St. Jude Medical, Inc. (NYSE:STJ) announced today that it has signed a definitive agreement to acquire Irvine Biomedical, Inc. (IBI) an Irvine, California privately held company which develops electrophysiology (EP) catheter products that are used by physician specialists to diagnose and treat cardiac rhythm disorders. IBI products are distributed by St. Jude Medical in Japan.

As a result of St. Jude Medical's 2003 acquisition of Getz Bros. Co., Ltd. ("Getz") in Japan, the Company assumed a 14% ownership position in IBI that Getz had acquired beginning in 1997. To acquire the remaining 86% of Irvine Biomedical's capital stock that it does not already own, St. Jude Medical expects to pay $47 million at the closing. This amount is net of the cash expected to be on hand at IBI on the closing date as well as consideration from the exercise of IBI stock options, which together total approximately $9 million. The IBI transaction is expected to close at the end of the third quarter.

The definitive agreement includes additional incentive payments of up to $13 million to the non-St. Jude Medical shareholders if IBI receives approval by specified dates in 2005 and 2006 from the U.S. Food and Drug Administration (FDA) of certain EP catheter ablation systems currently in development. In connection with this acquisition, St. Jude Medical anticipates recording an in-process R&D charge of $8-10 million at closing. Except for the in-process R&D charge, this transaction will not impact the Company's existing EPS guidance for 2004. Since St. Jude Medical's Getz organization is the IBI distributor in Japan and IBI's largest customer, the majority of IBI's sales are already reflected in St. Jude Medical's sales guidance for the remainder of 2004. In 2003, IBI recorded total sales to distributors of approximately $14 million.

Irvine Biomedical was founded in 1995 to pursue innovative technologies to treat cardiovascular disease, with a focus on developing medical devices for EP procedures. Its products in development include EP catheter ablation systems that use radio frequency and ultrasound energy. Peter Chen, Ph.D., serves as President and CEO of IBI. Raymond Chia, Ph.D., is Vice President of Operations. Both Drs. Chen and Chia, together with all operations at the IBI facility in Irvine, California, will remain with St. Jude Medical following the completion of the transaction.

Commenting on the agreement to acquire Irvine Biomedical, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "Our acquisition of IBI builds on our recent announcement that we are creating an Atrial Fibrillation Division. IBI brings to St. Jude Medical another valuable and cohesive product development organization with an impressive portfolio of intellectual property, EP ablation systems using both radio frequency energy and ultrasound energy sources, and a variety of other specialty devices designed to help physicians treat atrial fibrillation and other cardiac rhythm disorders. We look forward to leveraging this flow of technology and new products with SJM's existing distribution and significant global infrastructure to accelerate the growth of our atrial fibrillation programs around the world. We think our customers in the important market of Japan will be particularly pleased by this transaction due to the significant market share we already hold there with IBI products and the long-term commitment this acquisition represents by our organization to IBI product lines."

On behalf of Irvine Biomedical, President and CEO Peter Chen said, "We look forward to the opportunity to become part of St. Jude Medical. This transaction also provides IBI immediate access to a broader global EP customer base and the resources of St. Jude Medical's highly regarded sales and sales support organization. Both IBI and St. Jude Medical share a common objective to develop a catheter cure for atrial fibrillation. The technology and creative resources of both companies will continue to be highly focused on this major health care challenge."

Electrophysiology catheters are used by physician specialists to diagnose and treat a wide range of tachycardias. In placing these catheters inside the heart, physicians can determine the location of the abnormal conductive tissue that often causes arrhythmias. If necessary, an ablation catheter is used to apply radiofrequency (RF) or other energy to the abnormal tissue, disabling it in a process similar to cauterization. By destroying the abnormal tissue, physician specialists can often cure a patient for life, eliminating the need for medication or other therapies.

EP catheters can be used to treat atrial fibrillation (AF), a pervasive cardiac rhythm disorder in which the upper chambers of the heart do not beat effectively. AF results in reduced cardiac output, exacerbates heart failure and can result in the pooling and clotting of blood in the heart, often leading to stroke or other neurological problems. The prevalence of atrial fibrillation worldwide is in excess of 6 million. AF is progressive, expanding in incidence and severity with age. The economic impact to public and private health care systems of AF is increasing as populations' age.

The agreement to acquire Irvine Biomedical broadens St. Jude Medical's EP catheter product line consistent with the Company's "Surround AF" strategy, offering cardiologists and surgeons sophisticated devices and catheter systems to diagnose, suppress and cure atrial fibrillation. St. Jude Medical pacemaker and ICD systems incorporate the Company's unique AF Suppression(TM) algorithm, the first clinically proven technology to suppress atrial fibrillation. The Company also offers a broad range of advanced catheter systems for use by clinicians in the clinical management of patients with AF. An investigational device exemption (IDE) application has been approved by the FDA for a feasibility study using St. Jude Medical's proprietary Lineage(TM) PV catheter ablation system.

In June, St. Jude Medical completed the acquisition of Epicor Medical, Inc., the leader in the development of high intensity focused ultrasound (HIFU) devices for the surgical ablation of cardiac tissue, further strengthening St. Jude Medical's position in the treatment of cardiac arrhythmias, including atrial fibrillation. The Company's recently announced Atrial Fibrillation Division focuses on medical technology and services to help cure AF as well as address the broad field of electrophysiology.