Advanced Bionics Corp., a medical device company controlled by Los Angeles businessman Alfred E. Mann, agreed Tuesday to be acquired by industry giant Boston Scientific Corp.
Based in Valencia, Advanced Bionics develops miniature devices for deafness, pain and neurological disorders. Mann, 78, is a former aerospace entrepreneur who has made a fortune building and then selling biomedical firms. He started the company in 1993 with technology spun out of his nonprofit research organization, the Alfred E. Mann Foundation.
Advanced Bionics has one product on the market -- a hearing aid implant -- and had sales of $53 million in 2003. But the company is preparing to launch an under-the-skin device for chronic back pain and is working on other applications for its technology, including treatments for migraines, urinary incontinence and erectile dysfunction.
Based in Natick, Mass., Boston Scientific is the world's leader in drug-coated stents, used to keep arteries open after they are unclogged through surgery. The acquisition of Advanced Bionics would give Boston Scientific a portal into the emerging field of neurostimulation, in which electrical impulses are used to control nerves.
Boston Scientific said it would pay Advanced Bionics shareholders $740 million upon the deal's closing, which is expected within days. The company also would make additional payments over the next 10 years based on the success of Advanced Bionics products. The companies said the total payouts could reach $4 billion if Advanced Bionics sales touched $1 billion in the next decade.
Boston Scientific told analysts that it expected markets for Advanced Bionics products to grow considerably. It estimated that sales of hearing devices similar to the one sold by Advanced Bionics could reach $3.8 billion by 2010.
John P. Calcagnini, an analyst with CIBC World Markets, speculated that Advanced Bionics' devices might have applications for heart patients, providing Boston Scientific with an avenue into the market for implantable defibrillators. "It is a win-win deal for both companies," he said.
In New York Stock Exchange trading, Boston Scientific's shares rose $1.30 to $45.60. The shares have gained 75% in the last year.
In 1996, three years after Mann launched Advanced Bionics, the firm introduced its auditory implant for adults, and in 1997 it started selling the device for children. It controls 26% of the market for such hearing aids.
