CryoLife Appeals Rare Injunction In Patent Case

CryoLife Inc. on Wednesday filed its notice of appeal to the Federal Circuit of a preliminary injunction barring its PerClot blood-clotting powder, one day after a Delaware federal judge ordered Medafor Inc. to pay CryoLife $100,000 in the event that any court finds the injunction was wrongly issued. 
C.R. Bard Inc. unit Medafor satisfied the test for securing a preliminary injunction, including showing a reasonable likelihood that it will succeed on the merits and would suffer irreparable harm if CryoLife's product remained on the market, U.S. District Judge Sue L. Robinson ruled last month, in a relatively rare instance of a judge granting a preliminary injunction in a patent case. On Wednesday, CryoLife filed its notice of appeal of the injunction to the Federal Circuit.

The judge said Medafor has represented that it is able to pay the $100,000 if the condition on the injunction is met and that CryoLife agreed with the representation, adding that the requirement was proper and adequate security for the injunction.

“Pursuant to Federal Rule of Civil Procedure 65(c), this court orders that if this court or another court of competent jurisdiction finds this preliminary injunction wrongfully enjoined CryoLife, Medafor shall pay CryoLife $100,000 within ten (10) days of the order vacating or reversing this injunction,” the judge said.

CryoLife's PerClot Topical, launched last fall, competes with a Medafor product called Arista that was approved by the U.S. Food and Drug Administration in 2006. Both are powders used to control bleeding when conventional methods are ineffective.

The dispute began in April, when CryoLife filed suit seeking declaratory judgment that PerClot Topical would not infringe Medafor's patent. Medafor responded by filing an infringement counterclaim and seeking a preliminary injunction. CryoLife began selling PerClot Topical last fall.

Judge Robinson found that Medafor had shown that CryoLife likely infringes and that CryoLife was unlikely to show that the patent is invalid.

Medafor Injunction Holds Up US Perclot Topical

CryoLife, Inc. (NYSE: CRY), a leading medical device and tissue processing company focused on cardiac and vascular surgery, today provided an update on its ongoing litigation with C.R. Bard, Inc. and certain of its subsidiaries regarding PerClot. The U.S. District Court for the District of Delaware (the "Court") has allowed CryoLife's declaratory judgment lawsuit against C.R. Bard's Medafor, Inc. subsidiary ("Medafor") to proceed. The Court also granted Medafor's motion for a preliminary injunction with respect to CryoLife's marketing and sale of PerClot Topical in the U.S. CryoLife is currently awaiting the Court's order, which it expects will provide details regarding the scope of the injunction.

Pat Mackin, CryoLife President and Chief Executive Officer, said, "While we are disappointed with the District Court's ruling on the preliminary injunction motion, we continue to believe we have a strong case and remain focused on securing the best long-term outcome in the litigation for our shareholders. We remain on track to begin enrollment in our PerClot IDE clinical trial for surgical applications during the first half of 2015, which would position us for potential FDA approval in the second half of 2017."

In April 2014, CryoLife filed a declaratory judgment lawsuit against C.R. Bard and certain of its subsidiaries, including Medafor, requesting that the Court declare that CryoLife's manufacture, use, offer for sale, and sale of PerClot in the U.S. does not and would not infringe Medafor's U.S. Patent No. 6,060,461 (the "'461 Patent"). In addition CryoLife requested that the Court declare that the claims of the '461 Patent are invalid. In September 2014, Medafor filed a motion for a preliminary injunction against CryoLife.

The preliminary injunction applies to PerClot Topical, which is in the early stages of launch in the U.S. CryoLife included approximately$1.5 million in PerClot Topical sales in its previously announced 2015 financial guidance. At this low-volume level, the Company was anticipating the gross margin for PerClot Topical to be approximately breakeven. The Company's previously announced earnings per share guidance for 2015 included $3 million to $4 million in expense related to the litigation with C.R. Bard. The Company continues to expect that this represents the high end of potential litigation expenses for the year related to this matter, and it will re-assess its litigation strategy and provide appropriate updates to its financial guidance, if any, after receiving the Court's order.

