Olympus Acquires Redmond’s Spiration

Olympus Acquires Redmond’s Spiration, Maker of Lung-Disease Valve, for Undisclosed Sum

Spiration’s independent days are over. The Redmond, WA-based company, the developer of a minimally-invasive valve to treat lung diseases, has agreed to be acquired by Japan-based Olympus for an undisclosed sum.

The acquisition is really the culmination of a relationship that’s been growing between the two companies since 2008, when Olympus obtained rights to be the exclusive distributor of Spiration’s lung valve in Europe and Japan. Olympus has a lot of interest in lung diseases, as the world’s leading maker of endobronchial ultrasound technologies to help physicians look inside the lungs, as well as flexible bronchoscopes to help perform minimally invasive lung procedures.

The takeover marks the end of a long journey for Spiration. The company, founded in 1999, won FDA clearance to start selling its first product in the U.S. back in October 2008. It was for Spiration’s IBV Valve System, which uses tiny valves that can be implanted in the airway via a catheter threaded down a patient’s windpipe. The valves are intended to block off air flow to the diseased lung, so air doesn’t get trapped there and make it hard to breathe. The device can be removed if necessary. The device was initially approved by the FDA for a small subgroup of patients who suffer from air leaks after they get lung surgery, but the Spiration device is being tested in a much broader market of patients with chronic obstructive pulmonary disease. An estimated 16 million people in the U.S. (mostly smokers) have COPD. The potential market for this device could reach more than $1 billion a year, Spiration has said.

“I am pleased that our partnership with Spiration has led to this agreement which makes Spiration a part of the Olympus Group,” said Haruhito Morishima, president of Olympus Medical, in a statement. “Spiration possesses a high level of technological capability and deep insights into the respiratory field. Their products are also an ideal complement to the Olympus portfolio of bronchoscopes and equipment.”

It’s impossible to say what this deal means for investors without seeing the terms, but a price of anything less than at least $200 to $300 million would probably be considered a disappointment. The company has raised more than $100 million in equity and debt financing since its founding from Three Arch Partners, New Enterprise Associates, Versant Ventures, Sprout Group, InterWest Partners, Investor Growth Capital, GE Capital, Saints Capital, and Olympus.

[Update: 10:45 am, with comments from Spiration chief operating officer Greg Sessler.] Olympus plans to retain the entire 50-person staff that Spiration had assembled in Redmond to carry out R&D, sales and marketing, and manufacturing, Sessler says. That includes senior executives like CEO Rick Shea and Sessler. The operation will be re-named Olympus Respiratory America, Sessler says.

The new Olympus respiratory group here in Redmond will be focused on completing enrollment of patients in a pivotal clinical trial, and possibly submitting an application for broader FDA approval next year, Sessler says.

If all goes according to plan, the local operation could continue to grow as part of Olympus, with its greater resources and strategic interest in becoming a player in respiratory diseases. Although many acquisitions end up throwing people out of work, this deal could end up like Gilead Sciences’ acquisition of Corus Pharma, in which the parent company invests significant money in creating a respiratory disease hub in the Northwest, Sessler says. Selling to Olympus gives the Spiration team “staying power,” Sessler says.

“I’m really pleased with the outcome for Seattle,” Sessler says. “The unit will stay intact, and will have more resources, and opportunities for growth as opposed to some other situations we’ve seen with acquisitions in which a company purchases something and moves away.” He added: “We have a long list of technologies we’d love to develop.”