Endologix, Inc. (NASDAQ: ELGX), developer of minimally invasive
treatments for aortic disorders, announced today that it has signed
a definitive agreement to acquire Nellix Endovascular, Inc, a
privately-held medical device company that has developed a
revolutionary endograft for the treatment of Abdominal Aortic
Aneurysms (AAAs). Canaccord Genuity acted as financial advisor to
Nellix in this transaction.
Under terms of the agreement, Endologix will acquire Nellix for
$15 million in stock at closing, plus additional milestone-based
stock payments of up to $39 million. The agreement also includes a
commitment for a $15 million equity investment in Endologix from
Essex Woodlands Health Ventures, the majority shareholder of
Nellix. The Company anticipates that the closing will occur in the
fourth quarter of 2010, subject to Endologix stockholder approval
and customary regulatory approvals.
Nellix has developed a highly differentiated technology platform
that completely seals and fills an aortic aneurysm sac, preventing
device migration and potentially improving clinical outcomes. This
allows the product to treat a wide range of AAA anatomies,
including those that are outside of the indications for existing
Endovascular Aortic Repair (EVAR) devices. These include patients
with aortic neck lengths of 5 millimeters or less, widths as wide
as 34 millimeters, and patients with iliac aneurysm diameters
greater than 23 millimeters. Initial clinical results from patients
with up to two years follow-up have shown 100% implant success;
100% freedom from AAA-related mortality; no aneurysm ruptures; no
surgical conversions; and no stent graft migrations.
John McDermott, Endologix President and Chief Executive Officer,
said, "We believe Nellix is the most revolutionary EVAR technology
in the world and will help position Endologix as the innovation
leader in aortic aneurysm treatment. Nellix has developed a new
technology that will allow more physicians to treat more patients
than with any of the existing devices, potentially expanding the
global market for EVAR. The device also has exceptional clinical
results and feedback from physicians is very positive, particularly
as it relates to ease of use, effectiveness and versatility to
treat both simple and complex aortic anatomies."
Mr. McDermott continued, "In the near-term, we will dedicate
resources to build a direct sales force in Europe, which will
provide a channel to launch the Nellix system in Europe in 2012 and
provide a significant growth opportunity for Endologix's existing
and future products."
The $15 million in new capital from Essex Woodlands will be used
to support the transition and development of Nellix's technology in
anticipation of a full commercial European launch in 2012. The
capital will also be used to build a direct sales force in Europe
and initiate the U.S. IDE clinical trial.
Bob Mitchell, President and Chief Executive Officer of Nellix,
said, "Endologix is the ideal partner to maximize Nellix's
potential and drive adoption of this revolutionary device. The
Nellix technology has been developed in collaboration with
thought-leading physicians around the world and is the only AAA
device that completely seals the aneurysm sac. Early clinical data
suggest that the Nellix implant has the potential to dramatically
reduce endoleaks, secondary interventions and long-term patient
follow-up costs. I look forward to joining Endologix and working
closely with the management team as we build out the sales force in
both the United States and Europe, and continue developing the new
product pipeline."
Guido Neels, Managing Director, Essex Woodlands Health Ventures,
said "In our opinion, the combination of Endologix and Nellix
creates a company that is poised for great success. The advanced
Nellix technology and the proven track record of Endologix make the
company a strong contender for global leadership in the AAA field.
Accordingly, we have committed $15 million in additional capital to
invest in Endologix. The combined Company has a strong management
team and this funding puts them in an excellent position to achieve
their clinical and commercial objectives and execute on their
growth strategy."
Financial Impact
Endologix will provide updated financial guidance for 2010 and
will introduce financial guidance for 2011 in conjunction with the
release of the Company's third quarter results, which is scheduled
for today.
Conference Call, Presentation Slides and
Additional Information
Endologix management will discuss the acquisition during the
Company's third quarter 2010 results conference call, which is
scheduled for today beginning at 5:30 p.m. Eastern time (2:30 p.m.
Pacific time). Accompanying presentation slides will be posted on
the investor relations section of the Endologix Web site at
http://investor.endologix.com/ before the conference call begins.
Additional information about Nellix's technology can be found on
the investor relations section of the Endologix Web site by
clicking on the section titled "Nellix Technology."
To participate in today's conference call via telephone please
call (877) 407-0789 from the U.S. or (201) 689-8562 from outside
the U.S. A telephone replay will be available for seven days
following the completion of the call by dialing (877) 870-5176 from
the U.S. or (858) 384-5517 from outside the U.S., and entering pin
number 358458. The conference call will be broadcast live over the
Internet at www.endologix.com and will be available for 30
days.
About Endologix, Inc.
Endologix, Inc. develops and manufactures minimally invasive
treatments for aortic disorders. The Company's flagship product is
the Powerlink® System, which is an endovascular stent graft for the
treatment of abdominal aortic aneurysms (AAA). AAA is a weakening
of the wall of the aorta, the largest artery in the body, resulting
in a balloon-like enlargement. Once AAA develops, it continues to
enlarge and, if left untreated, becomes increasingly susceptible to
rupture. The overall patient mortality rate for ruptured AAA is
approximately 75%, making it a leading cause of death in the U.S.
Additional information can be found on Endologix's Web site at
www.endologix.com.
About Essex Woodlands Health Ventures
With $2.5 billion under management, Essex Woodlands is one of
the largest and oldest venture capital firms pursuing investments
in pharmaceuticals, biotechnology, medical devices, health care
services, and health information technology. Since its founding in
1985, Essex Woodlands has maintained its singular commitment to the
healthcare industry and has been involved in the founding,
investing, and/or management of over 100 healthcare companies
ranging across all sectors, stages and geography. The team is
comprised of 25 senior investment professionals with offices in
Palo Alto, Houston, New York and London. For more information,
please see www.ewhv.com.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, regarding, among other things, statements relating to the
benefits of Endologix, Inc.'s proposed acquisition of Nellix, Inc.,
including expected operating synergies, the strength of Nellix,
Inc.'s EVAR technology and the potential for long-term growth and
expanded market share. Endologix, Inc. intends such forward-looking
statements to be covered by the safe harbor provisions for
forward-looking statements contained in Section 21E of the Exchange
Act and the Private Securities Litigation Reform Act of 1995. These
statements are based on the current estimates and assumptions of
Endologix, Inc.'s management as of the date of this presentation
and are subject to risks, uncertainties, changes in circumstances
and other factors that may cause actual results to differ
materially from the forward-looking statements made in this
presentation. Important factors that could cause actual results to
differ materially from forward-looking statements include, but are
not limited to, risks relating to the ability to consummate the
proposed acquisition, the ability to successfully integrate the
Nellix technology with its current and future product offerings,
the scope of potential use of the Nellix technology, the ability to
obtain and maintain required FDA and other regulatory approvals of
the Nellix technology, the scope and validity of intellectual
property rights applicable to the Nellix technology, the ability to
build a direct sales and marketing organization in Europe,
competition from other companies, the ability to successfully
market and sell its products, plans for developing new products and
entering new markets; and additional factors that may affect future
results which are detailed in Endologix, Inc.'s Annual Report on
Form 10-K filed with the SEC on March 3, 2010, and in Endologix,
Inc.'s other periodic reports filed with the SEC. Endologix, Inc.
undertakes no obligation to revise or update information herein to
reflect events or circumstances in the future, even if new
information becomes available.
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