May 28 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
(Reporting by Toni Clarke in Washington; Editing by Paul Simao)