St. Jude Medical (NYSE:STJ) said today that it closed its buyout of Spinal Modulation May 1, in a bid to extend its reach into the neuromodulation space.
Spinal Modulation makes the Axium device, a neurostimulator designed to treat an area of the spine called the dorsal root ganglion, which contains nerve fibers that carry pain signals to the brain.
St. Paul, Minn.-based St. Jude paid $40 million for a stake in Spinal Modulation back in June 2013, including international distribution rights for Axium and an exclusive buyout option worth up to $40 million. Today St. Jude said it will pay another $175 million when the buyout closes, expected in the 2nd quarter, with further milestones due on FDA approval and "achievement of certain revenue targets."
The buyout will make it the only medical device maker to offer radiofrequency ablation, spinal cord stimulation and dorsal root ganglion stimulation therapy solutions for the treatment of chronic pain, St. Jude said.
Privately held Spinal Modulation, which in November 2011 won E.U. approval for Axium, enjoyed 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.
Back in December 2014, Menlo Park, Calif.-based Spinal Modulation said it closed enrollment in a U.S. pivotal study of its Axium device and later submitted a pre-market approval application with the FDA , according to a press release.
St. Jude has said it expects the Spinal Modulation buyout to dilute adjusted earnings per share by 5¢ per share for the rest of the year.
"Completing the acquisition of Spinal Modulation, Inc. is another important step forward in building momentum and accelerating sales growth across our neuromodulation product portfolio. We’re confident the Axium system will further support our goal of providing physicians multiple options to tailor treatment for patients with chronic pain," COO Michael Rousseau said in prepared remarks.
