Compatible Acquisitions

Originally Published MX May/June 2006

COVER STORY

Despite St. Jude Medical's spurt of acquisitions in 2005, less than 10% of the company's growth in the past year has been acquired growth, says Daniel J. Starks, chairman, president, and CEO of St. Jude Medical (St. Paul, MN). Instead, the company has focused on acquisitions that accelerate St. Jude Medical's existing internal initiatives, including those in the cardiac and neuromodulation sectors.

St. Jude Medical kicked off 2005 with the closing of its $272 million acquisition of Endocardial Solutions Inc. (ESI; St. Paul, MN). ESI develops, manufactures, and markets the EnSite system for the diagnosis and treatment of atrial fibrillation and other arrhythmias.

Several months later, in April 2005, St. Jude Medical completed its acquisition of interventional cardiology device manufacturer Velocimed (Maple Grove, MN) for $74 million in cash, with further payments contingent upon achievement of milestones. The acquisition brought St. Jude Medical into one of cardiology's hottest segments: the patent foramen ovale (PFO) closure market. PFOs are common defects in which a small hole between the upper chambers of the heart can allow unfiltered venous blood to enter the arterial circulation. If the unfiltered blood contains a clot or other debris, it can trigger a stroke or transient ischemic attack. Approximately 25% of the adult population has a PFO, and although the condition is considered benign in most people, there is evidence that PFOs may be associated with migraine headaches.

Velocimed's PFO closure system, Premere, received the European CE mark in December 2004. In the United States, Premere is currently available only for investigational use. The device will be used in a clinical trial under an FDA-approved investigational device exemption to study the effect of PFO closure on migraine attacks.

Continuing its trend of complementary acquisitions, in the fourth quarter of 2005 St. Jude Medical acquired Advanced Neuromodulation Systems (ANS; Plano, TX) for $1.3 billion. With the purchase of ANS, which reportedly holds the number-two market spot in the spinal cord stimulation segment, St. Jude Medical gained control of the company's Eon rechargeable neurostimulation system. The Eon is an implantable pulse generator (IPG) system designed to manage chronic, intractable pain of the trunk and limbs. The pacemaker-like rechargeable IPG features a battery life of at least seven years at high power and is compatible with the full line of ANS leads. The Eon system offers an extensive array of configuration, programming, and placement options, allowing clinicians to customize therapy to meet each patient's specific needs.

Copyright ©2006 MX