Wednesday, September 29, 2010

It's Over...Medafor Terminates Disputed Drug Distribution Agreement With CryoLife

KENNESAW, Ga. -- CryoLife Inc. (NYSE: CRY) said it has received a notice from Medafor Inc. that terminates a contentious medical device distribution agreement between the two companies, the latest in a long-running dispute, according to an SEC filing.
CryoLife, the Kennesaw-based maker of medical products that enable heart and blood vessel reconstructive surgery, said it would challenge the validity of Medafor's termination of the agreement and pursue its rights and remedies in court.
CryoLife said Medafor's notice came after CryoLife challenged in court a determination in March by Medafor that it was "treating the agreement as terminated."
CryoLife had filed a case in the U.S. District Court for the Northern District of Georgia, Atlanta Division, to stop privately held Medafor, which develops drugs to help blood clotting during major surgeries, from proceeding with the termination of the agreement. The court agreed to hear the case but denied a preliminary injunction, last week.
CryoLife is the single largest shareholder in Minneapolis-based Medafor, with a 10.4 percent holding. CryoLife had sought to hold talks to buy the rest of the company but later withdrew the offer.
Medafor accuses CryoLife of violating an exclusive distribution deal by sellingHemostase, an absorbable blood-clotting agent manufactured by Medafor, in Spain for uses allegedly barred by the agreement. In a counter-suit, CryoLife accused Medafor of violating an agreement by allowing other companies to distribute the product in territories and medical fields reserved exclusively for CryoLife.
The termination of the deal will not materially alter CryoLife's guidance for Hemostase revenue of between $4 million and $4.5 million for the last two quarters of the year, the company said.

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