In an effort to expand its atrial fibrillation portfolio,
) acquired Endosense SA for $170 million in cash. Geneva,
Switzerland-based Endosense in the first to develop a
force-sensing technology - TactiCath ablation catheter - to
measure the amount of force applied to the heart wall during a
catheter ablation procedure.
TactiCath is CE Marked for atrial fibrillation (AF) and supra
ventricular tachycardia (SVT) ablation. Several studies like
Toccata, Efficas I and II have authenticated the device's safety
and efficiency to reduce AF recurrence when contact force is
applied. Further, following the recent completion of the
Toccastar U.S. IDE trial, Endosense plans to submit its
pre-market application for approval to the U.S. Food and Drug
Administration (FDA) for paroxysmal AF indication before the end
St. Jude plans to pay an additional amount of $161 million in
cash on achievement of a regulatory milestone. Apart from
incurring acquisition-related costs, the deal does not materially
impact St. Jude's bottom-line guidance.
The acquisition of Endosense should help St. Jude's AF product
portfolio expand its foothold in the $900 million global cardiac
ablation catheter market. Management plans to integrate
Endosense's pioneering force-sensing technology with its
proprietary technologies such as MediGuide-enabled ablation
catheters and EnSite Velocity Mapping System to develop
cutting-edge innovative products to treat complex cardiac
St. Jude's AF business is the only franchise with solid growth
rate on a quarterly basis. In the second quarter of 2013,
revenues from AF climbed 9% (up 12% in constant currency) year
over year to $237 million. The strong year-over-year growth
reflects strong momentum in product sales, which is likely to
continue through 2013.
STJ recently won the U.S. FDA approval for its latest
MediGuide-enabled ablation catheters, considered a potential
growth driver for this segment. Further, we believe that the
addition of the new patent-protected TactiCath should further
enhance AF product offerings in both the international and U.S.
St. Jude has a Zacks Rank #2 (Buy). Other medical stocks such as
), with a Zacks Rank #1 (Strong Buy), along with
), carrying a Zacks Rank #2 (Buy), are worth considering.
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