Raymond Cohen had a vision about 10 years ago that neurostimulation would be a big part of medical therapy.
He was proven right earlier this month when it was announced that the company he started, Axonics Inc. (Nasdaq: AXNX) would be purchased for $3.7 billion by Boston Scientific Corp.
“It’s been a unicorn situation,” Cohen told the Business Journal in an interview before the announcement. “For me, Axonics is the crowning achievement. I’ve worked my entire life to create a company like this.”
The sale caps a whirlwind decade for Axonics, which went public in 2018 and won Food and Drug Administration approval for its implants to control incontinence in 2019.
The company’s sales ballooned, ranking it No. 1 on a Business Journal list for fastest-growing Orange County publicly traded companies. It also topped national lists for Deloitte Technology Fast 500 in 2021 and the Financial Times’ 500 fastest-growing companies in the Americas in 2022.
Since its IPO, Axonics’ stock has more than quadrupled.
The acquisition was announced on Jan. 8, the same day that the Business Journal honored Cohen as its Businessperson of the Year, in the healthcare sector.
$14B Behemoth
Boston Scientific (NYSE: BSX), which had an estimated $14.1 billion in sales last year, said Axonics’ revenue growth will be “highly accretive” to its urology business.
“We are excited to add Axonics technologies to the Boston Scientific portfolio, a combination that we expect will further strengthen our ability to serve urologists who are treating patients living with these often-chronic conditions,” said Meghan Scanlon, Boston Scientific’s president for its Urology unit.
“This acquisition also enables our entry into sacral neuromodulation, a high-growth adjacency with opportunities to expand access to care for patients.”
Implants
Overactive bladders affect an estimated 87 million adults in the U.S. and Europe, Axonics says. Another estimated 40 million adults are reported to suffer from fecal incontinence and accidental bowel leakage.
Axonics features two implantable devices: one with a rechargeable battery that needs to be charged for one hour every six to 12 months and a larger one that doesn’t need recharging. Each product can last 17 to 24 years or more in a body and has 90% efficacy.
Axonics says its systems sends electrical signals to the sacral nerve to help regulate the bladder and bowels.
Axonics’ typical patient is a 55-year-old woman suffering from bladder incontinence.
A third product from the company is Bulkamid, a hydrogel-based injection to help treat stress urinary incontinence; Axonics acquired the product in 2021 when it paid $200 million to buy Contura Ltd.
Axonics on Jan. 8 also issued preliminary results for its fourth quarter, reporting revenue climbed 27% to $109.3 million to $109.7 million, which topped analysts’ consensus estimates.
‘Strategic Sense’
Wall Street applauded the acquisition. The shares on Jan. 8 jumped 20% to $69.36, a slight discount to the $71 being offered by Boston Scientific, an indication that the deal will be completed, and a higher bidder is unlikely, analysts said.
“This deal makes strong strategic sense,” Nephron Research analyst Chris Pasquale wrote in a note to investors.
“Axonics’ leading solutions for overactive bladder and stress urinary incontinence nicely complement Boston’s Urology franchise and its existing strengths in the treatment of kidney stones and prostate dysfunction.”
Pasquale noted Boston Scientific’s urology franchise has struggled in recent years in the wake of pelvic sling safety issues.
“Bulkamid offers a better solution for many of those sling patients, with Boston already calling on the gynecologists Axonics has targeted for the next leg of growth for that franchise,” Pasquale said.
Axonics reported Bulkamid revenue grew about 44% to $74.4 million in 2023.
Axonics is the second company that Cohen has sold to Boston Scientific.
In 2010, Cohen restarted Vessix Vascular, a device maker of products that treat hypertension, and sold it to Boston Scientific for more than $200 million two years later.
Cohen Future?
Boston Scientific said it expects to close the Axonics deal in the first half of this year. The company said the acquisition’s impact to adjusted earnings will be immaterial this year and accretive thereafter. Axonics was expected to post its first-ever annual profit in 2023.
Axonics isn’t expecting any organizational changes prior to the completion, according to a question-and-answer sheet sent to Axonics employees. It’s still planning to move to a new headquarters in Irvine.
Last April, it inked a nearly 145,500-square-foot deal to relocate its headquarters to the Sand Canyon Business Center. It was the largest new local office lease of 2023.
As for Cohen’s own future, he declined to speak with the Business Journal for this article, citing the pending acquisition. In a December interview, the 64-year-old laughed when asked about retirement, saying he often works 70 hours a week and “I’m not going to ever stop.”
He’s bullish on Orange County, which he called “the center of the medical device universe in America.”
One such company, upstart artificial heart maker BiVacor, which has its base in Huntington Beach, recently announced it had appointed Cohen as its new chairman.
“We have more medical device companies here than anywhere else in America,” Cohen previously told the Business Journal. “We have the talent. We have the universities. If you’re going to start a company, you should be here in Orange County.”
