Aspect Medical To Buy Back Shares From Boston Scientific

 |  Includes: ASPM, BSX
by: Steven T. Gold

Aspect Medical (ASPM) sells an anesthesia monitoring system, the BIS system, which is used primarily in the United States and, according to the company, in 75% of the top hospitals.
The BIS system provides information that allows clinicians to assess and manage a patient’s level of consciousness in the operating room, intensive care, and procedural sedation settings, as well as to determine the amount of anesthesia or sedation needed by each patient. It is utilized by anesthesiologists in multiple medical settings.

Aspect Medical had a busy day of news on Monday and is scheduled for a conference call Tuesday morning. Perhaps most interesting was that it “agreed” to end its strategic alliance with Boston Scientific (NYSE:BSX). At this point it is unclear why the parties “agreed” to end the partnership and alliance.

In its press release ASPM stated it was ending both a 2005 neuroscience strategic alliance with BSX and the 2002 original equipment manufacturer product development agreement with BSX. While anxious to hear the reasoning for the “breakup” hopefully announced in the call Tuesday, I do like that ASPM thinks its own stock is cheap (its P/E is hovering around 10) and says it will immediately buy 2 million of its shares now held by BSX for about $15.91 per share and retain the option to purchase the remaining 4 million shares over the next six months.


ASPM does not want its stock price hurt by BSX unloading its stock. BSX owned about 27% of the company prior to the ending of the alliance. One major concern I have is why does BSX want to unload all of its APSM holding upon the ending of this alliance?

What happened with the alliance? Does BSX think the stock is worth less than the current market price? BSX certainly does not “need” the money to pay its bills.

In other news, ASPM raised its guidance and provided an update regarding two abstracts presented at the Alzheimer’s Association International Conference. The abstracts report on interim results of two studies that are investigating use of the company’s brain assessment technology to evaluate cognitive function in elderly patients. According to the release, the interim results are consistent with previous findings that ASPM’s EEG-based biomarker correlates with standard measures of cognitive performance.

According to ASPM, this suggests that the EEG-based biomarker can provide information that may be helpful in determining which patients with Alzheimer’s in the normal to mild cognitive impairment range are likely to experience cognitive decline. While not an overly positive press release, ASPM seemed to convey that the interim results are as expected and remains hopeful for further confirmation of the results in the future studies.

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