See official papers below....

https://drive.google.com/file/d/0B6J8c60Kq5rVUVBka0ExTjdYaWc/view?usp=sharing
https://drive.google.com/file/d/0B6J8c60Kq5rVSmhSWXVFd1daNWM/view?usp=sharing

It's Perclot AMP.......No, It's Endoclot AMP

Cryolife last month announced that finally they had some good news regarding the litigation with Medafor, and under terms of the settlement, Medafor has agreed to pay CryoLife $3.5 million in cash. However the Atlanta based CryoLife foray into the powdered Hemostat market segment may still prove "interesting". When making their arrangement with Chinese Starch Medical for rights to Perclot in all territories worldwide excluding China, Hong Kong, Macau, Taiwan, North Korea, Iran and Syria. They also included the following in the contract:

  1.5 Product Applicators, Etc. SMI agrees to promptly notify CryoLife of all improvements to applicators, tips and other accessories included within or used in connection with the Products, including all new applicators, tips and other accessories. All such improvements and any such new applicators, tips or accessories to the Products shall be included within the Products and the Parties shall adjust the catalog of Products to reflect these new products, with any transfer price to be negotiated in good faith, but based solely on costs to SMI for such improvements and/or new applicators, tips and accessories. The Parties agree that the Endoscopic applicator system used for powder delivery via gastrointestinal endoscope, as further described on Schedule 2.1 is not an improvement or new applicator and is not included in this Agreement.

2.   Distribution

    2.1  Limitations on SMI Activities. During the term of this Agreement SMI agrees (i) to sell the Products exclusively to CryoLife for use in Permitted Clinical Applications within the Territory, (ii) to refrain from selling or licensing any Products to any Existing Distributor or Third Party for sale or distribution in Permitted Clinical Applications within the Territory, (iii) to refrain from directly or indirectly marketing, promoting, or encouraging any Third Party to market, promote or Distribute the Products for any of the Permitted Clinical Applications within the Territory, (iv) to refrain from licensing or transferring any AMP™ Technology to any Third Party within the Territory for the purpose of manufacturing any Products upon terms or conditions that would enable or allow such Third Party to sell any Products for Permitted Clinical Applications within the Territory. In addition, SMI agrees that it shall refrain until January 1, 2015 from (A) directly, or indirectly selling, permitting to sell, market, promote or encouraging third parties to sell, permit to sell, market or promote any Competitive Product (defined below) for any Permitted Clinical Application within the Territory or (B) licensing or transferring to any Third Party technology that would enable or allow any Third Party to manufacture any Competitive Product within the Territory. The provisions of the foregoing sentence shall be deemed further modified so that SMI may only take the actions described therein if SMI complies with Section 1.4 (and therefore CryoLife does not match the right of first refusal set forth therein). As used herein, “Competitive Product” means any powdered absorbable surgical hemostat that is intended for or could be used for a Permitted Clinical Application. The foregoing limitations do not apply to sales by SMI of those products described on Schedule 2.1.

Read the full document HERE

.

Now Cryolife and their partners face the interesting prospect of Chinese made Perclot AMP particles meeting them in the EU re-branded as "Endoclot".  

As can be seen HERE the original Chinese Xijing Hospital trial changes for the use of AMP show the changes from perclot to "endoclot", but the endoclot webpage discusses AMP particles....see HERE. 

The CRY Q2 Earnings Conference Call is scheduled for 7/31/2012. 
Click the images below to enlarge

China Biologic Receives SFDA Manufacturing Approval Certificate for Human Coagulation Factor VIII

China Biologic Products, Inc., a leading fully integrated plasma-based biopharmaceutical company in China, today announced that its indirectly owned subsidiary, Shandong Taibang Biological Products Co., Ltd. ("Taibang") has received a manufacturing approval certificate from the China State Food and Drug Administration ("SFDA") for Human Coagulation Factor VIII ("FVIII"). With this certificate, the only approval remaining for Taibang's commercial production of FVIII is the SFDA's good manufacturing practice ("GMP") certification of the FVIII production line itself.

