Boston Scientific To Acquire Relievant Medsystems for $850 Million; Gains Access to Lower Back Pain Technology

Boston Scientific Corporation has announced its intention to acquire Relievant Medsystems, Inc., a private medical technology firm that markets the Intracept Intraosseous Nerve Ablation System for the treatment of vertebrogenic pain, a subtype of chronic lower back pain. The deal involves an initial cash payment of $850 million, with additional contingent payments dependent on sales performance over the next three years. The Intracept System, developed by Relievant Medsystems, is the sole FDA-cleared system for vertebrogenic pain and offers a minimally invasive, outpatient procedure. The therapy employs targeted radiofrequency energy to interrupt the basivertebral nerve’s pain signal transmission, aiming to enhance functionality and provide long-lasting relief. This acquisition will enable Boston Scientific to broaden its offerings and expand access to treatment for people in the U.S. living with vertebrogenic pain. The transaction is expected to close in the first half of 2024, subject to customary closing conditions. Relievant is projected to achieve sales exceeding $70 million in 2023 (and is consequently paying 12.1x 2023 anticipated sales not including contingent payments), with year-over-year growth of more than 50% anticipated in 2024. While the transaction is expected to have minimal impact on adjusted earnings per share (EPS) in 2024, it should become slightly accretive in 2025 and increasingly accretive thereafter. However, on a GAAP basis, it is likely to be more dilutive due to amortization and acquisition-related charges.
Vertebrogenic pain is a unique form of chronic lower back pain affecting an estimated 5.3 million individuals in the U.S. and resulting from damage to vertebral endplates, the junction between the spinal disc and the vertebral body. It is primarily caused by disc degeneration and the everyday wear and tear that subjects the endplates to stress, resulting in damage, inflammation, and the onset of vertebrogenic pain. Patients typically describe this pain as occurring in the middle of the lower back and exacerbated by physical activity, prolonged sitting, bending forward, or lifting. To diagnose vertebrogenic pain, physicians utilize MRI scans to detect specific changes known as Modic changes, which indicate endplate inflammation.
The Intracept Procedure is performed by pain specialists and orthopedic surgeons and offers effective relief for vertebrogenic pain and is performed as a same-day outpatient procedure. It is minimally invasive, does not require implants, and preserves the spine’s overall structure. During the procedure, a radiofrequency probe is used to heat the basivertebral nerve (BVN), preventing it from transmitting pain signals to the brain. Patients are under anesthesia during the approximately one-hour procedure. Notably, the BVN does not exhibit the ability to regenerate as a pain-transmitting nerve after the Intracept Procedure.
After the procedure, patients may receive post-operative instructions, but most individuals can resume their normal activities after a brief recovery period. Pain relief typically begins within two weeks, and what sets the Intracept Procedure apart is its long-lasting pain relief from a single procedure.
A recent study indicated that patients experienced improvements in function and pain relief lasting more than five years, with over a third of them reporting being completely pain-free. In the SMART trial which followed patients for five years, the mean reduction in the Visual Analog Scale which measures pain intensity was 4.38 (p<0.001) a 65% reduction.
The device is reimbursed by Medicare using CPT codes 64628 (Thermal destruction of intraosseous basivertebral nerve, including all imaging guidance; first two vertebral bodies lumbar or sacral) for the first two vertebral bodies and 64629 (Thermal destruction of intraosseous basivertebral nerve, including all imaging guidance; each additional vertebral body, lumbar or sacral) for each additional vertebral body. The outpatient facility reimbursement is $13,048 and under the Physician Fee Schedule the doctor makes $462 for CPT code 64628 and $214 for CPT code 64629.