Volcano Corp. has announced that it will acquire Axsun Technologies Inc., a privately held maker of lasers and optical engines used in optical coherence tomography (OCT) imaging systems and of advanced photonic components and subsystems for industrial applications, for about $21.5 million in cash.

Volcano develops products for diagnosing and treating coronary and peripheral artery disease. Under terms of the deal, expected to close this week, Axsun and its 85 employees based near Boston will operate as a wholly owned subsidiary of Volcano.

Axsun develops microelectromechanical systems-based lasers and optical engines used in OCT imaging systems, micro-optical spectrometers and optical channel monitors for pharmaceutical, chemical and petrochemical, and telecom network applications. Its technology and laser components allow for dramatic imaging performance improvements in equipment form factors as small as 1/1000th the size of current laser components at very low manufacturing costs, Volcano said.

Axsun currently has development partnerships with companies serving the cardiology and dental markets and expects the launch of the first medical imaging systems using its technology during the first half of 2009. Volcano plans to use new integrated versions of Axsun's advanced tunable laser and optical engine technology in the development of certain new OCT imaging systems.

"Axsun is another complementary and important transaction for Volcano, as it provides us proprietary OCT technology that we believe will both accelerate our OCT product development efforts and provide us significant and sustainable competitive advantages in the invasive imaging arena. We believe OCT technology will extend Volcano's reach to clinical indications and research opportunities that represent sizable market opportunities that are beyond those served by our current offerings," said Scott Huennekens, president and CEO of Volcano.

Axsun also markets a line of photonic products and measurement equipment into industrial spectroscopy and optical communications markets that are complementary to the medical imaging market, Volcano stated.

"The Axsun laser and optical engine technology is a key building block in our strategy to cement our already strong position in invasive imaging," Huennekens said. "The company's core technologies are truly leading-edge and will advance our programs to both enhance system performance and achieve lower manufacturing costs as we seek to remain the innovation leader in medical imaging. In addition to the known applications in the cardiology and dental fields, Axsun's unique technology has the potential to expand OCT applications into a number of new platforms serving large markets in the health care sector, including peripheral vascular, neurovascular, cancer and ophthalmology."

The transaction is expected to be neutral to earnings per share in fiscal 2009, but Volcano said it will provide additional details on the financial impact of the transaction when it provides 2009 guidance during its fourth-quarter earnings conference call in mid-February.

For more information, visit: www.volcanocorp.com