Kensey Nash ($KNSY) and St. Jude Medical ($STJ) have made up, agreeing to settle a dispute over the Angio-Seal vascular closure device licenses and related claims.
The agreement is beneficial to Kensey Nash, which will receive $39 million from St. Jude payable in 12 equal, quarterly payments beginning March 31. That's in lieu of all future royalties for the Angio-Seal.
Kensey Nash originally developed Angio-Seal, and St. Jude bought the marketing and manufacturing rights for the device from Tyco International in early 1999. "Angio-Seal will now be marketed by one of the top companies in cardiology, and we are looking forward to establishing a strong relationship with them for many years to come," Kensey Nash President and CEO Joe Kaufmann said at the time.
In December, however, Kensey Nash announced it was entering mediation over the contract disputes related to Angio-Seal. At the time, the company said St. Jude was obligated to pay 8% royalties on the device rather than the 6% it had been handing over. As a result of St. Jude's interpretation of the agreement, Kensey Nash said it been underpaid by more than $30 million. In addition, it was told by St. Jude that effective November 2011, the royalty rate would be reduced to 2%. That news did not sit well with Kensey Nash.
With the resolution of the dispute, however, Kaufmann still sees the two companies as having a solid relationship through 2017. Kensey Nash will continue to be the exclusive outside supplier of collagen for the Angio-Seal device until that time.
Kensey Nash also updated its 2012 guidance with reported earnings per share of $1.51 to $1.55 on revenues of $87.9 million to $89.1 million.
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