St. Jude Exercises Option to Buy Rest of CardioMEMS

<span class="articleLocation”>St. Jude Medical Inc, is buying CardioMEMS—well, the rest of the company it doesn’t already own. 

The St. Paul, Minn.-based cardiovascular firm plans to exercise its option to buy the shares of Atlanta, Ga.-based CardioMEMS it does not already own for $375 million following the recent U.S. Food and Drug Administration (FDA) approval CardioMEMS’s wireless implantable heart technology that is designed for use in managing patients with heart failure. CardioMEMS received FDA’s blessing on May 28. The CardioMEMS HF (heart failure) System already has inpatient reimbursement from the Centers for Medicare and Medicaid Services.

Second time was a charm for CardioMEMS. The FDA has turned the company down the first time it sought approval for it’s technology.

The company’s technology records pulmonary artery pressure and transmits it to physicians, who can monitor it remotely and manage the condition. 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, and any technology that will reduce healthcare costs in the short and long terms is a solid bet for future long-range profits, St. Jude is predicting.

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 expects to complete the acquisition in the second quarter of this year.

“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.

Michael Weinstein, an analyst at J.P. Morgan, said CardioMEMs “represents a key piece to the growth re-acceleration 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.”

“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 Jay Yadav, M.D., a cardiologist and entrepreneur and and Mark Allen, a Georgia Tech nanotechnology professor. Yadav serves as the firm’s CEO. Investors in the company include Arcapita Ventures, Boston Millennia Partners and Foundation Medical Partners.

“Hospitalizations are very traumatic for heart failure patients and costly to the healthcare system,” Yadev said. “With the availability of the CardioMEMS heart failure monitoring system, doctors and nurses can now deliver improved and more efficient care to their patients and produce meaningful reductions in their patients’ heart failure related hospitalizations.”

Yadav said the company will remain headquartered in Atlanta.

Philip Adamson, M.D., director of the Heart Failure Institute at the Oklahoma Heart Institute and co-principal investigator of the CHAMPION study, the data from which the FDA approval was granted, added: “The CHAMPION trial illustrates how close monitoring of patients with chronic heart failure can reduce the need for costly and dangerous hospitalization while improving quality of life. These results are the beginning of a new era of hope for patients suffering from chronic symptomatic heart failure complementing medical and device therapies. The ‘Hemodynamic Era’ is a major advancement with promise for profound long-term impact on heart failure morbidity.”

Takao Ohki, M.D., chief of vascular surgery at Jikei University in Tokyo, Japan, said, “The ability to get physiologic information wirelessly from patients with heart failure is a great breakthrough and represents the culmination of many years of basic and clinical research.”

Yadav noted that the research in heart failure would not have been possible without Dr. Ohki’s pioneering work with the CardioMEMS wireless technology in aortic aneurysms.