Taibang began research for FVIII in 2007 and successfully developed the technology in 2008. The Company conducted clinical trials from 2009 to 2010. In June 2010, the Company submitted required materials to Center for Drug Evaluation for approval to start manufacturing and passed on-site products verification in January 2011. The Company received official manufacturing approval certificate on June 21, 2012. FVIII will be primarily used in the treatment of hemophilia A.

Mr. David Gao, Chairman & CEO, said, "Receiving SFDA manufacturing approval represents the culmination of more than five years of work and the first technological approval of a coagulation factor product developed by Taibang. With the addition of Factor VIII, we should soon be able to offer three major categories of blood products: albumin products, immunoglobulin products and coagulation factor products. This will further strengthen our competitive position as a leading plasma-based biopharmaceutical company in China."

"We are very proud to bring FVIII to hemophilia A patients in China," continued Mr. Gao. "We believe that Human Coagulation Factor VIII addresses a critically unmet need of a large patient population and helps ease under-supply of coagulation products. Although it is not possible to specify a definitive timeframe in which we will receive GMP approval, we expect our FVIII production to be inspected by SFDA and then GMP certified by the end of 2012. Going forward, we intend to continue to develop and manufacture life-enhancing, effective, quality-assured products."

About China Biologic Products, Inc.

China Biologic Products, Inc., is a leading fully integrated plasma-based biopharmaceutical company in China. The Company's products are used as critical therapies during medical emergencies and for the prevention and treatment of life-threatening diseases and immune-deficiency related diseases. China Biologic is headquartered in Beijing and manufactures over 20 plasma-based products through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co., Ltd. and Guiyang Dalin Biologic Technologies Co., Ltd. The Company also has an equity investment in Xi'an Huitian Blood Products Co., Ltd. The Company sells its products to hospitals and other healthcare facilities in China. For additional information, please see the Company's website www.chinabiologic.com .

Baxter Announces ADVATE Approval in China for the Treatment of Hemophilia A

Baxter International Inc. announced the approval of ADVATE[Recombinant Human Coagulation Factor VIII for injection] for the control and prophylaxis of bleeding episodes in individuals with hemophilia A (congenital factor VIII deficiency) in China by the State Food and Drug Administration (SFDA). It is estimated that more than 50,000 people in China are living with hemophilia A.

''The introduction of recombinant FVIII therapies in China offers new treatment options for hemophilia patients. The launch of ADVATE is another step in advancing hemophilia care in China,'' said Professor Yang Renchi, Institute of Hematology and Blood Diseases Hospital, Chinese Academy of Medical Sciences and Peking Union Medical College, the leading professional hematological institution providing basic medical research with clinical services in China.

''Great strides have been made in managing hemophilia, allowing people with this serious condition to live longer, more active and fulfilling lives than ever before,'' said Guan Tao, Secretary General of Hemophilia Home, the hemophilia patient organization in China. ''The availability of ADVATE will be an important milestone for people with hemophilia in China.''

ADVATE is infused directly into the bloodstream and works by temporarily raising the level of factor VIII in the bloodstream, allowing the body's blood clotting process to properly function. Extensive global use and multiple clinical trials demonstrate clinical evidence for ADVATE. With SFDA's action, ADVATE is now approved in 54 countries worldwide.

''The approval of ADVATE in China marks an important milestone for Baxter and supports our ongoing commitment to treating individuals living with hemophilia,'' said Ludwig Hantson, Ph.D., president of Baxter's BioScience business.

Baxter continues to work closely with the Chinese hemophilia community, including both patients and treaters, to provide access to care for this life-saving, life-sustaining therapy. In 2010, Baxter cooperated with the Ministry of Health to set up a ''Hemophilia Disease Management System,'' China's first nationwide hemophilia patient registration and management system integrating diagnosis and treatment information. In recent years, Baxter has donated more than five million IUs of hemophilia products to Chinese patients and has provided a number of resources to raise awareness of the disease.

