STJ ST. Jude Medical, Inc.

Medical devices major St. Jude Medical (STJ) reported that its subsidiary AGA Medical Holdings has filed new patent infringement lawsuits against Europe-based cardiac occlusion (closure) devices and vascular implants maker Occlutech.

The suits, which were filed at the District Court of Duesseldorf, Germany, and the High Court of Justice, Chancery Division (Patents Court), U.K., involve three patents and seek injunctive relief and monetary compensation.

Minnesota-based heart devices maker AGA Medical Holdings has been involved in litigation with Occlutech since 2006. The latest lawsuits allege that Occlutech’s  atrial septal defect (“ASD”) and patent foramen ovale (“PFO”) closure/occlusion devices infringe key patents used in St. Jude Medical AMPLATZER occlusion device platform. The platform offers minimally invasive transcatheter treatments for the safe closure of structural heart defects.

Occlutech received a favorable ruling from the German Supreme Court (“BGH”), in May 2011, in the previous patent litigation brought by AGA Medical. The BGH did not find any basis for AGA’s allegation that Occlutech’s ASD and PFO devices violated any patent referred to in the lawsuit. Earlier, Occlutech had won a favorable court ruling in the U.K. and  The Netherlands.

St. Jude officially completed its acquisition (announced in October 2010) of cardiac devices maker AGA Medical Holdings in November 2010 for $1.3 billion. AGA Medical specializes in devices for treating structural heart defects and vascular abnormalities with minimally invasive transcatheter treatments.

Many of the company’s products are used to treat heart defects in children. Its coveted AMPLATZER occlusion devices are currently sold in 112 countries. AGA Medical has the leading market share for structural heart defect occluders.    

The acquisition of AGA Medical has considerably strengthened St. Jude’s Cardiovascular franchise, providing it with the opportunity to expand into fast-growing new therapy areas beyond the mature ICD and pacemaker markets. The company and its peers Medtronic (MDT) and Boston Scientific (BSX) are grappling in the soft CRM market for share.

The integration of the complementary product lines has made the combined entity a leading player in the structural heart market. St. Jude’s structural heart product revenues zoomed 66% in first-quarter 2011 benefiting from the addition of the AGA Medical product lines.

AGA Medical has a robust pipeline with a number of products currently under clinical trials. Should they be successful, St. Jude can look forward to blockbuster opportunities. The company expects the acquisition to help its sales grow at a low double-digit clip in 2011.

Moreover, the deal is expected to be accretive to St. Jude’s earnings starting 2011. We are currently Neutral on St. Jude, which is in agreement with a short-term Zacks #3 Rank (Hold).

 
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