November 21, 2010

The Wall Street Journal

Medtronic To Buy Hypertension Firm Ardian For $800 Mln

Medtronic Inc. (MDT) said Monday it will acquire Ardian Inc., a private company that makes a catheter-based tool for treating severe cases of high blood pressure, for at least $800 million.

Medtronic already owns 11% of Ardian. In addition to the up-front $800 million cash payment, it agreed to milestone payments based on revenue from Ardian's product, which uses a catheter with a radio frequency tip to block activity on renal nerves that are linked to hypertension. The procedure--for which Ardian doesn't have U.S. clearance--is known as "renal denervation."

Medtronic, a medical-devices heavyweight dealing with sluggish conditions in markets for top products such as heart-rhythm devices and spinal implants, called treating uncontrolled hypertension one of the most "exciting growth markets in medical devices."

The company isn't the only big, growth-challenged device maker showing interest in that market. Rival Boston Scientific Corp. (BSX) on Friday highlighted device-based treatment of high blood pressure as a key area of interest and a market that could eventually top $5 billion.

Ardian isn't tapping much of that opportunity yet, as the single-product company has been selling its "Symplicity Catheter System" only outside the U.S. on a very limited scale and could be years away from reaching the domestic market. But Medtronic's heft can help the company ramp up from the limited commercial release in Europe thus far, Ardian spokesman Greg Bakan said.

The Mountain View, Calif., company has mainly held back--despite getting European approval in 2008--because it was waiting to build more clinical evidence for its device, Bakan said. The company had clinical data released at a cardiology conference earlier this month indicating device benefits. Meantime, the study needed to garner U.S. approval isn't under way, but it is expected to launch next year.

Medtronic has launched a number of smaller transactions this year, including the $123 million acquisition of Osteotech Inc., a provider of biologics products, completed last week.

Shares of Medtronic, which will release fiscal second-quarter results Tuesday, declined slightly to $34.54 after-hours.