About ADVATE

ADVATE [Antihemophilic Factor (Recombinant) Plasma/Albumin-Free Method] was initially approved by the FDA in July 2003 for control and prevention of bleeding episodes in adults and children (0-16 years) with hemophilia A. ADVATE is a full-length (derived from the complete FVIII gene) recombinant FVIII product that is processed without any blood-based additives. Because no blood derived components are added at any stage of the manufacturing process, the potential risk of transmitting pathogens that may be carried in blood-based additives is eliminated. There have been no confirmed reports of transmission of HIV, HBV or HCV with rFVIII therapies.

ADVATE is approved in the United States, Canada, 27 countries in the European Union, Argentina, Australia, Brazil, Chile, China, Colombia, Croatia, Hong Kong, Iceland, Iraq, Japan, Macau, Malaysia, New Zealand, Norway, Panama, Puerto Rico, Serbia, Singapore, South Korea, Suriname, Switzerland, Taiwan, Uruguay and Venezuela.

In the United States, ADVATE [Antihemophilic Factor (Recombinant) Plasma/AlbuminFree Method] is also indicated for routine prophylaxis to prevent or reduce the frequency of bleeding episodes in adults and children (0-16 years) with hemophilia A. ADVATE is the only antihemophilic factor approved in the United States for prophylactic use in both adults and children. ADVATE is not indicated for the treatment of von Willebrand disease.

3 Chinese drug makers recall 13 chromium-tainted (porcine)gelatin products

Three pharmaceutical companies have recalled their chromium-contaminated drug capsules after authorities suspended sales of 13 types of problematic medicines.
Tonghua Yason Pharmaceuticals in Northeast China's Jilin province said the company decided to recall all tainted products made since 2010.
"Pharmaceutical producers do not possess the capability to examine capsules, so we just simply checked the quality report provided by capsule suppliers and then let them go," an anonymous official with the company's product quality department was quoted as saying by stcn.com, a website run by Securities Times.
But the company said the producer of the problematic capsules was a Zhejiang-based company and was not among those exposed by media.
China Central Television revealed in an investigative program on Sunday that nine pharmaceutical companies were packaging medicines with capsules made with industrial gelatin, which contains a much higher degree of chromium than edible gelatin.
The industrial gelatin was made from waste leather at plants in Jiangxi, Zhejiang and Hebei provinces, according to the report. (Pictured above:  Huge piles of substandard leather scraps at the warehouse of Xueyang Gelatin and Glair Factory in Hengshui, Hebei province, were used to make gelatin that was sold to capsule makers. Wang Min / Xinhua).
Normally, capsules are made with material from animal bones.
Excessive intake of chromium can result in chronic diseases. 

Jilin-based Huinan Tianyu Pharmaceutical posted a statement on its website saying that it is recalling the batch of products exposed by CCTV, but "those products were not problematic because they were produced in 2009 and they accorded with the standards set in related code released in 2000".
The Chinese Pharmacopoeia, amended in 2010, permits no more than 2 milligram of chromium per 1 kilogram of medicine. Before that, the cap was 5 mg per 1 kg for heavy metal, but it had no specific stipulation about chromium, said the announcement.
The company's products were found with 3.54 mg of chromium per 1 kg of medicine.
Dandong Tongyuan Pharmaceutical in Northeast China's Liaoning province also announced the recall of its chromium-contaminated products, according to China News Service.
Xiuzheng Pharmaceutical Group in Jilin said in a statement on its website that the company has suspended sales of the problematic products but said "the capsule suppliers we pick are quality firms that meet all the country's standards and we are re-examining those products".
After the chromium scandal was exposed, websites for three pharmaceutical companies involved, including Xiuzheng, were hit by hackers.
Song Xunjie, a manager with Xueyang Gelatin and Glair Factory in Hebei province, was detained on Monday by police and suspected of setting fire to his factory to eliminate evidence.
The fire did not cause any casualties. The factory had suspended production and police sealed 200 tons of products there.
The factory mainly sold products in Beijing and Zhejiang, as well as cities such as Changzhou, Jiangsu province, and Xiamen, Fujian province, according to Xinhua News Agency.
Sun Zhongshi, an expert with the National Rational Drug Use Monitoring System under the Ministry of Health, said the drug watchdog paid more attention to the quality of medicine inside the capsules rather than the capsules themselves, and should draw a lesson from this scandal.

