Analyst: Med-tech firms may become buyout targets

Shares of surgical device maker Cardica fell 60 cents, or 12.9 percent, to $4.07. Gene therapy developer Cardium Therapeutics fell 12 cents, or 11 percent, to 94 cents.

Lazard Capital markets analyst Sean Lavin highlighted both stocks in a note on companies that will likely have trouble raising cash and consequently become acquisition targets for larger firms. Lavin lowered his price target for Cardica to $11 from $16, indicating the company will likely have trouble raising cash. Cardium's price target dropped to $2 from $5 on similar cash concerns and potential competition from rival products.

Other companies that could become buyout targets include: Hansen Medical Inc., Mako Surgical Corp. and Arthrocare Corp., according to Lavin.

Research by Pricewaterhouse Coopers shows venture capital funding for the device sector fell to $896 million in the third quarter of 2008, down 25 percent from a high point of $1.2 billion in the first quarter of 2007.

While cash-strapped startup companies will present buying opportunities for established device makers, Lavin reported that industry player Boston Scientific is only willing to spend money on companies with commercial, in-demand technology.

Boston Scientific's Chief Executive Jim Tobin reportedly said that his company has nearly $2 billion in cash, but will very careful about any purchases due to the economic downturn.

"At this time we will only buy things that increase top-line growth. Small startups are generally out of luck," Tobin said in an address at the Cleveland Clinic on the economy and health care sector.

Shares of the Natick, Mass.-based company fell 12 cents to $6.89.