St. Jude & ZONARE in Imaging Tie-up - Analyst Blog

Medical devices major St. Jude Medical (STJ) has struck a development and marketing pact with leading ultrasound system provider ZONARE Medical Systems. The financial terms of the deal have not been divulged by the entities.

The agreement will mark the integration of St. Jude's echocardiography catheters and ZONARE Medical's z.one Convertible Ultrasound system technology. Under the deal, the companies will jointly market a co-branded ultrasound system for high-resolution intracardiac (within the heart) imaging. Physicians can use the ultrasound system and technology in procedures for treating irregular heart rhythms and repairing heart defects.

California-based ZONARE Medical develops and markets ultrasound systems that are used for diagnostic imaging in a range of clinical applications. The company's z.one Ultrasound platform is based on its proprietary data acquisition and image formation technology dubbed “Zone Sonography”.

The Zone Sonography technology is capable of acquiring ultrasound data up to ten times faster than the traditional ultrasound systems. ZONARE Medical launched the z.one Convertible Ultrasound system way back in 2005. The company has already sold more than 4,000 z.one systems globally.

Ultrasound imaging is minimally invasive and uses high-frequency sound waves (transmitted using a catheter) to produce anatomical images of the inside of the heart. Ultrasound allows physicians to visualize the real-time activity in the body, a major advancement over static medical imaging such as X-rays.

Ultrasound technology enables physicians to generate high-resolution intracardiac images giving a clear view inside the heart. This helps them reduce the time to perform cardiac procedures, thereby enabling faster patient recovery and improving hospital productivity.

St. Jude forayed into the high-growth intracardiac ultrasound echocardiography (“ICE”) market in 2008 with its acquisition of leading electrophysiology products maker EP MedSystems for roughly $92 million. The company obtained the ViewFlex ICE catheters and ViewMate II ultrasound imaging system through this acquisition. St. Jude competes with Boston Scientific (BSX), Siemens (SI), Johnson & Johnson's (JNJ) Biosense Webster and GE Healthcare, a unit of General Electric (GE), in the ICE market.

The ZONARE Medical deal strengthens St. Jude's foothold in the ICE market, which is growing roughly 25%-30% annually. The collaboration will offer the company's next generation ViewFlex catheters a new platform to perform intracardiac imaging. We are currently Neutral on St. Jude, which is supported by a Zacks #3 Rank (Hold).

 
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