-Aspect purchases two million shares immediately and acquires
option to purchase remaining four million shares over next six months;
Aspect gains all commercial rights to products developed under the
alliance previously shared with Boston Scientific-
NORWOOD, Mass.--(BUSINESS WIRE)--June 11, 2007--Aspect Medical
Systems, Inc. (Nasdaq: ASPM) and Boston Scientific Corporation (NYSE:
BSX) today announced a share repurchase plan and an agreement to
conclude their alliance for the development of new brain monitoring
products aimed at assisting clinicians in the diagnosis and treatment
of depression, Alzheimer's disease and other neurological conditions.
The agreement includes the following key provisions:
- Aspect will immediately acquire 2 million shares of Aspect
stock now held by Boston Scientific at a price of
approximately $15.91 per share. This price represents the
average of the closing prices of Aspect stock over the 20 most
recent trading days. Prior to this agreement, Boston
Scientific's position in Aspect stood at approximately 6
million shares, or 27% of Aspect's shares outstanding;
- For a period of six months following the date of the
agreement, Aspect will have the right to purchase any or all
of the balance of Boston Scientific's position in Aspect at a
price of $15.00 per share, or the average of the closing
prices of Aspect stock over the 10 trading days prior to
Aspect exercising its right to repurchase, whichever is
higher. In addition, Boston Scientific has agreed not to sell
any of its Aspect stock, except to Aspect, during the six
month period;
- Boston Scientific is relieved from all current and future
obligations to the alliance. The neuroscience alliance was
established in May 2005 and involved a commitment by Boston
Scientific of $25 million over five years to support research
by Aspect in the depression and Alzheimer's markets. To date,
Boston Scientific has provided $10 million of the $25 million
originally committed; and
- Aspect regains all commercial rights to products developed
under the alliance that were previously shared with Boston
Scientific.
Aspect and Boston Scientific also agreed today that all rights and
obligations in connection with an OEM Product Development Agreement
signed in 2002 will cease effective upon closing of the share
repurchase. As part of the 2002 Agreement, Boston Scientific held an
option to distribute products developed by Aspect in the procedural
sedation space. With Boston Scientific declining this option, all
rights to products developed in conjunction with this agreement will
revert to Aspect. As a result of this, Aspect will recognize
approximately $3.8 million of previously deferred alliance revenue
this quarter.
"Boston Scientific has been an outstanding partner, and we
appreciate their contribution to our success to date. 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," said Nassib
Chamoun, president and CEO of Aspect Medical Systems. "We are
enthusiastic about Aspect's neuroscience program, particularly the
interim results from the BRITE study that we announced three weeks
ago. We believe that the neuroscience business will become a great
complement to our core consciousness-monitoring business in the years
ahead. Today's share purchase from Boston Scientific speaks to our
growing financial strength and signals our confidence in our ability
to continue to grow our core business and to develop the potential of
our neuroscience program."
Chamoun continued, "We also believe that the opportunity to
reacquire full commercial rights to the products developed in the
neuroscience space will prove to be significant for Aspect longer
term. Over the coming months, we plan to seek financing, which may be
in the form of convertible notes, in order to replenish our cash
position and gain the flexibility to exercise our option to purchase
additional shares from Boston Scientific. We believe these share
purchases will provide stability and create value for all of our
shareholders."
Other Transaction Details
Under the terms of the termination and repurchase agreement signed
today, Aspect and Boston Scientific have agreed that all obligations
and rights granted by either party in connection with the 2005
neuroscience strategic alliance and the 2002 OEM product development
agreement will terminate under the agreement. In connection with the
2002 Agreement, Boston Scientific established a revolving credit
facility available to Aspect which was also terminated under the
agreement. Aspect has never drawn down on this line of credit.
Aspect and Boston Scientific are also entering into a registration
rights agreement under which Boston Scientific will have the right to
request under certain circumstances that Aspect register under the
Securities Act of 1933, as amended, shares of Aspect common stock held
by Boston Scientific and not repurchased by Aspect.
Revised Q2 Financial Guidance
For the second quarter ending June 30, 2007, the Company is
raising its guidance for total revenue to be within a range of $26.1
million to $27.1 million, reaffirming product revenue guidance of
$22.3 million to $23.3 million, raising guidance for earnings per
fully diluted share to be within a range of $0.05 to $0.07 on a GAAP
basis, and on a non-GAAP basis, raising guidance for earnings per
fully diluted share to be within a range of $0.13 to $0.15. The
Company is raising guidance for GAAP net income on a pre-tax basis per
fully diluted share to be within a range of $0.12 to $0.14, and
raising guidance on a pre-tax non-GAAP basis to be within a range of
$0.21 to $0.24. Non-GAAP pre-tax and after tax EPS do not include
stock-based compensation expense. These changes in Q2 guidance stem
from the recognition of previously-deferred alliance revenue in Q2 as
a result of this agreement offset partially by costs associated with
the agreement. Details will be provided on tomorrow's call.