SOURCE: China Daily

Baxter International's CEO Discusses Q4 2011 - and the International Markets

Robert L. Parkinson
...In our regenerative medicine business, we achieved a number of milestones, including the approval and U.S. launch of ARTISS Fibrin Sealant for use in facial surgery and the U.S. regulatory filing for TISSEEL Fibrin Sealant for vascular surgery providing a broad hemostasis label. As we've previously mentioned, we're very pleased with the publication of data from Baxter's Phase II chronic myocardial ischemia adult stem cell program, which was published in the scientific journal Circulation Research....
Third, we recently announced the definitive agreement to acquire Synovis, an acquisition that complements and expands Baxter's regenerative medicine and biosurgery franchise, including a number of devices and biological products for hemostasis, tissue sealing and adherence.

Robert J. Hombach

Yes. And so net-net, not much of an impact to speak of on the base of $4.31 of earnings. But as we move into 2012, clearly, we're projecting a much more pronounced impact. And maybe I'll just take a minute here and kind of walk everyone through the drivers because I think this is important. As we've talked about, regularly, Baxter has about 60% of our revenues outside the U.S. We've increasingly highlighted for investors that now slightly more than 20% of our revenues come from emerging markets. And in fact, emerging markets have been growing 2 to 3 times the rate of developed markets over the last 5 years. So the mix of our business certainly has shifted towards emerging markets to a much greater degree. As we've highlighted in the past, for developed markets, we have the ability through natural hedges given our manufacturing footprint, which we have in places like Europe and Canada and Japan, Australia and so on. We have some natural hedges there, but also we utilize financial hedges in those developed markets. Now I would pause here to say, as we've talked about in the past, our pipe policy, we hedge 80% of our projected exposures. And by the nature of hedging, when you're looking 12 to 18 to 24 months out, you have to be careful in your projections to ensure that you don't get yourself in an overhead situation, hence, the 80% with a 20% buffer. But what that does mean is we do have some residual exposure muted but some residual exposure in the developed markets. As we said in the past, with emerging markets, we do not hedge. We do not utilize financial hedges, and we have modest natural hedges in some manufacturing facilities in Latin America, Eastern Europe and so on but nothing near the degree we have in the developed markets. And so our bottom line drop to exposure on the emerging markets is much more leveraged. So to frame that exposure for you then, looking at it by region, so within Latin America, from an operating profit perspective that would be exposed to foreign currency, think of that in terms of $300 million to $400 million of annual profit. And that's primarily Brazil, Colombia and Mexico. For Eastern Europe, which is primarily Russia, Poland and Turkey, again, about $300 million of operating profit on an annual basis. And then in Asia Pacific, and there we would exclude Japan, Australia, New Zealand and China because of the stability of the currency, so all of Asia excluding those 3 is another roughly $300 million of operating profit on an annual basis. So you add that up. That's $900 million to $1 billion of profit exposed to currency in emerging markets. And as you've seen, there's been quite a bit of volatility, and given where we're sitting today and where rates are today relative to where they were on average in 2011, if you assume an 8% to 10% weakening across that basket of emerging market currencies, that's $80 million to $100 million of incremental exposure that we're factoring in here. And you add to that the slight 20% residual impact from the developed markets that goes unhedged, and that's how we get into this kind of $0.15 to $0.18 range of FX exposure. Now, as you would imagine, given the volatility, we've assumed somewhat conservative rates relative to where market rates are today. There's been of bit of a run-up here in the last few days, but given the volatility, I hesitate to call it very conservative. And so that's the picture. But if I step back and think about as a large U.S. multinational corporation in thinking about the long run, being along the emerging markets, whether it's from a growth perspective or currency perspective, is exactly where we want to be. We continue to see great opportunities there, but in times of financial crisis like this, where the correlation between those currencies and the U.S. dollar is all going one way, it creates this kind of outsized exposure that we're having to factor into our guidance here for 2012. So thanks for bearing with me, but I think it's important that people understand the breadth of the issue for us.

