BUSINESS NEWS
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| Chamoun |
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| LaViolette |
On June 11, Aspect Medical Systems Inc. (Norwood, MA) announced that its strategic alliance with Boston Scientific Corp. (Natick, MA) was ending after a two-year period. Formed in May 2005, the alliance was focused on the development of brain-monitoring technology for diagnosing and treating depression, Alzheimer's disease, and other neurological disorders. As part of the collaboration, Boston Scientific had committed to providing Aspect Medical with $25 million to fund research and product development activities.
In the announcement, issued by Aspect Medical, no reason was provided for termination of the alliance. However, industry analysts were not entirely surprised by the move, which was generally seen as having been initiated by Boston Scientific.
In late May, Boston Scientific had suggested that in coming months it might sell off what it described as "noncore assets." At the time of that disclosure, it was widely speculated that Aspect Medical could be on the list. Boston Scientific is the largest holder of Aspect Medical stock, owning approximately 27% of the company's shares, currently valued at around $90 million.
"Boston Scientific has been an outstanding partner, and we appreciate its contribution to our success to date," said Nassib Chamoun, president and CEO of Aspect Medical Systems. "Further, we understand Boston Scientific's desire to refocus its strategic priorities following its recent acquisition, and we believe that this agreement creates new opportunities for both parties."
Shortly after Chamoun's announcement, Aspect Medical said it would offer approximately $110 million in notes to finance the repurchase of its stock from Boston Scientific.
Speaking in early June at the Goldman Sachs Global Healthcare Conference, Paul LaViolette, Boston Scientific's chief operating officer, acknowledged that the company plans to announce a significant cost-reduction initiative.
He told investors that the plan is not a major financial restructuring but rather an optimization of company assets and business units. He noted that the past year had presented significant challenges to the company's coronary stent and CRM sectors, but that both were showing solid recovery in both domestic and international markets.