Tomorrow's Conference Call
Representatives from Aspect Medical Systems will host a conference
call tomorrow morning at 8:00 a.m. EDT for all interested parties,
including financial analysts, portfolio managers, individual investors
and members of the press. To participate in the call dial
1-800-926-7510 (domestic), 1-212-231-2907 (international), or access
the Webcast at http://www.aspectmedical.com on the Investor page, or
at http://ccbn.com. A replay of the call will be available from
June 12, 3:00 p.m. EDT through June 19, 12:00 a.m. EDT. To hear the
replay, please dial 1-800-633-8625 (domestic), 1-402-977-9141
(international) and enter passcode: 21341459.
About Aspect Medical Systems, Inc.
Aspect Medical Systems, Inc. (NASDAQ: ASPM) is a global market
leader in brain monitoring technology. To date, the Company's
Bispectral Index (BIS) technology has been used to assess
approximately 20 million patients and has been the subject of more
than 2,800 published articles and abstracts. BIS technology is
installed in approximately 75 percent of hospitals listed in the July
2006 U.S News and World Report ranking of America's Best Hospitals and
in approximately 55 percent of all domestic operating rooms. In the
last twelve months BIS technology was used in approximately 16 percent
of all U.S. surgical procedures requiring general anesthesia or deep
sedation. BIS technology is available in more than 160 countries.
Aspect Medical Systems has OEM agreements with eight leading
manufacturers of patient monitoring systems. The company is also
investigating how other methods of analyzing brain waves may aid in
the diagnosis and management of neurological diseases, including
depression and Alzheimer's disease. For more information, visit
Aspect's Web site at http://www.aspectmedical.com.
Safe Harbor Statement
Certain statements in this release are forward-looking within the
meaning of the Private Securities Litigation Reform Act of 1995 and
may involve risks and uncertainties, including statements with respect
to the Company's expectations regarding total revenue, product revenue
and earnings per share for the second quarter, the Company's
expectations regarding the potential of its neuroscience business, the
Company's expectations that it will continue to grow both its core
business and its financial strength, and the potential benefits of
both the termination of the alliance with Boston Scientific
Corporation and the Company's plans to repurchase shares of Boston
Scientific Corporation common stock. There are a number of factors
that could cause actual results to differ materially from those
indicated by these forward-looking statements. For example, the
completion of the Company's BRITE trial could be delayed and/or the
trial could be unsuccessful as a result of various factors including
delays in patient enrollment, lower than anticipated retention rates
for patients in the trial, negative trial outcomes and the failure of
the trial to establish the predictive accuracy of the Company's brain
assessment technology in predicting the effectiveness of
antidepressant medications. In addition, the Company may not be able
to successfully develop products for the diagnosis and treatment of
neurological diseases, such as depression and Alzheimer's disease,
achieve widespread market acceptance of any such products that it may
develop or compete with new products or alternative techniques that
may be developed by others. The Company also faces regulatory,
competitive, intellectual property and market risks relating to its
ability to successfully develop, commercialize and sell other products
based upon its BIS monitoring technology. The Company may also
experience difficulties in controlling expenses, growing its sales
force and raising additional funds to replenish its cash position and
enable it to repurchase additional shares from Boston Scientific
Corporation. There are other factors that could cause the Company's
actual results to vary from its forward-looking statements, including
without limitation those set forth under the heading "Risk Factors" in
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007 as filed with the Securities and Exchange Commission.
In addition, any forward-looking statements represent the Company's
views only as of the date of this press release and should not be
relied upon as representing the Company's views as of any subsequent
date. While the Company may elect to update forward-looking statements
in the future, it specifically disclaims any obligation to do so, even
if its expectations change. Therefore, you should not rely on these
forward-looking statements as representing the Company's views as of
any date subsequent to the date of this press release.
Aspect, Bispectral Index and BIS are registered trademarks of
Aspect Medical Systems, Inc. All other trademarks, service marks and
company names are the property of their respective owners.
CONTACT: Aspect Medical Systems, Inc.
Mike Falvey, 617-559-7363
VP, CFO
or
Emily Anderson, 617-559-7032
Media Relations
SOURCE: Aspect Medical Systems, Inc.
