained a stay in proceedings for Neovasc’s European patent application.

Neovasc is contesting both, but CardiAQ was bought by Edwards Lifesciences last month, and if the larger company chooses to keep fighting it could find itself outspent, if not outclassed (Edwards’ $350m CardiAQ buy ups mitral valve stakes, July 13, 2015).

Trials

Maybe this litigation is part of the reason why Medtronic did not buy Neovasc. But it could also come down to Twelve simply having a better technology, and here information is not so much scarce as non-existent.

Twelve is conducting a trial of its product in 10 patients with severe symptomatic mitral regurgitation, but remarkably this is not scheduled to conclude until 2021. Whatever data Medtronic has seen must have been pretty convincing, not least because the deal is relatively expensive – Edwards got CardiAQ for $350m upfront and Abbott bought Tendyne for just $225m (Mitral valve space heats up with Abbott deals, July 31, 2015). Medtronic is to pay a further $50m if Twelve’s product gains CE mark in Europe.

Neovasc’s Tiara is also in a trial, this time in 30 patients with symptomatic severe mitral regurgitation requiring mitral valve replacement who are at high risk of open chest surgery. It is set to finish in 2020.

Some industry watchers are confident that Neovasc’s technology is good enough, or that its legal niggles are mild enough, and that it will get taken out at some point: its shares closed up 19% on the Toronto exchange and 8% on Nasdaq yesterday.

Buyers?

The obvious possible buyers are Boston Scientific and St. Jude Medical. These two were late to the transcatheter aortic valve party, with Boston buying Sadra Medical for its Lotus valve in 2011 and St. Jude’s Portico valve, which it developed in-house, gaining CE mark the year after.

But the larger device makers’ scramble to acquire mitral valve developers is reminiscent not just of the rush to buy in aortic valve companies – a similar pattern was also seen with renal denervation technologies, one of the great medtech flops.

Between 2010 and 2012 Medtronic bought Ardian, Boston bought Vessix Vascular, Covidien bought Maya Medical and, again, St. Jude developed a device in-house. Unlike transcatheter aortic valves, which have seen some success although not to the degree many analysts had forecast, renal denervation, intended as a cure for intractable hypertension, has been a washout.

In buying Twelve, will Medtronic have got another CoreValve – whose flagship aortic device, also called CoreValve, will have sales in the hundreds of millions of dollars this year – or another Ardian? Unless the company can accelerate the pace of Twelve’s clinical trial it could have a long wait before it finds out.

To contact the writer of this story email Elizabeth Cairns in London at [email protected] or follow @LizEPVantage on Twitter