Channel Medsystems sues Boston Scientific over spiked $275m buyout

Channel Medsystems sued Boston Scientific (NYSE:BSX) this week over a $275 million buyout that Boston allegedly spiked over a former Channel employee’s alleged scheme to embezzle nearly $3 million from the women’s health company. Emeryville, Calif.-based Channel Medsystems developed Cerene, a cryogen-based endometrial ablation system designed to treat heavy menstrual bleeding that won CE Mark approval in the European Union in June 2017. In the U.S., the treatment phase is complete in a 242-woman pivotal investigational device exemption trial. The company has raised at least $47.6 million in a series of funding rounds that included Boston Scientific, which acquired a 20% stake for $20.6 million spread over two of the rounds. Last November the companies agreed to a deal that would have seen Boston acquire the remaining 80% for $275 million if it won FDA approval by Sept. 30, 2019, according to the lawsuit, but by May the agreement had foundered in the wake of the alleged embezzlement scheme. As 2018 approached Channel executives discovered that then-quality assurance VP Dinesh Shankar had faked expense reports, launching an internal probe with outside counsel and forensic accountants and tapping another outside firm to run a quality system audit. The investigations found that, although Shankar had embezzled $2 million via six fake shell companies and another $567,000 using faked expense reports – including some that were submitted to the FDA – the scheme d...
Source: Mass Device - Category: Medical Devices Authors: Tags: Featured Legal News Mergers & Acquisitions Wall Street Beat Boston Scientific Channel Medsystems Source Type: news