St. Jude Medical (NYSE:STJ) said it agreed to pay up to $331 million, including $170 million in up-front cash, for Swiss force-sensing catheter maker Endosense.
St. Paul, Minn.-based St. Jude said the deal also includes provisions for milestone payments worth another $161 million "contingent upon both the achievement and timing of a regulatory milestone," likely pre-market approval from the FDA.
Endosense’s TactiCath device is designed to sense the force being applied to heart muscle during cardiac ablation procedures. CEO Jan Keltjens told MassDevice.com last summer that Endosense is likely to be the 2nd player in the U.S. force-sensing catheter market after Johnson & Johnson’s BioSense Webster subsidiary – and ahead of St. Jude.
"Apart from the fact that we are pioneering force-sensing, which is sometimes underestimated, is the fact that we think that by the time we get to the market we’ll be only the 2nd approved device in the U.S. in this space," Keltjens told us. "For now it’s a 1-horse race, it’s Biosense Webster. And I think it’s going to be a little bit of a neck-to-neck race with St. Jude Medical, but I would not be surprised if we pulled ahead of them and that we are the 2nd approved device."
Endosense closed a $40 million Series C round in November of last year, after winning CE Mark approval in the European Union for its 3rd-generation TactiCath Quartz device in June. The 1st U.S. use of the TactiCath Quartz came in February 2013, as part of Endosense’s just-completed Toccastar trial aimed at backing its application for pre-market approval from the FDA.
Endosense, which had said it hopes to file for PMA approval during the 4th quarter, now expects to file for a a paroxysmal atrial fibrillation indication "before the end of the year," according to a press release.
St. Jude said it funded the acquisition using cash reserves held outside the U.S. "and expects to make any future payments using these same cash balances."
"The acquisition of Endosense further strengthens our industry-leading portfolio of products to treat patients with cardiac arrhythmias, and provides an opportunity to accelerate our market share capture in the $900 million global cardiac ablation catheter market," St. Jude’s cardiovascular & ablation technologies president Frank Callaghan said in prepared remarks. "This transaction significantly accelerates our timeline to providing an irrigated ablation catheter that incorporates force sensing in both international and U.S. markets, and has potential future applications across other St. Jude Medical technology platforms as well."
Back in May 2012 at the Heart Rhythm Society meeting in Boston, Keltjens downplayed the possibility of an acquisition, saying he believed Endosense had the horses to go it alone.
"One of my philosophies is you don’t sell companies. What you do as a management team is you build a company. You build a business, and then at some point the proposition may become so compelling that one of the big ones is trying to take you out," he said. "That could be theoretically Biosense Webster, because they want to lock up the segment. I’m not going to speculate on whether they want to do it or not."
