2013 Medtech M&A Review: St. Jude Medical Jolts the Heart Care Sector

By Clyde A. Burkhardt

St. Jude Medical, a leading producer of defibrillators and pacemakers, in August announced the proposed acquisition of Switzerland-based Endosense SA, which developed the highly innovative force-sensing TactiCath irrigated ablation catheter.

The acquisition could give St. Jude an edge in the highly competitive $900-million global cardiac ablation market. The price will be approximately $170 million initially and could include up to an additional $160 million if the TactiCath catheter meets certain regulatory targets. Endosense completed a U.S. trial of the device and is expected to submit an application to FDA by the end of 2013.

In an October transaction that inspired a lot of talk in the medtech industry, St. Jude acquired Nanostim Inc., developer of the first commercially available leadless pacemaker. The transaction adds to St. Jude’s portfolio of heart rhythm products a wireless pacemaker that is one-tenth the size of a traditional pacemaker. A major advantage of the Nanostim leadless pacemaker is that it is minimally invasive and eliminates lead and surgical pockets. With the acquisition, St. Jude will be the first to market with a wireless pacemaker, beating out competitors Boston Scientific and Medtronic, which are believed to be working to develop leadless pacemakers of their own.

In a financing transaction agreement that could lead to a future acquisition in the spine segment, St. Jude invested $40 million in privately held Spinal Modulation Inc., the developer of the Axium Neurostimulator System, which provides neuromodulation therapy for patients with chronic intractable pain. St. Jude has exclusive options to market the system in international markets where it is approved for sale and acquire the Spinal Modulation for up to $300 million plus certain revenue-based milestones upon commercialization in the United States.

Clyde A. Burkhardt is senior managing director of HT Capital Advisors LLC (New York City), a private investment banking firm. He leads HT Capital Advisors' groups focusing on the medical device, healthcare services, and precision component industries. Contact Burkhardt at [email protected].