SJM Facility

St Jude Medical, a Minnesota-based medical device firm, has made a $40m equity investment in Spinal Modulation, a California-based firm that develops stimulator for spinal cord to treat chronic pain.

The deal enables St Jude Medical to exclusively distribute Spinal Modulation’s Axium neurostimulator system in overseas markets that have given permission for the sale of the device.

St Jude Medical also gains the exclusive option to buy the Californian firm for up to $300m in addition to some revenue-based milestones following the commercialisation in the US.

St Jude Medical Implantable Electronic Systems Division president Dr Eric S Fain said that the firm is excited to partner with Spinal Modulation and add the Axium system to its existing neuromodulation portfolio.

"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 percent of the adult population and carries an economic burden of billions of dollars annually," Fain said.

Spinal Modulation president and CEO David Wood said that the company is looking forward to working with St Jude Medical to further develop neuromodulation solutions that cover the entire body.

"We look forward to collaborating with St Jude Medical which, through its global scale, expertise and resources, will help us expand the reach of our innovative therapy to more physicians and patients around the world," Wood said.

The Axium neurostimulator system delivers a kind of spinal cord stimulation (SCS) that targets the dorsal root ganglion (DRG).

By stimulating the DRG, chronic pain conditions can be addressed in an alternative way to traditional SCS technologies, and patients with lower extremity pain or difficult-to-treat pain in specific areas can be offered more targeted therapy.

In traditional SCS technologies, leads are placed along the dorsal column, while in the Axium neurostimulator system leads are placed at the DRG and provide targeted stimulation to areas that are difficult to treat, such as in the lower leg, foot and groin.

The Axium system also uses approximately 95% less power than regular SCS therapy.

The system secured European CE Mark approval in November 2011, but it is not approved for use in the US.

The firm has received investigational device exemption (IDE) from the US Food and Drug Administration (FDA) and expects to commence enrolment in the second half of this year.

Bofa Merrill Lynch acted as financial advisor and Gibson, Dunn & Crutcher as legal counsel to St Jude Medical, while Leerink Swann served as financial advisor and Wilson Sonsini Goodrich & Rosati as legal counsel to Spinal Modulation.

Image: St Jude Medical, through the agreements, has gained the rights to distribute Spinal Modulation’s Axium Neurostimulator System in overseas markets. Photo: Courtesy of St Jude Medical.