St. Paul, MN, and Westford, MA-- St. Jude Medical, Inc. and LightLab Imaging, Inc. entered into an agreement under which St. Jude Medical will acquire LightLab, a subsidiary of Goodman Co., Ltd. for approximately $90 million in cash.
LightLab is the pioneer in the development of Optical Coherence Tomography (OCT), a high-resolution diagnostic coronary imaging technology that aids physicians in the treatment of cardiovascular disease. Earlier this month, LightLab received Food and Drug Administration (FDA) clearance of the first OCT products to be available in the United States. OCT diagnostic imaging technology has been shown to provide image resolution 10 times greater than intravascular ultrasound imaging systems (IVUS) and 20 times faster image capture.
During the second half of 2010, St. Jude Medical expects the OCT platform to contribute an additional $20 million in revenue to its cardiovascular business. The OCT market is expected to grow at a double-digit compounded annual rate over the next five years and is expected to capture IVUS market share, as well as expand the market for coronary imaging. The IVUS market is estimated to be $500 million for 2010, and is growing 10 to 15% annually. OCT coronary imaging is expected to grow at an even faster rate within this market.
Upon closing, St. Jude Medical will be the first company to offer a portfolio that includes both OCT and Fractional Flow Reserve (FFR) technology. No other OCT systems are currently available for coronary imaging. This combination will provide physicians with comprehensive lesion assessment information, ranging from the anatomical images of OCT to the physiological data of FFR. St. Jude Medical acquired its FFR measurement technology platform through the acquisition of Radi Medical Systems AB in 2008. The LightLab
business will become part of the St. Jude Medical Cardiovascular Division.
The FDA cleared LightLab's C7-XR Imaging System and companion C7 Dragonfly Imaging Catheter in early May. This intravascular imaging technology, comprising the console used in the hospital lab and the catheter inserted into the vessel, allows the clinician to readily see and measure important vessel characteristics otherwise invisible or difficult to observe with older imaging technology. This OCT system eliminates the need for temporary vessel occlusion that was required by earlier generation OCT systems.
LightLab now has products approved in 40 countries, including the only OCT system cleared for use by regulatory bodies in the U.S., Europe, and Japan. The imaging technology has already been used by leading hospitals worldwide to perform high-resolution imaging of vessel structure in thousands of coronary interventions. The next generation C7-XR Imaging System and companion C7 Dragonfly Imaging Catheter is also approved in Europe and is currently pending regulatory clearance in Japan.
The transaction is expected to close by the end of the second quarter, subject to customary closing conditions and regulatory approvals. Except for a nonrecurring charge to be recorded at the time of closing, this acquisition does not change St. Jude Medical's outlook for 2010 consolidated earnings per share.
In connection with the transaction, Bank of America Merrill Lynch is acting as financial advisor and Gibson, Dunn & Crutcher LLP as legal advisor to St. Jude Medical. Brown Brothers Harriman is acting as financial advisor to LightLab and Choate, Hall & Stewart LLP as legal counsel. Kitahama Partners, LLC is acting as legal counsel to Goodman Co., Ltd.