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Merit Medical Systems to acquire Cianna Medical for $135 million

by John R. Fischer, Senior Reporter | October 03, 2018
Operating Room Women's Health
Merit Medical Systems to acquire
Cianna Medical
Merit Medical Systems Inc. has agreed to acquire Cianna Medical Inc. for an upfront payment of $135 million.

The multi-specialty manufacturer is expected to complete its transaction for the California-based enterprise at the closing of the fourth quarter of 2018, providing its customer base with access to wire-free breast localization tools, including Cianna’s SCOUT and SAVI Brachy technologies.

"This transaction adds to Merit a technology leader in breast tumor localization that is precise, highly directional, and visible," said Merit's chairman and chief executive officer Fred P. Lampropoulos, in a statement. "With more than 350 initiations and 45,000 wire-free localizations to date, the SAVI SCOUT is complementary to Merit's strategic biopsy initiatives." Additionally, Merit intends to market the SAVI Brachy, which uses thin tubes to deliver radiation to lumpectomy sites.

A developer of the first nonradioactive, wire-free breast localization system, Cianna is the only manufacturer in the world of technology that utilizes RADAR in human tissue, according to Merit.

Launched in 2015, the SCOUT Radar Localization System enables clinicians to localize tumors a day prior to the surgery, shortening procedure time compared to conventional wired systems. Such a feature has enabled revenues for the device to grow from $1 million at its debut to a projected $29 million in 2018, with its current estimated market share at approximately 5 percent with no revenues currently outside of the U.S.

It also allows surgeons to target affected tissue within +/-1 millimeter of its location, and can be used both for lumpectomy localization and to mark biopsy sites without creating any significant artifacts on MR images.

The SAVI Brachy platform is designed for single-entry ease, with its catheters expanding to fit the size and shape of a tumor cavity, and delivering radiation in the form of interstitial brachytherapy combined with tissue-sparing dosimetry capabilities. Merit, however, will only market the catheter and is not involved in the development, sale or transport of radiation seeds.

The structure of the agreement also includes potential earn-out payments of $15 million for achievement of supply chain and scalability metrics as part of the initial $135 million payment, and up to $50 million more for the achievement of sales milestones.

In addition, Merit plans to maintain all commercial and R&D teams from the Cianna family and to enhance overall coverage as well as logistical and clinical support in areas that are currently underserved by Cianna Medical.

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