Leading medical devices company, Medtronic (MDT) has decided to acquire California based privately held, Ardian for an upfront payment of $800 million. Additionally, Medtronic is liable to pay milestone payments based on Ardian’s revenues through 2015.

The transaction, subject to approvals, is expected to close during the third quarter of fiscal 2011. Medtronic currently holds an 11% stake in Ardian.

Ardian develops catheter-based therapies to treat hypertension and related conditions. Immense potential exists in this market as hypertension, affecting about 1.2 billion people, is one of the leading causes of death globally. Recently, Ardian had presented positive data from the Symplicity HTN-2 trial evaluating its flagship product, the Symplicity Catheter System. It was observed that patients treated with this device experienced a greater reduction in blood pressure after six months compared to the control group.

The Symplicity HTN-2 trial was aimed at studying the safety and effectiveness of renal denervation in patients suffering from hypertension which could not be controlled with drugs. The trial enrolled 106 patients from 24 investigational sites. In addition, the study found the therapy to be safe, without any serious procedure-related events, cardiovascular complications and kidney-related complications.

Although the catheter system has received approval in Europe (CE mark) and Australia (TGA), it is yet to receive approval in the US. Ardian plans to begin a US pivotal study of the device for its approval in the US. The decision to acquire Ardian is based on the thesis that renal denervation as a treatment for uncontrolled hypertension has the potential to record strong growth going ahead.

Subsequent to the disappointing performance of two of its largest segments – CRDM and Spinal during the first quarter of fiscal 2011, Medtronic has been looking for suitable acquisitions to accelerate its growth profile. Last week, the company completed the acquisition of Osteotech for $123 million, thereby further strengthening its biologics portfolio.

We are currently Neutral on Medtronic.

 
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