St. Jude Medical (NYSE:STJ) last week branded neurostimulation devices maker Spinal Modulation as its territory with a $40 million equity investment that gives St. Jude international distribution rights and an exclusive option to acquire the company down the road.
St. Jude bought immediate distribution rights for the Axium Neurostimulator System, a nerve stimulation device for patients with chronic, intractable pain. The longer-term acquisition rights allow St. Jude to nab Spinal Modulation for up to $300 million, with additional revenue-based payment milestones, once Spinal Modulation achieves U.S. commercialization.
The Axium system has the FDA’s Investigational Device Exemption status and Spinal Modulation expects to begin enrollment in a U.S. clinical trial in the 2nd half of this year.
Privately held Spinal Modulation, which in November 2011 won E.U. approval for Axium, has had backing from some of the largest companies in the medtech space, including Medtronic (NYSE:MDT) and Johnson & Johnson (NYSE:JNJ) which both participated in a $30 million Series D financing round in June 2011.
The Axium device stimulates nerve stimulation to an area of the spine called the dorsal root ganglion (DRG), an area that contains nerve fibers that carry signals, including pain signals, to the brain. The device’s leads are placed at the DRG, unlike traditional systems which place leads along the dorsal column of the spin. That allows Axium to deliver targeted pain-blocking therapy to hard-to-treat areas such as the lower leg, foot and groin, according to a St. Jude statement. Axium also uses about 95% less power than traditional systems, the company added.
"This investment in our neuromodulation business further demonstrates St. Jude Medical’s commitment to transforming the treatment of debilitating conditions, including chronic pain, which impacts about 10 to 13% of the adult population and carries an economic burden of billions of dollars annually," St. Jude implantable electronics president Dr. Eric Fain said in prepared remarks.
STJ shares were down 0.2% to $43.90 as of about 12:15 p.m. today.