St. Jude Medical Inc. (NYSE:STJ) agreed to spend $60 million on an equity stake in CardioMEMS Inc., an Atlanta-based medical device company that’s developing a wireless system to test heart function.
The deal gives St. Jude a 19 percent stake in CardioMEMS, plus an exclusive option to acquire the company for another $375 million "during the period that extends through the completion of certain commercialization milestones," according to a press release.
CardioMEMS was founded by Dr. Jay Yadav, a former staff physician at the Cleveland Clinic who left the institute in 2006 after heading its innovations unit. Yadav, who also founded AngioGuard, ( later acquired by Johnson & Johnson’s (NYSE:JNJ) Cordis Corp. subsidiary), sued the clinic in 2007, claiming it had done irreparable harm to his good name as a researcher and clinician during interviews with the Cleveland Plain Dealer.
The Cleveland Clinic and Yadav settled the case for undisclosed terms earlier this year.
The CardioMEMS system uses pulmonary artery pressure to measure how well a patient’s heart is functioning, via a sensor that transmits real-time measurements to an external monitor. A clinical trial of the system in patients with New York Heart Association Class III heart failure showed a 30 percent reduction in rate of hospitalizations for heart failure after six months and a 38 percent reduction per year in hospitalizations over 15 months, according to the press release.
CardioMEMS raised a $22.1 million round of venture capital backing in August 2009, money it used to bankroll its Champion clinical trial.