New Medtronic Acquisition Adds To Atrial Fibrillation Unit
January 12 2009 - 2:15AM
Dow Jones News
Medtronic Inc. (MDT) is buying a private company that makes
devices to correct a heart-rhythm problem called atrial
fibrillation as it steadily builds a business to address that
fast-growing cardiology market.
Medtronic will pay $225 million for Ablation Frontiers Inc.,
which is based in Carlsbad, Calif., plus additional payments linked
to certain clinical milestones. Medtronic declined to disclose the
details of those payments.
Ablation Frontiers sells a system of catheters in Europe that
use radio frequency to address rhythm problems, but does not yet
have approval to sell them in the home market. It is currently
enrolling patients in a study designed to gather evidence for Food
and Drug Administration approval, and the system could reach the
U.S. in the first half of 2010.
Medtronic's new deal follows its recently closed $380 million
purchase of CryoCath Technologies Inc., which makes a different
type of system designed to treat atrial fibrillation.
Minneapolis-based Medtronic, a medical-devices heavyweight well
known for implantable defibrillators and pacemakers, is folding
both acquisitions into a new franchise called AF Solutions.
Both companies make technology that should offer simpler and
faster procedures than current treatment methods, according to
Medtronic. The systems, for example, are designed to address more
surface area at once while negating the need for complex mapping to
guide treatment.
Atrial Fibrillation is a common type of irregular heart rhythm
that involves fast and very disorderly beating in the heart's upper
chambers. It can heighten the risk of strokes and other
complications.
The problem is typically treated with drugs, which often don't
help. There is also a growing market for using catheters threaded
through blood vessels to destroy tissue and stop electrical signals
that cause the problem. The market is moderately sized, with few
potential candidates getting the therapy today, but it has at least
a 20% annual growth profile.
As newly purchased technology is approved, that kind of
expansion could help offset the slower, single-digit growth profile
of Medtronic's big business for implantable defibrillators. That
business has also been challenged recently by tough
competition.
"We're driving into a high-growth, underserved market," said
Reggie Groves, vice president and general manager for the AF
Solutions business, in an interview.
The market for treating atrial fibrillation with devices is
already growing in the U.S., even though no company has approval
yet to market its tools for this purpose. But there are catheters
approved for fixing other issues, and doctors can use approved
devices for other purposes at their discretion.
Medtronic heart-device rival St. Jude Medical Inc. (STJ) has a
big device-based atrial fibrillation business, as does Johnson
& Johnson (JNJ) unit Biosense Webster. The latter company could
become the first to win Food and Drug Administration approval for
treating atrial fibrillation with devices - an FDA panel of outside
experts recommended approval in November.
Medtronic sees its recent deals as complimentary because they
bring different technology aimed at different types of atrial
fibrillation. The key CryoCath system - which is also under study
in the U.S. with potential introduction in the first half next year
- uses a balloon to freeze tissue and address atrial fibrillation
that comes and goes.
The Ablation Frontiers tools use heat to treat persistent and
sometimes long-lasting atrial fibrillation that may require
targeting tissue in different areas.
The Ablation Frontiers purchase is seen closing in Medtronic's
fiscal fourth quarter, which ends in late April.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
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