Medical devices giant Medtronic plans to turn its latest $325 million acquisition, Israeli company Ventor Technologies, into a significant R&D center for new technologies.
It may have been a stormy week for the Israeli high-tech industry, as Amdocs announced a four-day week, and other industry leaders laid off employees, but at medical devices company Ventor Technologies, the staff was celebrating.
The rumors began last week, and were finally confirmed on Monday when medical device giant Medtronic announced that it will buy the Israeli heart developer for $325 million.
It’s an impressive sum for a company that was only founded five years ago, doesn’t even have its own web site, and employs just 24. It was also one of the largest deals signed for some time in Israel.
What makes this deal particularly good news is that Medtronic plans to turn Netanya-based Ventor, a developer of transcatheter heart valve technologies for the treatment of aortic valve disease, into a significant Israeli R&D center producing new products and new ideas for the US giant.
“Medtronic views our company as a primary innovation center,” Ventor’s CEO, Guy Ezekiel tells ISRAEL21c. “They want us to come up with new ideas. They recognize the incredible engineering talent we have here, and told us they want to learn how we innovate and how we bring a product to market so quickly.
Proven as successful innovators
“Intel has a huge R&D center in Israel, which is extremely successful,” Ezekiel continues. “We have proven ourselves to be successful innovators, and view this as an opportunity to become a successful R&D center that will help develop incredible products for Medtronic, products that will one day reach the market and save thousands of lives.”
Ventor was founded in May 2004 by Dr. Ehud Shvemental of Sheba Medical Center Tel Hashomer, Rafi Benary, and Yossi Tuval. It started life in a small office above a garage in Ra’anana. Angel investment came from entrepreneur Dr. Shimon Eckhouse, the co-founder of Syneron, and was followed by venture capital investment from Pitango Venture Capital and Medica-Opal Ventures.
The company, which until this deal had avoided press interviews or publicity, focuses on developing transcatheter valve technologies for patients suffering aortic stenosis, a condition in which the aortic valve becomes narrow and impedes blood flow.
Today these patients are usually treated with open-heart valve surgery, but not all are eligible for this surgery, because of deteriorating health. Ventor offers a non-surgical alternative to these patients, which can be applied using a local anesthetic.
“Our transcatheter can be transplanted on a beating heart in a minimally invasive procedure that doesn’t require open-heart surgery. Because of this we have less complications, less morbidity, and less mortality,” says Ezekiel.
The company’s flagship product, the Ventor Embracer, is now in visibility trials in Europe. It should reach the European market in two years, and go on sale in the US by 2014.
Talks between Minneapolis-based Medtronic and Ventor began six months ago, during which time Medtronic invested $10 million in the Israeli company raising the company’s total investment to $17 million (of which $5 million still remains in the bank). After rumors of the impending buy-out hit the press last week, the deal was finally inked last Friday.
At the same time Medtronic announced the deal, it also announced another $700 million buy-out of an additional heart device maker company CoreValve, which makes a similar product for aortic stenosis.
A lean and modest company
The two acquisitions make Medtronic an overnight leader in the field of replacing aortic valves without the need for open-heart surgery.
Ventor’s first task as Medtronic Ventor Technologies, is to bring its existing transcatheters to market. Its next is to innovate and develop new products. Employee numbers are expected to rise. “We plan to come up with new opportunities and present them to Medtronic and get their support,” says Ezekiel.
“This is a really big transaction for a company of our size,” admits Ezekiel, who joined Ventor in 2006 from his previous job working with Medrad, a 1,500 employee company in Pittsburg. “We are a very lean and modest company, and this has created efficiency.”
Ezekiel, who will remain at the new company as the site leader, believes the deal with Medtronic is a positive sign for the Israeli high-tech industry, and particularly the life sciences sector. “We are going through a difficult time, but I strongly believe that the companies who continue to work in a modest and efficient way will continue and survive,” he says, adding that he believes the economic crisis will be over by 2010.
“We have incredible talent in Israel. In my entire career I have never worked with such a talented group as I have here in Israel. The level of engineering and the ability to work hard is just amazing,” Ezekiel tells ISRAEL21c. “Because of the challenges here in Israel, employees think and operate differently – more creatively. We don’t cut corners, but we run faster than our competitors.”
So what do Ventor’s employees think of the deal? “They are thrilled,” says Ezekiel, adding that all Ventor employees have generous stock options. “It’s an incredible opportunity for our employees. They recognize the value of working with a large company like Medtronic, which employs 40,000 people around the world. There are lots of new opportunities, lots of diversity.”
So how did they celebrate? “We took them all out for a meal in a nice restaurant in Netanya and had a toast,” says Ezekiel. “The next day, everyone was back at work as usual.”
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