Fernando-2The global EVAR market has been dominated for many years by three companies: Cook Medical, Medtronic and W.L. Gore.  This, however, is likely to change as Endologix announced on October 26 that it would be acquiring Trivascular.  This bold move by Endologix is a direct threat to the big three and I think came as a surprise to many.  What is also surprising is how quiet the big three have been with acquisitions in this space, although Cook Medical and W.L. Gore have historically shied away from M&A activity; focusing instead on organic growth.  Nonetheless, the merger between Endologix and Trivascular is compelling for several reasons.

Both companies have been growing rapidly and gaining share in the EVAR market; by combining operations and product offerings, Endologix will offer the first real threat to the top three competitors.  This is especially important in the large US market as Endologix prepares to launch its marquee product, Nellix, in 2016.  The combined team of 160 EVAR-focused sales reps is comparable in size to each of the big three and the nearly 1100 active hospital accounts gives Endologix a broader customer base for not only its Nellix launch but an expanded product offering which now includes the Ovation system from Trivascular.

The combined portfolio of Ovation, AFX, and Nellix is well positioned to address the current and future needs of physicians especially as they perform more complex procedures.  Ovation and Nellix are specifically designed to the address Type 1 endoleaks—which is one of the major complications with EVAR—using different approaches to seal the proximal neck; while AFX addresses stent migration by sitting on the aortic bifurcation.  Finally, Ovation is currently the only low-profile device on the US market, which allows for improved access to the aneurysm and a percutaneous approach.

The combined companies will now compete more forcefully with competitors in the FEVAR market (i.e. Cook Medical), although indirectly since neither has a fenestrated product.  Both the Ovation and Nellix systems are able to compete with fenestrated grafts by different means.  The ovation stent graft can be used in infra/juxta-renal procedures that have neck lengths that are too short for a standard EVAR graft, and which would result in the use a fenestrated graft.  This is due to the sealing ring, which allows the product to be placed much closer to the renal arteries than other EVAR grafts.  Nellix on the other hand is starting to compete with fenestrated procedures because it is increasingly being used off-label to perform chimney procedures.  The major complication with chimney procedures is the gutters that form between the EVAR graft and renal stents.  The endobag-filled polymer of Nellix is capable of sealing these gutters and preventing endoleaks.  Therefore, these two systems offer more choice to physicians that want to treat AAAs near the renal arteries but without the added cost and wait times associated with a fenestrated graft.

By combining forces with Trivascular, Endologix is making the right bet and focusing on the growing segment of complex EVAR procedures, while at the same time offering a suite of products that can be used to perform the vast majorities of EVARs.  The question now is whether this merger will result in further M&A activity in the EVAR market, especially because in some markets there are too many small competitors fighting for minimal market share.  Medtronic has already acquired Aptus Endosystems and invested in Arsenal AAA, both small innovative companies focused on providing fixation and sealing solutions.  Who is next?

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