A Delaware court ruled Dec. 18 that Boston Scientific cannot terminate its $275 million acquisition of Channel Medsystems, though it tried to do so in 2018, according to MedTech Dive.
In November 2017, Boston Scientific agreed to buy Channel, an Emeryville, Calif-based startup that makes devices to treat women's health, for $275 million. The buyout was contingent on the FDA approving one of Channel's devices by Sept. 30, 2019.
The device, called Cerene, was designed to treat heavy menstrual bleeding in premenopausal women.
In December 2017, a month after the acquisition agreement was reached, Channel discovered that its vice president of quality, Dinesh Shankar, had falsified documents to defraud $2.6 million from the company and that some of the false documents were sent to the FDA as part of Cerene's approval application, according to MedTech Dive.
Because of this, Boston Scientific believed the device wouldn't be approved and terminated the merger agreement on May 11, 2018, despite the fact that the FDA said the false documents wouldn't cause the device to be denied approval.
The FDA approved the device in March 2019. Because the acquisition was contingent on the approval, the Delaware Court of Chancery ruled that Boston Scientific breached its contract with Channel.
The court ruled that Channel is entitled to an order requiring Boston Scientific to complete the merger, according to MedTech Dive. It instructed Boston Scientific and Channel to submit a document confirming the acquisition within five business days.
Boston Scientific reportedly said in a Dec. 18 U.S. Securities and Exchange Commission that it is "evaluating its options."
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