St. Jude Medical Announces Intent to Acquire Spinal Modulation, Inc
28.04.2015 14:14
St. Jude Medical adds DRG stimulation technology to its pain management portfolio to expand its options for treating chronic pain
St. Jude Medical, a global medical technology company, today announced that it has exercised its exclusive option to acquire Spinal Modulation, Inc., developer of the Axium(tm) neurostimulator system. Upon completion of this acquisition, St. Jude Medical will be the only medical device manufacturer able to offer radiofrequency ablation (RFA) as well as spinal cord stimulation (SCS) and dorsal root ganglion stimulation (DRG) for the treatment of chronic pain.
The acquisition of Spinal Modulation, Inc. will advance St. Jude Medical's stated goal of providing physicians with treatment tailored to the individual needs of each pain patient, thereby achieving significantly better outcomes. Stimulation of the dorsal root ganglion (DRG) with the Axium System has been shown to provide meaningful relief in patients struggling with chronic pain. The method is particularly helpful for treating narrowly defined areas of pain that are often difficult to treat with conventional spinal cord stimulation (SCS).
The Axium system received CE approval for the treatment of chronic, refractory pain in November 2011. In December 2014, Spinal Modulation announced that it had completed enrollment in its ACCURATE IDE trial in the United States. Spinal Modulation then submitted the PMA application to the FDA to obtain approval for marketing in the United States. Results from the ACCURATE study will be presented at the 12th Annual Meeting of the International Neuromodulation Society (INS), June 6-11, 2015, in Montreal, Canada.
“Physicians require a variety of treatment options to effectively treat chronic pain, and our acquisition of Spinal Modulation is part of our ongoing commitment to providing physicians with new and innovative treatment options,” said Michael T. Rousseau, Chief Operating Officer of St Jude Medical. “Dorsal root ganglion stimulation with the Axium system ideally complements our current product portfolio for chronic pain, and the acquisition of this technology will enable us to work with physicians even better than before to reduce the burden of chronic pain to reduce.”
Chronic pain affects approximately 1.5 billion people worldwide - more than heart disease, cancer and diabetes combined. This disease can dramatically reduce quality of life, with negative impacts on personal relationships, work productivity and daily routines. It has been proven that both SCS and DRG stimulation provide relief from chronic pain and thereby restore lost quality of life to affected patients.
Unlike conventional SCS, DRG stimulation specifically stimulates nerves in the dorsal root ganglion. This structure is packed with sensory nerves that transmit information to the spinal cord, which then transmits the signals to the brain. Traditional SCS takes a different approach: nerves in the spinal cord are stimulated along the dorsal column, which is often associated with difficulty in addressing the painful area in isolation.
It has been shown that targeted stimulation of the DRG with the Axium system enables effective treatment of pain conditions that cannot currently be adequately treated with conventional SCS, for example chronic, treatment-refractory pain in the leg, foot and groin area. Research has also shown that patients suffering from postoperative pain and neuropathic pain may also benefit from DRG stimulation. It is estimated that this still underserved population accounts for more than five times as many patients as can currently be treated with commercially available products.
“St. Jude Medical has a history of delivering new, innovative treatment options for chronic pain patients, and we believe DRG stimulation as an extension of its chronic pain portfolio will bring a range of benefits to patients around the world,” said David Wood , President and Chief Executive Officer of Spinal Modulation. “We are proud of what our Spinal Modulation team has built over the last 10 years and see great potential for St. Jude Medical in continuing to expand the availability of DRG stimulation therapy to patients who can benefit from additional therapeutic options.”
Transaction details
In June 2013, St. Jude Medical entered into a series of deals that provided the company with a $40 million equity investment in Spinal Modulation. The agreements gave St. Jude Medical an exclusive option to distribute the Axium™ neurostimulator system in international markets for which this technology is approved for sale and also an exclusive option to acquire the company from St. Jude Medical. Now that St. Jude Medical has exercised its exclusive option, the Company expects to close the acquisition of Spinal Modulation in the second quarter of 2015, subject to customary closing conditions.
St. Jude Medical will pay approximately $175 million upon closing of the transaction, with additional payments due upon FDA approval of the Axium system and the achievement of certain sales targets. Excluding acquisition-related costs, we estimate that this acquisition will dilute St. Jude Medical's adjusted net income for the remainder of 2015 by approximately $0.05 per share, which we hope to partially offset through operating efficiencies. St. Jude Medical will provide an update to its 2015 adjusted consolidated earnings per share through share guidance when it announces its first quarter results on April 22, 2015.