Medical Device Daily Associate

St. Jude Medical (St. Paul, Minnesota) reported that it has signed a definitive agreement to acquire the business of Velocimed (Maple Grove, Minnesota), a privately owned company that develops and manufactures specialty interventional cardiology devices.

St. Jude will acquire Velocimed's business for a cash purchase price of $82.5 million, less an estimated $8.5 million of cash at Velocimed upon closing, plus additional contingent payments tied to revenues in excess of minimum future targets, and a milestone payment upon FDA approval of the company's Premere patent foramen ovale (PFO) closure system. The first additional contingent payment contemplated under the agreement would be paid in March 2007.

St. Jude said it anticipates that the acquisition will close in 2Q05. In connection with this transaction, the company will record a special charge for in-process R&D. It noted that the acquisition does not change its existing guidance for 2005 earnings per share, exclusive of special charges.

Velocimed was founded in 2001 to develop specialty interventional cardiology and neurology devices. Velocimed has developed three product platforms: the Premere PFO closure system; the Proxis proximal embolic protection device; and the Venture guidewire control catheter for accessing difficult anatomy and crossing chronic total occlusions in interventional catheterization procedures.

The company's investors include Warburg Pincus, the Vertical Group and RiverVest Venture Partners.

Velocimed has drawn more than $45 million in venture funding to date to develop its products, which it says are designed to be developed quickly — a contrast from other device makers that might take seven to 10 years to bring a product through regulatory clearance and to market.

Commenting on the proposed acquisition, St. Jude Chairman, President and CEO Daniel Starks said, “The acquisition of Velocimed supports our objective of building on the market leadership of our Angio-Seal vascular closure product line through selective investments in emerging therapies that represent significant new growth opportunities for interventional catheterization procedures. We look forward to completing this transaction and welcoming the employees of Velocimed to St. Jude Medical.“

Paul Buckman, president of the company's recently formed Cardiology Division, noted that the Velocimed buy bolsters his unit's potential product offerings.

“In July 2004, St. Jude Medical announced the formation of the Cardiology Division,“ said Buckman. “With this transaction, St. Jude Medical gains immediate access to three product platforms that serve growing segments of the interventional cardiology market and that we are particularly interested in bringing to our customers.“

Peter Gove, a spokesperson for St. Jude, underscored Buckman's comments for Medical Device Daily, saying that the company didn't just buy Velocimed solely for its PFO system — since there already are larger, more advanced players in that space, including NMT Medical (Boston) and AGA Medical (Golden Valley, Minnesota) — but rather for the range of products that it has developed.

“The combination of their technologies is what attracted us,“ said Gove. He coupled this with the company's desire to leverage its continued success with Angio-Seal and “expand our cardiology product lines into therapeutic areas.“

On behalf of Velocimed, Dennis Wahr, MD, a founder, director and CEO, said, “The Velocimed team is delighted to join forces with St. Jude Medical. We think the combination of our technology and St. Jude's experience and resources will allow these interventional cardiology products to achieve their full potential.“

A PFO is a structural defect of the heart where a small hole at birth between the right and left atria fails to close in infancy. An estimated 25% of the adult population has a PFO. Though usually considered benign, this condition has been associated with an elevated risk of a stroke. More than 200,000 patients worldwide who survive a stroke each year have a PFO and are potential candidates for PFO therapy.

The Premere PFO closure system already is approved in Europe. Efforts to initiate a U.S. clinical study of the system under an investigational device exemption (IDE) are currently underway.

Speaking at the JP Morgan Healthcare Conference in San Francisco last month, Wahr, formerly an interventional cardiologist, indicated tremendous enthusiasm for the PFO market, describing it as a “staggering opportunity“ at $800 million and with a paltry 4% current penetration rate.

Premere is designed, the company said, to “redefine“ PFO closure. Consisting of two flexible, low-profile, nitinol anchors connected via an adjustable length polyester tether, the system is designed to adapt to the patient's individual anatomy, maximizing closure success while minimizing procedural complications.

This first-of-its-kind design is intended to enable greater placement control during deployment. The anchors, Velocimed said, “are designed to conform seamlessly to the septal wall to 'hold the door shut,' promoting rapid endo-thelialization and closure of the PFO.“

The system will be available in 15 mm, 20 mm and 25 mm sizes.

