St. Jude Medical Inc. in Little Canada is making a $215 million play in the market for treating chronic pain, a health condition that affects about 1.5 billion people worldwide.
St. Jude on Monday announced it plans to exercise its right to buy Spinal Modulation Inc., a Belgian company that makes a device to treat pain by electrically stimulating a cluster of sensory nerves called the dorsal root ganglion.
The Axium Neurostimulator System is cleared for commercial sales in Europe, but is still awaiting full approval from the U.S. Food and Drug Administration. The company has applied for FDA authorization to sell the device, and it plans to unveil new clinical data about the system at a conference in June.
St. Jude agreed to pay $175 million up front, plus undisclosed payments later if FDA approval is given and revenue goals are met. St. Jude acquired an exclusive option to buy Spinal Modulation when it invested $40 million in equity in the company in June 2013. Other investors included Johnson & Johnson and Medtronic PLC. Spinal Modulation is listed as having offices in Belgium, Australia and venture-capital epicenter Menlo Park, Calif.
Excluding transaction costs, the deal is expected to shave 5 cents from St. Jude's adjusted consolidated earnings for 2015, though the dilution will be partly offset by operating efficiencies. The company expects to update its earnings guidance for the year on Wednesday as part of its regular quarterly earnings report.
The deal, expected to close before July, will give St. Jude a presence in three kinds of pain-treatment therapies, including radio frequency ablation, spinal cord stimulation and now dorsal root ganglion (DRG) stimulation.
Traditional electric stimulation to treat chronic pain works by interfering with signals on the spinal cord's dorsal column. However, isolating the specific area to target with such stimulation can be difficult. The St. Jude announcement said Spinal Modulation's technology works by targeting nerves within the DRG, which is a dense structure "packed with sensory nerves" that transmit information to the spinal cord.
The technique is seen as having promise particularly for patients with chronic, intractable pain in the leg, foot or groin, as well as patients with post-surgical and neuropathic pain, which are considered underserved markets for neurostimulation devices.
