St. Jude Medical announced Friday that it is making a $40 million investment in a California spinal company and has also reserved the option to buy it at a later date for no more than $300 million plus milestone payments.

Spinal Modulation has developed the Axium Neurostimulator System, which is an intraspinal neuromodulation device to treat chronic intractable leg pain. Interestingly, other investors in the company include St. Jude Medical's in-state rival Medtronic. Another strategic investor in Spinal Modulation is Johnson & Johnson, which has invested through its venture arm.

Spinal Modulation believes that because it stimulates the dorsal root ganglion, it has adopted a novel manner to treat chronic pain. According to St. Jude Medical's news release DRG are "small structures that contain nerve fibers, which carry signals to the brain."

Neurostimulating them would interrupt the signals of pain that the brain receives. Both the companies believe that this mechanism of treating pain by stimulating the DRGs allows treating pain in areas that are currently not addressed by traditional spinal cord stimulation. These include hard to reach anatomy - extremities like the foot and back. Axium apparently also requires 95 percent less power than traditional spinal cord stimulation therapies.

The product has regulatory clearance in the European Union and is under an investigative device exemption from the FDA. Enrollment for a clinical trial will begin in the second half of the year.

“St. Jude Medical is excited to partner with Spinal Modulation and add the unique and complementary Axium Neurostimulator System to our existing neuromodulation portfolio,” said Eric S. Fain, president of the St. Jude Medical Implantable Electronic Systems Division, in the news release. “This investment in our neuromodulation business further demonstrates St. Jude Medical’s commitment to transforming the treatment of debilitating conditions, including chronic pain, which impacts about 10 to 13 percent of the adult population and carries an economic burden of billions of dollars annually.”

Neuromodulation is considered by some to be one of the most exciting developments to treat difficult diseases.

 -- By Arundhati Parmar, Senior Editor, MD+DI