Volcano Corporation, a provider of intravascular ultrasound (IVUS) and functional measurement (FM) products designed to enhance the diagnosis and treatment of vascular and structural heart disease, said today that it has reached a definitive agreement to acquire CardioSpectra, Inc., a privately-held company developing innovative Optical Coherence Tomography (OCT) technology. CardioSpectra's unique OCT imaging system is expected to complement Volcano's existing product offerings and will further enhance Volcano's position as an imaging technology leader in the field of interventional medicine.
Under terms of the agreement, Volcano will pay $25 million in cash at closing, which is expected to occur by the end of the year. In addition, Volcano may make additional payments based on the achievement of certain product development, regulatory and revenue milestones. Any future payments may be made in cash or stock or a combination of both at Volcano's discretion.
Founded in 2005 and based in San Antonio, Texas, CardioSpectra's core product line is based on technology licensed from the University of Texas and Dr. Thomas Milner, a co-founder of CardioSpectra.
"We believe CardioSpectra's OCT technology and products will be an important addition to Volcano, as we expect that it will allow us to expand our reach into clinical situations where extremely high resolution imaging is paramount. Our long term goal is to integrate this OCT functionality directly into our s5i integrated imaging suite of products - offering hospitals and physicians a complete, multi-functional capability that seamlessly provides IVUS, functional measurement and OCT all in one system," said Scott Huennekens, president and chief executive officer of Volcano.
"CardioSpectra's OCT system allows fast, easy imaging of highly detailed structures in the vasculature, including vessel wall defects, intra-luminal thrombus and stent struts. The ability to visualize stent expansion and apposition is excellent when using OCT. In fact, CardioSpectra's OCT resolution is such that it is able to visualize even very thin layers of cells covering drug eluting stent struts at follow-up. We expect this capability will be highly valued by other device manufacturers as they design and conduct clinical trials to assess the safety and effectiveness of new implantable devices," he continued.
"The resolution from this system is truly remarkable - providing significantly greater resolution in the near field than conventional IVUS. Rather than competing with our IVUS offerings, OCT complements our existing business by opening up clinical indications and research opportunities beyond those available to IVUS."
CardioSpectra's offering consists of a console with advanced custom software, a pull-back device and disposable catheters. The system and accessories are not approved for human use at this time. The company expects to file for appropriate U.S. and international approvals during 2008. CardioSpectra holds a number of issued U.S. patents on its technology with many additional patents pending.
Chris Banas, chief executive officer of CardioSpectra, stated, "We believe CardioSpectra and Volcano are a very strong fit. Volcano brings a deep knowledge of the field of invasive imaging, an exceptional worldwide distribution organization and the eventual ability to integrate our OCT imaging system into their integrated s5i invasive imaging suite. IVUS and OCT have the potential to be highly complementary, particularly when both systems are integrated directly into the cath lab and ready for use at a moment's notice. CardioSpectra adds a new dimension in imaging to Volcano and will provide a group of very talented OCT engineers to the team."
Steve Bailey, MD, Professor of Medicine and Radiology and Chief of Cardiology at the University of Texas Health Sciences Center, San Antonio, commented, "I have used CardioSpectra's current system and catheter on many occasions in our animal lab here in San Antonio. This system is fast and very easy to use - and the images are truly extraordinary. With the resolution provided by CardioSpectra's OCT we are able to see stent malapposition and vessel wall morphologies with a clarity never before achieved. I believe that marrying this technology with the strong clinical and market development team at Volcano will create a powerful combination."
Volcano indicated that it will discuss the impact of this transaction on its expected fiscal 2008 results when it provides guidance for fiscal 2008 on its fourth quarter conference call in February. Additional details on the transaction can be found on Volcano's Current Report on Form 8-K, filed today with the Securities and Exchange Commission.