Boston Scientific to merge with CVIS in IV ultrasound consolidation

CVIS Insight III to be future platform

Competitors Boston Scientific and Cardiovascular Imaging Systems(CVIS) have circled each other warily for the past several years.The companies have traded marketing partners as well as lawsuits,but in the end have decided to put aside their differences tobuild an alliance with a commanding position in the developingintraluminal ultrasound (IVUS) market.

The companies announced on Aug. 31 that they had reached amerger agreement in which Boston Scientific would buy all outstandingshares of CVIS stock at $10.50 a share. The deal is valued atabout $100 million and is subject to shareholder and regulatoryapprovals.

CVIS will become a separate division of Boston Scientific andwill be the R&D, manufacturing and marketing headquartersfor Boston Scientific's intraluminal ultrasound program. The newdivision's headquarters will remain in Sunnyvale, CA. Boston Scientificis based in Watertown, MA.

The deal will relieve financial headaches for CVIS, which hasstruggled to achieve profitability despite holding almost halfof the world market share for intraluminal ultrasound systems.Boston Scientific, through its alliance with echocardiographyvendor Hewlett-Packard, holds another large chunk of the IVUSbusiness. Competitor Endosonics has a market share of about 26%.

CVIS and Boston Scientific hope to build synergy by mergingtheir respective R&D efforts to develop new IVUS devices,according to Boston Scientific co-chairman and CEO Pete M. Nicholas.

"By working together and leveraging the technology fromboth companies, the development of new devices focused on reducingthe cost and improving the accuracy of diagnosing and treatinglesions deep within the body will be greatly accelerated,"Nicholas said.

In particular, the companies want to expand their technologyfrom its base in coronary imaging to other organ groups, saidRichard Ferrari, president and CEO of CVIS.

"One of the beauties of the merger is that it will enablethe acceleration of products targeting other areas of the bodyoutside of the coronary vessel, such as gastrointestinal, urologicaland endovascular applications," he told SCAN.

Ironically, the technology in question has been the cause oflegal friction between the two firms. Boston Scientific fileda federal lawsuit late last year seeking to invalidate a CVISpatent. CVIS countered with a patent infringement suit againstBoston Scientific. The merger will kill the legal dispute.

The CVIS Insight III system will become the standard hardwareplatform of Boston Scientific's new IVUS program. Boston Scientificwill continue its alliance with Hewlett-Packard, which it establishedin 1992 (SCAN 10/7/92). Hewlett-Packard is expected to developa universal interface to all Boston Scientific and CVIS catheters.In addition, CVIS will maintain its alliance with Diasonics.

"The goal is to develop catheters for as many hardwarebases as will use them," Ferrari said.