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STRYKER IN TALKS TO BUY BOSTON SCIENTIFIC UNIT: REPORT -- Stryker Corp. (Kalamazoo MI), a maker of artificial hips and knees, is in advanced talks to buy Boston Scientific Corp.’s (Natick MA) pain-management device unit for about $1.5 billion, said people with knowledge of the potential transaction. An agreement for the neuromodulation unit may be announced this week, said the people, who declined to be identified because the talks are private. Stryker would probably pay all cash, and the deal may be valued at $1.4 billion to $1.5 billion, the people said. The division is one of two businesses Boston Scientific put up for sale earlier this year. This unit would complement a range of devices Stryker sells to pain management specialists for back problems, said William Plovanic, an analyst with Cannacord Genuity in Evanston, IL. “This is a transaction that makes sense,” Plovanic said. “It will help Stryker leverage its distribution channels. And the neuromodulation business is at least as profitable, if not more so, than Stryker’s overall business.” A final agreement hasn’t been reached, said the sources, noting that talks are frequently scuttled in the late stages.

      Boston Scientific is also seeking a buyer for its neurovascular products, which prevent strokes. A deal for that second unit is several weeks away and the business may sell for about $1 billion, the people said. Stryker’s preferred use for its cash is for acquisitions, Chief Financial Officer Curt Hartman said on July 20. The company said on Aug. 9 that it obtained a $1 billion senior unsecured credit line, due in August 2013, to replace a previously outstanding $1 billion credit security due in November. During the last five years, Stryker announced the completion of six acquisitions, with an average size of $164.9 million, according to Bloomberg data. Boston Scientific CEO Raymond Elliott has been trying to turn around the company as growth in its biggest markets--cardiac stents used to prop open clogged arteries and devices to treat irregular heartbeats--have had little or no growth. That effort suffered a setback this year after a month-long recall of its implanted heart defibrillators forced the company to write off $1.8 billion. Stryker shares closed the week off 76 cents, or 2%, at $45.81. Boston Scientific rose 21 cents, or 4%, to $5.69.

FDA PANEL BACKS WIDER USE OF LILLY'S CYMBALTA -- A federal panel voted narrowly last week to recommend allowing Eli Lilly & Co. (Indianapolis IN) to market its blockbuster antidepressant Cymbalta for some chronic pain conditions like lower back ailments that affect millions of Americans. The scientific advisory panel to the Food and Drug Administration voted 8-6 in favor of expanding approved uses of Cymbalta. If approved by the agency, the drug would compete with Tylenol, aspirin and other anti-inflammatory drugs and opioids, like codeine and morphine. FDA officials at the meeting assured the panel they would draft warnings against the overuse of Cymbalta for pain, if they did finally approve a label change. Advisory committee votes are often, but not always, followed by the agency. “I think it will be a very useful drug for a significant number of patients,” Dr. Jeffrey R. Kirsch, the chairman of the advisory panel, said after the vote. But while the committee, in a series of votes, approved the drug’s effectiveness for lower back pain, it voted against the drug’s use for osteoarthritis. The FDA staff earlier in the week opposed Lilly’s broader proposal that would have allowed Cymbalta to be used for chronic pain.

      Dr. Robert Baker, Lilly’s global development leader for psychiatry and pain disorders, said the company would continue seeking FDA approval to market Cymbalta to treat all chronic pain. He said Lilly learned only last week that the agency had limited votes to just two conditions. “While we’d have been happy to move right to chronic pain, we are also understanding and interested in helping them capture this for doctors as they work for patients for individual subsets of pain such as osteoarthritis or lower back pain,” Dr. Baker said. Approval for lower back pain alone could add as much as $500 million in annual sales of Cymbalta, on top of its $3 billion current sales, an investor note from Barclays Capital said Thursday. The Barclays note predicted Lilly would invest heavily in promotion because it was relying on Cymbalta for sales growth from next year, when its patent expires on its best-selling drug, Zyprexa, and to 2013, when its patent expires on Cymbalta. Lilly shares closed the week down $1.53, or 4%, at $34.17.

      But Electromed Inc. (Nasdaq) slid 68 cents, or 17%, to $3.32. The developer of innovative airway clearance therapy products priced its initial public offering of 1.7 million shares of common stock at $4.00 per share. Founded in 1992, Electromed manufactures, markets and sells products that provide airway clearance therapy, including the SmartVest Airway Clearance System and related products, to patients with compromised pulmonary function.

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