Above and Below the Belt in Women's Health Care: Cytyc buys Proxima

Cytyc purchased Proxima Therapeutics, a brachytherapy company with a device to treat breast cancer, for $160 million in cash, following on its acquisition last year of Novacept, a manufacturer of a minimally-invasive endometrial ablation device to treat excessive menstrual bleeding. Three years earlier, Cytyc had acquired Pro-Duct Health, developer of a new test to assess the breast cancer risk of an at-risk patient. Cytyc is clearly going in the direction of creating an overall franchise in women's health, integrating diagnostics and therapeutics, both above and below the belt. But investors want to know that deals don't simply represent a piecemeal, opportunistic approach to business development, but that they fit together in a larger context. It's all about leveraging Cytyc's distribution channel in women's health, says CEO Patrick Sullivan.

Cytyc Corp. 's recent $160 million cash purchase of Proxima Therapeutics Inc. , a brachytherapy company with a device to treat breast cancer [See Deal], follows its acquisition last year of Novacept Inc. , a manufacturer of a minimally invasive endometrial ablation device to treat excessive menstrual bleeding, for $325 million [See Deal]. Three years earlier, Cytyc had acquired, for $174 million, Pro-Duct Health, developer of a new test to assess the breast cancer risk of an at-risk patient [See Deal]. In November 2004, Cytyc also made an equity investment in Valeo Medical Inc. , developer of a noninvasive endometriosis diagnostic [See Deal].

Cytyc still gets 84% of its $393 million in annual revenues from its ThinPrep cervical cancer testing product line, and,...

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