Johnson & Johnson to acquire V-Wave Ltd. in $1.1bn deal to enhance heart failure treatment

Johnson & Johnson (NYSE: JNJ) has made headlines with its decision to acquire V-Wave Ltd., a private company renowned for its cutting-edge treatments for heart failure. The agreement, valued at an upfront payment of $600 million and potential additional payments totaling approximately $1.1 billion, marks a strategic expansion for Johnson & Johnson MedTech. This acquisition is set to enhance the company’s capabilities in treating cardiovascular diseases, a sector of increasing global importance.

Expanding Johnson & Johnson MedTech’s Cardiovascular Innovations

The acquisition of V-Wave is a pivotal moment for Johnson & Johnson MedTech, reinforcing its status as a leader in cardiovascular care. By integrating V-Wave, Johnson & Johnson aims to accelerate its entry into high-growth markets and deepen its collaboration with interventional cardiologists and heart failure specialists. The venture aligns with Johnson & Johnson’s strategy to address the global burden of heart failure, a condition affecting millions worldwide and leading to significant healthcare costs and reduced quality of life.

V-Wave’s Innovative Heart Failure Solution

V-Wave’s flagship product, the Ventura Interatrial Shunt (IAS), represents a significant advancement in heart failure treatment. This device addresses heart failure with reduced ejection fraction (HFrEF), a condition in which the heart struggles to pump blood efficiently. The Ventura IAS, which received FDA Breakthrough Device Designation in 2019 and CE Mark in 2020, is designed to alleviate elevated left atrial pressure by creating a shunt between the left and right atria. This innovative approach aims to reduce cardiovascular events and hospitalizations, potentially filling a critical gap between guideline-directed medical therapies (GDMT) and more invasive treatments such as left ventricular assist devices (LVADs) and heart transplantation.

Market Opportunity and Technological Impact

Approximately 800,000 patients in the United States are diagnosed with HFrEF each year, underscoring the substantial market potential for V-Wave’s technology. The Ventura IAS offers a novel approach to managing heart failure, addressing an unmet need in a large patient population. The acquisition aligns with Johnson & Johnson’s commitment to enhancing patient outcomes through innovative solutions, reflecting the company’s strategic focus on high-impact medical technologies.

Statements from Leadership

Tim Schmid, Executive Vice President and Worldwide Chairman of Johnson & Johnson MedTech, expressed enthusiasm about the acquisition. He highlighted Johnson & Johnson’s deep understanding of V-Wave’s technology and its potential to transform cardiovascular care. Schmid emphasized that the acquisition is a significant step toward advancing the standard of care for heart failure patients.

Dr. Neal Eigler, Chief Executive Officer of V-Wave, shared his optimism about the merger. He praised Johnson & Johnson MedTech’s capability to accelerate the development and delivery of V-Wave’s breakthrough technology. Eigler acknowledged the dedication of the V-Wave team and expressed confidence in Johnson & Johnson’s ability to bring their innovations to a broader patient base.

Transaction Details and Financial Impact

Under the terms of the agreement, Johnson & Johnson will acquire V-Wave for an initial payment of $600 million, with additional potential payments up to $1.1 billion based on regulatory and commercial milestones. The transaction is anticipated to close by the end of 2024, contingent on regulatory approvals and customary closing conditions.

In accordance with U.S. GAAP, the acquisition will be recorded as an asset acquisition, resulting in a non-tax deductible in-process research and development charge of approximately $600 million. Johnson & Johnson expects this transaction to dilute adjusted earnings per share (EPS) by about $0.24 in 2024 and $0.06 in 2025. The company will update its full-year financial outlook during the third quarter 2024 results announcement scheduled for October 15, 2024.

Post-acquisition, V-Wave will be integrated into Johnson & Johnson MedTech’s Cardiovascular portfolio. Michael Bodner, Group President of Heart Recovery & Intravascular Lithotripsy, will oversee the V-Wave team. V-Wave, founded in 2009, is known for its focus on innovative heart failure treatments, leveraging decades of expertise in science, engineering, and medicine.

Heart failure is a major global health issue, with the World Health Organization highlighting its prevalence and impact. The integration of V-Wave’s technology is expected to contribute to Johnson & Johnson’s broader strategy of advancing cardiovascular care through innovative solutions. V-Wave’s Ventura IAS aligns with recent trends in the medical device industry, focusing on minimally invasive technologies that offer significant benefits over traditional treatments.