Medtronic Inc. (MDT) is buying a private company that makes devices to correct a heart-rhythm problem called atrial fibrillation as it steadily builds a business to address that fast-growing cardiology market.

Medtronic will pay $225 million for Ablation Frontiers Inc., which is based in Carlsbad, Calif., plus additional payments linked to certain clinical milestones. Medtronic declined to disclose the details of those payments.

Ablation Frontiers sells a system of catheters in Europe that use radio frequency to address rhythm problems, but does not yet have approval to sell them in the home market. It is currently enrolling patients in a study designed to gather evidence for Food and Drug Administration approval, and the system could reach the U.S. in the first half of 2010.

Medtronic's new deal follows its recently closed $380 million purchase of CryoCath Technologies Inc., which makes a different type of system designed to treat atrial fibrillation. Minneapolis-based Medtronic, a medical-devices heavyweight well known for implantable defibrillators and pacemakers, is folding both acquisitions into a new franchise called AF Solutions.

Both companies make technology that should offer simpler and faster procedures than current treatment methods, according to Medtronic. The systems, for example, are designed to address more surface area at once while negating the need for complex mapping to guide treatment.

Atrial Fibrillation is a common type of irregular heart rhythm that involves fast and very disorderly beating in the heart's upper chambers. It can heighten the risk of strokes and other complications.

The problem is typically treated with drugs, which often don't help. There is also a growing market for using catheters threaded through blood vessels to destroy tissue and stop electrical signals that cause the problem. The market is moderately sized, with few potential candidates getting the therapy today, but it has at least a 20% annual growth profile.

As newly purchased technology is approved, that kind of expansion could help offset the slower, single-digit growth profile of Medtronic's big business for implantable defibrillators. That business has also been challenged recently by tough competition.

"We're driving into a high-growth, underserved market," said Reggie Groves, vice president and general manager for the AF Solutions business, in an interview.

The market for treating atrial fibrillation with devices is already growing in the U.S., even though no company has approval yet to market its tools for this purpose. But there are catheters approved for fixing other issues, and doctors can use approved devices for other purposes at their discretion.

Medtronic heart-device rival St. Jude Medical Inc. (STJ) has a big device-based atrial fibrillation business, as does Johnson & Johnson (JNJ) unit Biosense Webster. The latter company could become the first to win Food and Drug Administration approval for treating atrial fibrillation with devices - an FDA panel of outside experts recommended approval in November.

Medtronic sees its recent deals as complimentary because they bring different technology aimed at different types of atrial fibrillation. The key CryoCath system - which is also under study in the U.S. with potential introduction in the first half next year - uses a balloon to freeze tissue and address atrial fibrillation that comes and goes.

The Ablation Frontiers tools use heat to treat persistent and sometimes long-lasting atrial fibrillation that may require targeting tissue in different areas.

The Ablation Frontiers purchase is seen closing in Medtronic's fiscal fourth quarter, which ends in late April.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

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