St. Jude to acquire CardioMEMS following FDA approval of device
May 28 (Reuters) - St. Jude Medical Inc said on Wednesday it plans to exercise its option to buy the shares of CardioMEMS it does not already own for $375 million following news the Food and Drug Administration has approved CardioMEMS's wireless heart device.
The implantable device is designed for use in managing patients with heart failure. It records pulmonary artery pressure and transmits it to physicians, who can monitor it remotely and manage the condition.
"FDA approval is in line with our expectation and a positive for St. Jude," Larry Biegelsen, an analyst at Wells Fargo Securities, said in a research note. He estimates CardioMEMS sales will reach $259 million annually by 2018.
In September 2010, St. Jude paid $60 million for a 19 percent stake in CardioMEMS, with an exclusive option to buy the remaining 81 percent for $375 million. The company said it plans to exercise its option and expects to complete the acquisition in the second quarter of this year.
St. Jude's shares rose 3.5 percent to $66.40 in afternoon trading on the New York Stock Exchange.
Michael Weinstein, an analyst at J.P. Morgan, said CardioMEMs "represents a key piece to the growth reacceleration story at St. Jude." He added the CardioMEMS system "has the chance to be one of the more meaningful technological advances in heart failure management in recent memory."
Heart failure occurs when the heart is unable to pump enough blood through the body to meet its demands, pushing up blood pressure in the heart. Increased pulmonary artery pressure can precede worsening heart failure.
By being able to monitor a patient's pulmonary artery pressure remotely, physicians can manage a patients medications and reduce the likelihood of hospitalization.
"The CardioMEMS HF System will not only improve the lives of patients but will also reduce the economic burden of this epidemic disease," Dr. Eric Fain, group president of St. Jude, said in a statement. "We are delighted to have CardioMEMS become a part of St. Jude Medical."
Atlanta-based CardioMEMS was founded by Dr. Jay Yadav, a cardiologist and entrepreneur. Investors in the company include Arcapita Ventures, Boston Millennia Partners and Foundation Medical Partners. (Reporting by Toni Clarke in Washington; Editing by Paul Simao)