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| Ecvue system--Courtesy of CardioInsight |
Undisputed medical device heavyweight Medtronic ($MDT) has been busily wheeling and dealing with tiny startups this year--perhaps putting to rest industry concern that the merger with Covidien would put a damper on strategic backing for private med tech companies as a key player was eliminated.
In its second startup deal disclosed this week, Medtronic has purchased CardioInsight Technologies for $100 million plus undisclosed performance-based contingent payments. That could mean an initial return of roughly 4x for investors; according to SEC filings the company has raised more than $22 million in venture capital. Its investors include Draper Triangle Ventures, Case Technology Ventures and Jumpstart Ventures.
The FDA cleared CardioInsight's Ecvue system last November, which the agency disclosed in January. It is designed to create images of the heart's electrical activity by using electrical data from the body's surface and combining it with 3-D anatomical data. Ecvue then reconstructs and displays 3-D maps and other measures of cardiac electrical activity. The system received a CE mark in November 2011. The Ecvue system has been used in more than 1,400 patients in the U.S. and Europe.
CardioInsight's product line will become part of Medtronic's Cardiac Rhythm and Heart Failure division within the Cardiac and Vascular Group. This is already one of the company's strongest groups--Cardiac Rhythm & Heart Failure brought in $1.4 billion in revenue last quarter, an increase of 11% that was driven largely by the launch of the Reveal Linq insertable cardiac monitor in the U.S. and robust growth for Arctic Front Advance CryoAblation System. Overall, Medtronic had $7.3 billion in revenue during the most recent quarter, an increase of 7%.
In a somewhat similar deal last year, Abbott Laboratories ($ABT) snapped up Topera for $250 million plus undisclosed milestones. In January, FDA cleared the third generation of its 3-D Mapping System that was updated to include a color-imaging module to aid in the identification of rotors, a condition associated with atrial fibrillation. The improvements are intended to enable more efficient diagnoses of complex arrhythmias. The Topera acquisition was one of three deals the company cut at the time as part of its entrance into the field of electrophysiology.
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| Dr. Charu Ramanathan |
But while Topera's system requires catheterization, CardioInsight's does not. It's designed to be noninvasive and--the company claims--effective at gleaning data with just a single heartbeat. Ecvue users wear a single-use, multisensor disposable vest that captures electrical signals on the body's surface, which is then paired with software to create epicardial 3-D maps and virtual electograms from the heart.
CardioInsight was founded in 2005 by CSO Dr. Charu Ramanathan out of her research at Case Western Reserve University and the company is based where the university is located--Cleveland, OH. The startup has $7 million in cash, offsetting a bit of the Medtronic upfront bringing it to $93 million.
"This investment aligns with our goal to deliver breakthrough technologies for patients who have atrial fibrillation and other arrhythmias," Reggie Groves, VP and GM of the AF Solutions business, said in a statement."CardioInsight will broaden and enhance the existing AF Solutions program at Medtronic, and will provide meaningful clinical and economic solutions for patients, hospitals, physicians and payers."
- here is the release