Guidant has agreed to acquire Cook in a stock-for-stock transaction valued at up to $3 billion. The deal would remove the stumbling block that Guidant encountered in licensing rights from Cook for coating stents with paclitaxel.
In June 2002, a US Federal court ruled in favour of Boston Scientific, thereby blocking Guidant’s alliance with Cook to launch a paclitaxel-coated stent. The court ruled that Cook breached an existing co-exclusive licensing agreement among Boston Scientific, Cook and Angiotech Pharmaceuticals. The court found that the Cook-Guidant agreements constituted “a de facto sublicense”that was “neither authorised, permitted, nor lawful. In addition, the court found that Cook breached the Angiotech agreement by unlawfully assigning its regulatory responsibilities to Guidant.
However, according to analysts at Merrill Lynch the original licence for paclitaxel coating that was struck between Angiotech and the two co-exclusive licensees, Boston and Cook, specifically states that the right to paclitaxel transfers if substantially all of the assets of Cook are acquired. Guidant has therefore struck a deal to acquire Cook.
In the eyes of many, Guidant had no other option than to make a move to purchase Cook; fighting Boston Scientific and striking a royalty deal being viewed as a non-viable route.
In describing Guidant’s agreement to acquire Cook, Ronald W. Dollens, President and CEO of Guidant, said: “This agreement is strategically important as it adds clarity around our ability to fully participate in the drug-eluting stent market opportunity. Each company brings product development, manufacturing and marketing expertise that will significantly enhance our business.
Guidant also cited the strong financial performance of Cook, as well as its comprehensive product line, including the ZENITH abdominal aortic aneurysm graft and products for interventional radiology. Stents account for an estimated $906 million of projected $3.2 billion in Guidant sales this year.
Guidant’s obligation to complete the acquisition is subject to certain clinical and legal conditions relating to the ACHIEVE drug-eluting coronary stent system. The conditions include positive clinical results and Guidant’s rights to use certain clinical data to sell the Achieve product.
The transaction remains subject to shareholder approval, government clearance and other conditions. The companies expect to complete the deal in early 2003, subject to satisfying these conditions.