St. Jude pours $40M into neuromod outfit with option to buy

St. Jude bought the rights to sell Spinal Modulation's Axium device.--Courtesy of Spinal Modulation

St. Jude Medical ($STJ) is investing $40 million in Spinal Modulation to get its hands on the company's pain-management device, and, if the partnership goes well, St. Jude holds the option to buy it straight up for $300 million.

Under the deal, St. Jude gets exclusive rights to sell the Axium Neurostimulator System, a CE marked spinal cord stimulation device Spinal Modulation said can treat areas of chronic pain missed by other on-the-market therapies. The device targets the dorsal root ganglion of the spine, using 95% less energy than traditional neuromodulation implants and delivering pain relief in hard-to-treat areas like the lower leg, foot and groin, Spinal Modulation said.

The device won its CE mark in 2011, and Spinal Modulation snagged the FDA's blessing for a large-scale U.S. trial, expecting to kick off enrollment later this year.

For St. Jude, picking up the rights to sell Axium gives it another marketable device in its neuromodulation business, which slipped 4% last quarter to $99 million. St. Jude has targeted the unit for growth, rolling out new devices around the globe to build on 2012's 1% sales growth, and Axium complements the company's existing line of deep-brain stimulators and spinal modulation implants, division president Eric Fain said.

"This investment in our neuromodulation business further demonstrates St. Jude Medical's commitment to transforming the treatment of debilitating conditions, including chronic pain, which impacts about 10% to 13% of the adult population and carries an economic burden of billions of dollars annually," Fain said in a statement.

Spinal Modulation, founded in 2004, developed its device with the help of $30 million in financing from the likes of Medtronic ($MDT) and Johnson & Johnson ($JNJ), and pairing up with St. Jude will give it a global platform to expand Axium's adoption, CEO David Wood said.

- read the announcement

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