Embolic protection devices are used to help minimize the risk of heart attack or stroke if plaque or other debris are dislodged into the bloodstream during interventional cardiology procedures. Interest in the embolic protection market has increased based on recent studies involving saphenous vein grafts (SVG) where a reduction of major adverse coronary events occurred when other embolic protection devices were deployed. Velocimed's Proxis device has CE mark approval for SVG use and is currently being evaluated in the U.S. in a clinical study under an approved investigational device exemption granted by the FDA.

A chronic total occlusion (CTO) refers to the complete obstruction of a blood vessel that can prevent an interventional cardiologist from delivering catheter-based therapy to a location past the obstruction. Velocimed's Venture wire placement catheter is designed to assist clinicians in these situations by providing precise steering control and other unique features to help advance a guidewire past a CTO to the desired location in the body. The catheter has CE mark approval and is ready for market release in the U.S.

While not downplaying the significance of a PFO device being purchased for the first time by a large company like St. Jude, Larry Haimovitch, president of Haimovitch Medical Technology Consultants (Mill Valley, California), told MDD that Velocimed's next few years are going to be driven not by PFOs but rather by its distal embolization protection product line and guidewires.

That being said, he noted that sources have told him that the Premere PFO product “is a really good device,“ and could have the opportunity to play in the newest potential application for such systems — the treatment of severe migraines. This could be especially true in Europe, he said, because the device is not indicated for any specific condition. Rather, it has a broad approval, whereas in the U.S. it would have to be labeled for specific indications.

“The way to position the merger is to say near-term [there is a] significant opportunity in distal protection,“ Haimovitch said. “Longer-term, there's a huge potential opportunity out of migraines and stroke, but not in the U.S. because there are going to have to be detailed clinical trials.“

It remains to be seen whether the migraine indication will hold up under extensive trials. NMT Medical initiated patient enrollment in its Migraine Intervention with StarFLEX Technology (MIST) clinical study in Europe in January, becoming the first company in the space to initiate a migraine trial (Medical Device Daily, Jan. 10, 2005).

In other dealmaking news:

• Bridgetech Holdings International (Solana Beach, California) reported that it has signed a letter of intent to acquire a majority interest in Clarity Imaging International, a Texas-based diagnostic imaging and image guided therapeutic company.

“We believe a cornerstone to the foundation of Bridge-tech is imaging and image-guided therapy,“ said Herbert Wong, chairman of Bridgetech.

“In the future, imaging and surgery centers will work hand in hand.“ he added. “We can't see a new surgery center opening without imaging.“

Clarity expects to have a minimum of five imaging centers opened by the end of 2005 in the U.S. alone. Each center should generate revenue of $2 million to $3 million on an annual basis.

• Certron Corp. (Los Angeles) reported the closing of the merger of Certron Acquisition Corp., a wholly owned subsidiary of Certron Corp., with and into Cybrdi (Frederick, Maryland).

As a result of the merger, Cybrdi is now a wholly owned subsidiary of Certron and the former Cybrdi shareholders will be issued roughly 47.3 million shares of Certron common stock, representing about 93.8% of the common stock of Certron Corp.

The shares are being issued in exchange for all of the issued and outstanding common stock of Cybrdi. Certron will be filing amended articles of incorporation with the California Secretary of State to change its name to Cybrdi.

All of Certron's officers and directors have resigned and Yanbiao Bai, the CEO of Cybri, has assumed the role of CEO and a director of Certron. Other vacancies on the board of directors and other positions within the company will be filled by officers and directors of Cybrdi.

Cybrdi conducts operations in both China and the U.S. Most of its Chinese operations are conducted through its 80% ownership interest in a Chinese joint venture.

Cybrdi manufactures both human and animal tissue microarrays for a variety of scientific uses, such as drug discovery and development. Its U.S. office is located in Frederick and the main office of its Chinese joint venture is located in Shaanxi, China, a suburb of Shanghai.

Certron was engaged in the distribution of magnetic media products, primarily blank audio and videocassettes, but disposed of or wrote off its remaining inventory in that sector during fiscal 2003.