Boston Scientific to Issue $2.2 Billion in Senior Notes to Fund Acquisition of Axonics

Source: Siyu MedTech

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Recently, Boston Scientific (NYSE: BSX) announced,The company plans to issue senior notes worth nearly $2.2 billion (approximately 15.831 billion RMB).。

In fact, this is to acquire Axonics, an implantable neuromodulation technology company, and incorporate its sacral nerve stimulator into Boston Scientific's portfolio to enrich its "armamentarium" and enhance its competitive edge against Medtronic.

As of the press release date, two domestic companies, Commit Medical and PinChi Medical, have launched sacral nerve stimulator-related products in China. The approved registration certificate details are as follows:

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# $3.7 Billion Acquisition Imminent!

Boston Scientific Corporation plans to use the net proceeds from this offering for the acquisition of Axonics (NASDAQ: AXNX), according to reports.，The acquisition amount is approximately 3.7 billion US dollars.。

In fact, the acquisition had reached an agreement in principle as early as January this year (Review:$26.2 Billion Mega-Acquisition! Boston Scientific Enters Sacral Neuromodulation Market）。

Boston Scientific Corporation is expected to complete this transaction in the first half of this year.At that time, Axonics will become a wholly-owned subsidiary of Boston Scientific.

To complete this acquisition, Boston Scientific intends to combine these funds with borrowings from its commercial paper program and cash on hand.As per惯例, Boston Scientific Corporation expects this offering to be completed on February 27. In addition to funding the acquisition of Axonics, the proceeds are also expected to be used to pay related fees and expenses.

In addition, the proceeds will also be used to repay the 3.450% senior notes due in March 2024. Meanwhile, Boston Scientific Corporation also plans to use the proceeds to pay any accrued and unpaid interest on these notes.

# Second in Growth in the Americas! Medtronic Competitor!

AxonicsIs a developer of novel implantable neuromodulation technologies, the companyPioneered and introduced significantly enhancedSacral Neuromodulation Therapy, used for urethral dilation in bladder and bowel dysfunction as well as female stress urinary incontinence, both of which are the fastest-growing segments in urology.

In the United StatesThe Financial Times' 2023 Ranking of Fastest-Growing Companies in the AmericasUp,Axonics ranked second, while in 2022, the company ranked first.

It is reported that,Axonics is the world's first company to overcome the miniaturization challenges of implantable electrode stimulation devices.。

The Axonics team discovered through market research at the time of its establishment that the technical difficulty with SNM lies in battery lifespan. The average battery life of neurostimulators at that time was only 4 years, which forced patients to undergo frequent device replacement surgeries. If a patient needed to undergo an MRI scan, it would also have to be removed.

In response, Axonics has developed both recharge-free and rechargeable SNM systems.

▲R20 SNM and R15 SNM

ItsFourth Generation R20™RechargeableSacral Neuromodulation (SNM) System (Battery life of up to 20 years) received FDA approval approximately a year ago. In addition, Axonics also launchedNo Charging RequiredThe F15™ SNM System.

An analyst once stated that Axonics' products are highly complementary to Boston Scientific Corporation's urology business, which accounts for approximately 14% of the company's estimated sales in the fiscal year 2023.

After the acquisition is completed, Boston Scientific can ride the wave of Axonics to enter the high-growth sacral neuromodulation market, once again coming head-to-head with Medtronic.

# Net Profit Surges 300%! Neural Modulation Growth Rate at Bottom

At the end of January 2024, Boston Scientific Corporation announced its financial performance for the fiscal year 2023.Net sales were $14.24 billion (approximately 101.1 billion RMB), representing a year-over-year increase of 12.3%.；Annual net profit was US$504 million (approximately RMB 3.6 billion), a year-on-year increase of 300%.。

In the fiscal year 2023, the growth rates of the Medical Surgical and Cardiovascular business segments were neck and neck.NeuromodulationBelonging to Boston Scientific's medical surgical business, in addition, there are other segments under this business.EndoscopeAndUrinaryTwo departments.

But whether in terms of growth rate or net sales, neuromodulation lags far behind the other two divisions.

• By growth rate: Endoscopy (11%) = Urology (11%) >Neuromodulation (5%)
• Ranked by net sales: Endoscopy (2.48 billion) > Urology (1.96 billion) >Neuromodulation (980 million)

In contrast, Axonics' financial report shows that the companyNet Income Estimate for Fiscal Year 2023$366.1 million, a year-on-year increase of 34%;The SNM system, as the company's main growth driver, contributedApproximately $291.7 million in revenue, representing a 31% year-over-year increase.

In 2020 and 2021, Axonics' gross margins were 60.2% and 64.2%, respectively; in February 2021, Axonics announced the acquisition of UK-based medical device company Contura and its flagship product Bulkamid (a urethral bulking agent for treating female stress urinary incontinence (SUI)) for $235 million. In the past two years, the company's gross margin has directly...Exceeded 70%.

According to reports,In 2023, Axonics therapy treated approximately 100,000 patients with urinary incontinence worldwide.。

# Over $1 Billion Market May Face New Challenges

SNM therapy began to develop as early as the end of the 20th century. Medtronic was the first to enter this market and even held a monopoly position for a period of time.

Company FounderCohen onceMentioned:"The market for urinary incontinence in the United States is enormous. Even if there are more competitors in the future, it doesn’t matter because this field offers unlimited opportunities."

It is estimated that 33 million adults in the United States alone suffer from overactive bladder, with an additional 40 million adults affected by fecal incontinence.In 2022, 98% of Axonics' total revenue came from the United States., the rest comes from the international market.

Before Axonics emerged, this huge and largely untapped market had been monopolized by Medtronic alone.As mentioned aboveAxonics R20™ is对标to Medtronic's InterStim X™. Compared with the latter, Axonics R20™ has a smaller neurostimulator volume and a longer service life.。

Public information shows that the company currently occupies a significant position in the sacral nerve modulation market.With a 27% market share, by 2023, Axonics therapy has treated approximately 100,000 incontinence patients globally.

But overall, the market penetration of SNM still has room for improvement. This situation largely arises because, although SNM is highly effective in treating overactive bladder and fecal incontinence, neuromodulation itself is very complex, and currently, patients' willingness to adopt the therapy remains relatively conservative.

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