St. Jude Medical acquires early-stage device company Nanostim

St. Jude Medical paid about $123 million to acquire a developer of small, leadless cardiac pacemakers not yet approved in the U.S. The deal follows St. Jude's 2011 recall of leads for two of its pacemakers.

The deal with Nanostim, an early-stage medical-device company based in Milpitas, Calif., has been in the works for several years. St. Paul, Minn.-based St. Jude Medical first said it was partnering with the company two years ago during the product development and commercialization phases. The deal also offers Nanostim additional cash payments up to $65 million for future milestones.

Nanostim's device received approval in Europe, but it has not yet been approved by the FDA. Enrollment in its investigational device exemption study is expected to begin in the first half of 2014, a St. Jude Medical spokeswoman said.

St. Jude Medical, one of the largest makers of cardiac rhythm management devices, in 2011 had to recall leads for its Riata and Riata ST pacemakers after reports of premature lead insulation failure. Most implantable heart defibrillators have leads, which can often lead to revision procedures. Experts say that lead extraction can have “unavoidable risks,” and hospitals have said this can lead to higher costs.

Boston Scientific last year had a subcutaneous implantable heart defibrillator approved by the FDA. That device does not require hardware to be implanted into the heart, which the company has said may lead to cost-savings.

Dr. Ken Stein, chief medical officer for Boston Scientific's cardiac rhythm management group, last year told Modern Healthcare: “By avoiding issues with lead failures, by avoiding some of the operative complications, which are things that can lead to very high healthcare expenditures, we are very confident that this is going to play very well in a cost-conscious environment.”

Biotronik, another manufacturer of cardiovascular medical devices, in February reported approval of an implantable cardioverter defibrillator that operates with one lead rather than two and has atrial sensing capabilities.

Follow Jaimy Lee on Twitter: @MHjlee