Greatbatch to Spin Off Neuromodulation Firm

If 2014 was the year of consolidation, it looks as if 2015 is the year of the spinoff.

Frisco, Texas-based Greatbatch Inc. has caught the spinoff bug.

The company is planning for the tax-free spin-off of its neuromodulation subsidiary, QiG Group LLC, to be known post-spin as Nuvectra Corp.
Neurostimulation market veteran Scott Drees has been named as Nuvectra’s CEO. In addition, Joseph A. Miller Jr. will step down from Greatbatch’s board of directors immediately prior to the completion of the spinoff to accept an appointment as a director and chairman of the board of Nuvectra.

Nuvectra will be a neuromodulation medical device company initially focused on the development and commercialization of a neurostimulation technology platform for treatment of various disorders through stimulation of tissues associated with the nervous system. This technology platform has the capability to provide treatment to patients in several established markets such as spinal cord stimulation (SCS), sacral nerve stimulation (SNS) or deep brain stimulation (DBS), and other emerging sectors.

Algovita is the first application of this neurostimulation technology platform and is indicated for the treatment of chronic pain of the trunk and limbs. It received CE Mark last year, and U.S. Food and Drug Administration (FDA) approval is expected before the end of 2015, according to the company.

Algovita brings to market a “user-friendly, robust and flexible design with a broad set of product capabilities and advanced technology, and is well positioned to take market share from existing SCS systems,” company officials said.  Greatbatch estimates the SCS marekt to be approximately $1.8 billion globally. Nuvectra is expected to continue developing additional applications for its technology platform to compete in the broader $3.5 billion global neurostimulation market.

Drees served as neuromodulation portfolio manager for QiG Group, and provided leadership and direction to QiG’s subsidiaries, Algostim LLC and Pelvistim LLC. In his 34 years in the implantable medical device industry—20 of which have been focused on neurostimulation—Drees was instrumental in the development of the global neurostimulation market while in leadership roles at Advanced Neuromodulation Systems Inc., now part of St. Jude Medical Inc.

Drees was a founding board member of the National Pain Foundation, and currently serves on the board of directors at Neuros Medical Inc. Prior to ANSI, Drees held a wide variety of positions at St. Jude Medical, Boston Scientific Corp. and Johnson & Johnson’s Codman division.

Miller has served as a Greatbatch director since 2003, chairs the Technology and Investment Committee and is a member of the Corporate Governance and Nominating Committee. He retired in 2012 as executive vice president and chief technology officer for Corning Inc., a position he’d held since 2001. Before joining Corning, he served as senior vice president of E.I. DuPont de Nemours in addition to other executive leadership roles. Miller also serves on the board of directors of Lightwave Logic Inc.

Greatbatch plans to continue to focus on expanding its core business and providing complete medical device systems for its customers.

“This spinoff will provide Greatbatch and Nuvectra with even greater focus and flexibility needed to execute independent growth initiatives, undertake strategic imperatives and deliver unparalleled service to our respective customers,” said Thomas J. Hook, president and CEO of Greatbatch. “With Scott Drees as CEO, Nuvectra will have one of the global neurostimulation market’s most capable and experienced executives at the helm. Joe Miller adds invaluable technology and industry expertise, plus proven leadership in public company governance. Nuvectra will be well positioned for success from day one.”

The spinoff is expected to be completed by the end of 2015, but remains subject to a number of considerations including final approval of the Greatbatch board of directors, status of FDA approval, receipt of an opinion regarding the tax-free nature of the transaction, and the effectiveness of the Form 10 registration statement, among other considerations.

Greatbatch develops and manufactures critical medical device technologies for the cardiac, neurostimulation, vascular and orthopedic markets; and batteries for high-end niche applications in the portable medical, energy, military, and environmental markets. It sells through its brands Greatbatch Medical, Electrochem and QiG Group.