Boston Scientific has exercised its option to acquire privately held Cameron Health in a structured deal that could pay nearly $1.4 billion if all sales milestones are met. The San Clemente, California-based maker of a novel defibrillator will receive $150 million upfront, another $150 million if its device is approved by the U.S. Food and Drug Administration, and nearly $1.1 billion contingent on meeting sales milestones over six years.

Defibrillators are devices that generate an electric impulse to jumpstart a failing heart. Unlike conventional implantable defibrillators, which require thin wires to be inserted into the venous system and into the heart, Cameron Health has developed a defibrillator that sits just under the skin, bypassing the veins and heart entirely. The company says its novel technology, the world’s first such implantable cardioverter defibrillator, has the potential to expand the reach of so-called ICD therapy for patients at risk of sudden cardiac arrest. Boston Scientific sees the deal as strengthening its own arrhythmia management portfolio.

Cameron Health made headlines in May 2011 when it announced it raised $107 million to continue development and commercialization of its device, which received marketing approval in Europe in 2009. That funding had brought the total capital raised by Cameron to almost $200 million. Boston Scientific first invested in Cameron Health in 2003 at which time it secured an option to acquire the company within 90 days of its filing for approval of its device with the FDA, which Cameron did at the end of 2011. Boston Scientific anticipates FDA approval for Cameron’s S-ICD System in the first half of 2013.

“The S-ICD System was designed to eliminate the complications associated with transvenous leads, creating an important new treatment option for patients at risk of sudden cardiac arrest,” says Kevin Hykes, president and CEO of Cameron Health.

Investors had mixed feelings about the deal after it was announced, according to The Wall Street Journal. An analyst at J.P. Morgan noted that the novelty of Cameron’s ICD would mean that it would face greater scrutiny by the FDA, reported The Wall Street Journal. The device has already been implanted in more than 1,000 people in several European countries and Cameron Health has not yet presented data from a U.S. trial. Still, the deal promises to provide a good exit for Cameron Health’s investors. Boston Scientific expects it to close in the second or third quarter of 2012.