This morning Boston Scientific Corp. reported plans to acquire privately held Relievant Medsystems Inc. for an upfront cash payment of $850 million plus undisclosed payments contingent on sales performance of the company’s lead product, the Intracept intraosseous nerve ablation system, over the next three years. The deal is expected to close in the first half of 2024.

Intracept treats vertebrogenic pain, a type of chronic low back pain caused by degradation of the vertebral endplates that nourish and protect the disks. Vertebrogenic pain is estimated to affect 5.3 million people in the U.S.

Pain receptors in the endplates connect to the basivertebral nerve. Since 2022, the American Society of Pain and Neuroscience Best Practice Guidelines have recommended basivertebral nerve ablation to relieve vertebrogenic pain based on Level A grade evidence. Intracept is the only U.S. FDA-cleared system for this indication.

Intracept uses radiofrequency energy in a minimally invasive, implant-free procedure to provide long-term relief from this form of chronic back pain by interrupting the transmission of pain signals from the basivertebral nerve to the brain.

″We anticipate this novel, clinically backed technology can support our category leadership strategy while expanding access to care for individuals who need personalized treatment,” said Jim Cassidy, president, Neuromodulation, Boston Scientific. ″Upon close, we look forward to working with the Relievant team to explore opportunities to bring this high-growth therapy to a wider population of people living with chronic low back pain.”

The companies anticipate that Relievant will generate sales of at least $70 million this year and to provide year-over-year growth above 50% in 2024. The transaction is not expected to be material to Boston Scientific’s earnings per share in 2024, though it should become slightly accretive in 2025 and increasingly so over time. The addition of Relievant is expected to be “immediately accretive to Medsurg gross margins (and corporate gross margins) and modestly accretive to operating margins over the 2024-2026 long-range plan period,” said Larry Biegelsen of Wells Fargo.

“We view this as a good fit within Boston Scientific’s interventional pain franchise and an asset with high growth potential, but one that has risks,” Biegelsen added. He noted that commercial coverage remains low, and the physician fee is likely below what surgeons would prefer given the difficulty level and time required for the procedure. Further, “the moat may not be that great which could lead to me-too devices in the future. Both Medtronic and Styker have similar technology that could potentially be repurposed to do something similar to what Relievant does.”