David R. Lewis - Morgan Stanley, Research Division

I will -- just maybe one more quick one for Bob Parkinson. And Bob, there's been a lot of concerns here in the quarter regarding European austerity. You've talked a lot about old Europe pressures. I guess we've been surprised about where that pressure's coming from. I think it's a little different than where the investor sees within your plasma business versus your injectable and your nutritional business. Can you just sort of talk to us in the way you're see the pressure and which businesses for Baxter are proving to be more robust? And then where -- which businesses are seeing sort of more pharmaceutical-like pressure?

Robert L. Parkinson

Yes. I mean, so the negative impact of the austerity measures, first of all, is just kind of what I call general softness, David, and underlying demand. But these are the kind of things we see globally. So surgical procedures and things of that nature are somewhat softer than what's been reflected historically. So now we'd run across virtually all our businesses, certainly even our IV business and so on and so forth. But the other pressure that's probably more pronounced and is more associated with our BioScience business would be pricing pressures with governments who clearly are under the gun to implement austerity measures. And given healthcare spend and well-large item that represents on national budgets and so on, we continue to see governments virtually unilaterally implementing various pricing actions, and that impact is more pronounced in things like, say, biosurgery where people are making trade-off decisions in terms of clinical options that they have but also, most of our BioScience products, which are more expensive. So as an example, countries like France implement actions in terms of taking prices down. It's a haircut, David. So it's not as pronounced as what you would see with some of the tender actions, I would say, on hemophilia because encouragingly, we haven't seen the expansion beyond the Anglo markets of the tender activity for hemophilia. But -- so we think we've captured in our guidance for next year those known pricing actions that will be taken on a country-by-country basis. We also think we've reflected kind of the underlying softness of demand. But I think we have to be cognizant of the fact that given the extreme austerity measures and pressures that exist that unlike the U.S. governments in Europe, most notably, really have a history of implementing unilateral actions for which there's not a lot of control. We think we've captured it, but like I say, given the environment, I think, we have to be cognizant that there could be more there. And by the way, this is an ongoing thing. I mean, this is -- it's why I talk about dealing with the new environment in our company, in our culture and so on. This isn't something that's going to pass through this year in -- or through the end of 2012. It's going to be with us....

David H. Roman - Goldman Sachs Group Inc., Research Division

Okay. And then as I look at the Plasma Protein business, the issues about timing of imports in China, I think you had talked about that last quarter, as well a new product, the delay on a large tender for PD Factor VIII in Brazil. Are those issues that we should think about as being ongoing for the next several quarters? Or will those normalize at some point, whereby that business gets back to sort of stable underlying growth on a reported basis?

Robert J. Hombach

Yes. Certainly, Brazil for sure is a timing issue, and we're hoping to continue to accelerate into China. Without them it becomes -- it is a great growth opportunity. So yes, you should see normalized growth rates here in 2012 for that category.

Mary Kay Ladone

Although I would mention, David, that tenders tend to be volatile, and we can see shifts from quarter-to-quarter, so just to highlight that.

Robert L. Parkinson

David, the one thing I would add to the China situation, there's been local action by the Chinese government to further scale back some of their local plasma collection operations in the country. So this importation of albumin in China would appear to be something that is going to be sustainable for the near future, certainly over the next few years, I think, given some of the local issues they manage through.

CRY Q2 2011

Comment: Solid growth from CRY this Q2...Hemostasis portfolio buoyed by off-label use of Bioglue (Purified bovine serum albumin (BSA) and glutaraldehyde) in Japan and a suggested move of Perclot manufacturing to the USA from China. For Perclot this should be useful considering how many markets require a Free Trade Certificate (i.e. These certificates are required by governments in a growing number of countries that need assurance that products exported from the United States to their countries are the same as products sold in the United States , presumably meeting all state and federal laws and regulations, thus posing no threat to their subjects. Exports to these countries must be accompanied by a valid certificate, or the product will not be admitted.)


Steve Anderson 

...Japanese BioGlue sales in early July continue to be strong and demonstrate that the product is being well received. BioGlue is also doing very well in Brazil where our distributor is on track by a $1 million during calendar 2011. Sales of BioGlue in Brazil have increased from $150,000 for 2005 to about $1 million in 2011. BioGlue is projected to comprise 40% of company’s sales in 2011.As you will recollect, BioGlue’s gross margins are in excess of 80%.

