The Wider View: BTG still on M&A trail but avoiding "data risks" after PneumRx sting

BTG is reaping the rewards from a series of acquisitions it made over the last few years in interventional medicine, as evidenced by this business unit’s double-digit sales growth in the first half of fiscal 2019. The one exception however is PneumRx, which deflated the company’s hopes of taking to the US the first endobronchial coil technology for treating emphysema after the FDA decided against approving the product for marketing. While this has not steered the firm away from the acquisition trail, its M&A strategy in interventional medicine is now focused more than ever on selecting de-risked, ready-to-market assets.  


What’s happened

In its first fiscal half-year results for 2018/2019, BTG recorded a 10-percent increase in product sales at $340.2 million. Much of this growth came from its interventional medicine business, which saw first-half sales increase 12 percent, year-over-year, to $172.3 million (BTG’s pharmaceutical business saw products sales increased 7 percent to $167.9 million).

Star performers within interventional medicine were its oncology unit (sales up 12 percent at $110.9 million) - comprising embolisation and drug-eluting bead products, the radioactive glass microsphere technology Therasphere and cryoablation products - and its vascular unit (up 20 percent at $59.2 million) - comprising its EkoSonic Acoustic Pulse Thrombolysis system for treating pulmonary embolism, the Varithena vein treatment, and the Sentry bioconvertible inferior vena cava filter to prevent pulmonary embolism.

The one outlier was the PneumRx interventional pulmonology business, which saw revenue sliced down some 58 percent to $2.2 million. The PneumRx endobronchial coil treatment for severe emphysema is CE marked and currently only sold in Europe, where the company just initiated a prospective, multicentre, randomised, controlled study (ELEVATE) to confirm findings of a previous RCT and to further identify disease characteristics of responders to the coil treatment.


The wider view

BTG has made eight acquisitions in the last decade, each deal bringing in either a key platform or a bolt-on technology to its portfolio, a strategy which CEO Louise Makin calls "pillars and fillers". Seven of these deals are related to its interventional medicine business, and the total value of these transactions do not exceed far beyond the $200-million mark, aside from PneumRx. (See Figure 1).


Figure 1. BTG’s interventional medicine-related acquisitions




Deal value



Bead technology - embolisation and drug-eluting beads

£177.2 million


Nordion's Therasphere business

Radioactive glass microspheres

$200 million



Ultrasound-based thrombolysis

$220 million; $180 million up-front and $40 million milestones



Endobronchial coils

$475 million; $230 million up-front and $245 million milestones


Galil Medical


$110 million; $84.5 million up-front and $25.5 million milestones


Roxwood Medical

Specialty catheters for complex lesions

$80 million; $65 million up-front and $15 million milestones


Novate Medical

Bioconvertible inferior vena cava filter

$150 million; $20 million up-front and $130 million milestones


With PneumRx, this deal distinguished itself from BTG’s other M&A transactions in terms of its value –  being the biggest at $475 million (even though the consideration was split roughly 50:50 between upfront and milestone payments –  and in terms of its risk profile. The company’s endobronchial coils for treating severe emphysema had already been CE marked and was being commercialised in Europe at the time that BTG acquired PneumRx, but it had not been approved in the US yet, which is BTG’s biggest commercial market and accounts for roughly 90 percent of total revenue.

The other acquisitions, on the other hand, involved products that were already approved in the US and ready for commercialisation or were generating revenue in that market.

So it came as a blow when BTG’s premarket approval application for the PneumRx coil was rejected by the US FDA in August and the company’s plans of a product launch this year were scuppered.

While BTG had initiated the ELEVATE study in Europe (just before the FDA’s PMA rejection) to look more closely at the issue of patient selection and how this would impact efficacy outcomes for the PneumRx coil, all indicators signal that this business is ready to be cast off by the company. The firm is currently looking at options, including a sale, for the business and Makin confirmed to FirstWord MedTech that PneumRx is "not really part of [BTG's] story as it moves forward."

But while it may have been stung by PneumRx, the company maintained that M&A will continue to be very much part of the company’s growth strategy.

The firm is in a strong cash flow position - as of September 30 2018, it had cash and cash equivalents of $285.2 million - and Makin said unequivocally that much of the cash will be allocated to acquisitions.

"That’s our strategy, we are very clear about that, and we're still in investment phase," said the CEO.  In addition to adhering to its "pillars and fillers" strategy in interventional medicine, the company is also looking at expanding beyond oncology and vascular and into new interventional therapy areas. "We want places where we can quickly build a multimodality portfolio," said Makin, adding that the company "does not want to take data risks”. "We are looking to just take, as we have done in all our other acquisitions apart from PneumRx, commercial expansion risks."

Makin pointed to its latest acquisition, the Ireland-based maker of the first FDA-cleared bioconvertible inferior vena cava filter Novate Medical, as an example of BTG’s approach to M&A deals moving forward. "I met the CEO of Novate about four years ago, we've kept close to them, we've monitored them and we've been able to do a successful deal for both companies. And that's how we've done and will do our M&A, by really tracking a number of companies that we think at one stage might fit into our portfolio and then making it happen when it is right for us and right for them."  

Indeed, at least one acquisition announcement could be expected within the next 18 months or sooner. BTG has invested $20 million in Veran Medical Technologies, and has an option to acquire the company. Veran ticks all the boxes in Makin’s M&A criteria: the company specialises in electromagnetic navigation system to help with the early diagnosis and treatment of lung cancer, one disease area that BTG is keen to expand into. Additionally, it is already revenue-generating. So should BTG decide to buy Veran outright, it can exercise its option as early as January 2020.

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