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Neovasc buy by Boston Scientific possible: JPM

March 31, 2017

JMP Securities analyst John Gillings reiterated a Market Outperform rating and $5 price target on Neovasc (NASDAQ: NVCN) after Boston Scientific (NYSE: BSX) announced that it agreed to acquire Symetis SA for $435 million in cash.

Gillings said BSX’s goal with the deal is to be a leading player in structural heart. The analyst said notably missing from BSX’s line-up is a product candidate for transcatheter mitral valve replacement (TMVR).

He highlights that NVCN sold its tissue processing business to BSX for ~ $67.9 million and BSX agreed to purchase a 15% stake in the company.

The analyst notes there was no mention made of MValve, the company that is developing a mitral docking technology for the Lotus valve, in which BSX has invested and holds an option to acquire. Further, the The Middle Peak Medical mitral asset recently acquired by Symetis is not part of the deal, and is being spun-out prior to the deal.

Gillings said when asked about this, BSX said it already had investments in the mitral space.

“We believe the most likely meaning to be taken from this comment is the 15% stake it holds in NVCN,” Gillings said. “These comments, along with BSX’s strategy to be a leading player in structural heart, gives us incremental confidence that NVCN would be an ideal fit for BSX and we would not be surprised to see further investment and, potentially, an acquisition at some point in the future, perhaps tied to milestones such as clarity around the appeals process or progress toward or receipt of CE Mark.”

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