Teleflex gains FDA approval for Manta vascular closure device to make good on $160M acquisition
Critical care and surgery player Teleflex Inc. is already on the way to making good on its most recent acquisition of Essential Medical Inc. The deal dates to early October 2018 and was for $60 million in cash up front plus up to $100 million on undisclosed sales and regulatory milestones. Teleflex acquired Essential for its Manta vascular closure device for large bore arteriotomies. It was CE marked when the deal closed, but now it has gained a U.S. FDA PMA approval to close femoral arterial access sites after the use of relatively large devices or sheaths in endovascular catheterization procedures.
It's the first such biomechanical vascular closure device that has been designed specifically for large bore femoral arterial access site closure. Teleflex expects the large bore market will be based on its use in TAVR (transcatheter aortic valve replacement) and EVAR (endovascular aneurysm repair) procedures and reach $200 million to $300 million annually – and Wall Street agrees. That's enough to move the needle for Teleflex, which had $2.1 billion in 2017 revenues.
Market for Manta
"Manta is a unique system specifically designed for closure of large-bore arteriotomies, and we believe it could be the first in the U.S. market with this indication. Manta has excellent clinical data, demonstrating rapid hemostasis and significantly reduced complications compared to suture-mediated and surgical closures," said Teleflex President and CEO Liam Kelly at the recent J.P. Morgan Healthcare conference. "Our initial target market for Manta will be the TAVR and EVAR, and we estimate the global addressable market in these two procedures will be approximately $200 million to $300 million."
The device is indicated specifically to reduce time to hemostasis after the use of 10-20 French devices or sheaths in endovascular catheterization procedures. Wells Fargo analyst Larry Biegelsen concurs with Kelly on his assessment of the market, offering an even more optimistic spin. He noted that the 14 F Manta vascular closure device is indicted for after the use of 10-14 F devices or sheaths with a maximum outer diameter of 18 F, and the 18 F Manta vascular closure device is for after the use of 15-18 F devices or sheaths with a maximum outer diameter of 25 F.
"The initial commercial opportunity for Manta is for closure of transcatheter aortic valve replacement (TAVR) procedures where clinicians typically use two Abbott Perclose devices," Biegelsen said in a note on the FDA approval. "We estimate the TAVR market opportunity in the U.S. is about $300 million. The Manta can also be used for endovascular aneurysm repair procedures."
Manta is designed to offer a simple and easy to use device for large bore closure. It is intended to provide fast biomechanical closure with rapid hemostasis and low complication rates. This could potentially reduce costs and improve patient outcomes.
In the SAFE Manta IDE clinical trial, the major complication rate of 5.3 percent was an improvement upon standard rates for suture mediated devices. Manta offered a 65 second mean time from deployment to hemostasis.
The Manta device has been marketed in Europe for the last two years with more than 10,000 units sold. Based on this experience, Teleflex anticipates rapid uptake in the U.S. market as well – but perhaps a bit more measured.
"The adoption that we've seen in the few countries it's been launched– in the Netherlands and Finland and just beginning in Germany and France, and in particular, in the Netherlands – has been quite, quite dramatic," said Kelly. "Within an 18-month period, I think they got to about 60 percent of the total market penetrated to the Manta product for all large bores. I would anticipate that within the U.S., it will take a little bit longer than that, just again you're changing clinical practice."
In 2018, Teleflex also bought assets of coronary balloon catheter company QT Vascular Ltd. for $20.6 million. In that deal, Teleflex gained the Chocolate balloon catheter with the option to acquire drug-coated versions of that device. These and the Manta device will all be sold via Teleflex's Interventional business unit.
One of eight businesses, the Interventional North America is one of the fastest growing units. During the third quarter, it had net revenues of $66.7 million, a gain of 9.9 percent over the same quarter a year prior.
"FDA premarket approval is another important milestone for the Manta vascular closure device," said Stewart Strong, president and general manager of the Interventional business unit of Teleflex. "Our commercial efforts in 2019 will include a measured launch of the Manta device to ensure strong initial outcomes with key thought leading physicians as we further invest in building the commercial infrastructure to support the long-term growth of Manta device revenues."
In 2017, Teleflex also acquired Neotract Inc. for up to $1.1 billion. Its Urolift system, a minimally invasive medical device for treating lower urinary tract symptoms due to benign prostatic hyperplasia (BPH), is already a top growth driver within Interventional Urology with $49 million in revenue during the third quarter, an increase of about 45 percent from the same period a year earlier.
It also closed a roughly $1 billion deal to buy Vascular Solutions Inc. in early 2017 to add developed and marketed clinical products for use in minimally invasive coronary and peripheral vascular procedures.
In May 2018, Teleflex started a restructuring plan that involved relocating its manufacturing operations to a less expensive location, outsourcing some of its distribution operations and implementing workforce reductions. In November, the company lowered its 2018 guidance for GAAP revenue growth to 13.5 percent to 14.5 percent from 14 percent to 15 percent.
"We have been, and we'll continue to be, a serial acquirer. We have completed over 40 transactions since 2011, most of which have added scale, revenue growth, margin expansion and ultimately, shareholder value," summed up Kelly. "We think our ability to source, research and integrate acquisitions is a core competency of Teleflex. And lastly, we have momentum heading into 2019 and beyond. We expect our recent scale acquisitions, new product introductions and emerging markets to further transform our organic revenue growth profile.