We are also very pleased with the early European market acceptance of PerClot. During the second quarter of 2011, sales of PerClot in Europe increased by 76% over the sales of HemoStase, a product we formally distributed for the same timeframe a year earlier. Sales of PerClot for the first six months of 2011 in Europe were $1,271,000 versus $721,000 of HemoStase for the same period in 2010.

In our opinion, PerClot is a more effective product than HemoStase [Arista, Medafor Inc.]. We believe that PerClot is a second generation powdered hemostatic agent and the doctors are genuinely pleased with what it does on the surgical setting. Sales in Australia have also been excellent.

During the first quarter conference call we stated that we had filed our US IDE for PerClot with FDA. The FDA had a number of questions and comments regarding our initial IDE submission. We have been addressing the FDA’s issue and are working on our responses. It’s important to note that HemoStase’s gross margin were 55%, and that when approved in the United States we will replace that product with PerClot whose gross margin will be an excess of 80%. I believe that PerClot sales will be a revenue and earnings growth engine for CryoLife going forward....

Ashley Lee

..Once we get PerClot, the manufacturing process transferred here [from current Starch Medicals Chinese manufacturing site] and approved in the US, that’s going to be an 80 plus percent gross margin product...

Steve Anderson

In addition to that, we’re working hard on getting third quarter approved in Brazil and in Canada, and we’re making good progress on that, its just a matter of working our way through the bureaucracy that is involved in approval in those countries. And so they should come on here in the next six to nine month and that products then would be looking at significant sales increases as a result of that. And the success we’re having in Brazil was of course with BioGlue it is sort of piggyback on that. And so, I would expect with the larger volumes late this year and next year with PerClot that those margins probably will continue to increase...

Raymond Myers - Benchmark

On the last call I asked you about this and you were a little more cautious at that time about Japan BioGlue sales, because that market is small you said that you thought you would have to do an additional clinical study to enter the $150 million general surgical sealant market in Japan. And I wonder are we being more optimistic now that we can broaden the use before having to do that study?

Steve Anderson

I think it’s evident that the Japanese physicians are using it off label for other uses. I think it’s too early. I don’t happen to know where they are using it at this time, but it’s obvious from the volume that they are using it an addition to and other places in addition to aortic dissections. We are going to do an additional clinical study, but we have the same exact approval from the FDA initially when we marketed that product in the States and of course and it ended up being used a lot for certain neurological indication and maybe that’s where it’s being used in Japan. I would have to ask our distributor we happen to know that I don’t at this early stage.

Joe Mondillo - Sidoti & Company

With the growth that you guys are seeing in BioGlue and PerClot, we assume to see an increase in CapEx going forward to support the growth that you are seeing?

Ashley Lee

Not necessarily. That’s one of the parts of our business that we think is very leverageable. We have got the infrastructure here currently at our facility to ramp production for BioGlue. We do not perceive any significant spend on CapEx for PerClot and getting that manufacturing process migrated [from Beijing, China] to our US facility....

Jury Rules Against Baxter In Contaminated Chinese Heparin Case - "The Cheap Stuff"

An Illinois jury on Thursday awarded $625,000 to the estate of a Chicago-area man who was administered a blood-thinning drug that contained a contaminated ingredient medical-products company Baxter International Inc. (BAX) manufactured in China.
It was the first of hundreds of pending lawsuits against Baxter to go to trial.
The cases are related to a 2008 finding by the Food and Drug Administration, which discovered a link between contaminated heparin marketed by Baxter to Chinese suppliers of the active ingredient used in heparin. In the U.S., the contaminated heparin was linked to dozens of deaths and hundreds of allergic reactions.
Plaintiffs contended 63-year-old Steve Johansen received low doses of contaminated heparin during dialysis and a bolus dose during a subsequent hospitalization at Palos Community Hospital in late 2007.
The active pharmaceutical ingredient in the contaminated heparin received by Mr. Johansen and other Americans was obtained from Baxter/SPL's Chinese supplier, Changzhou SPL (a joint venture with SPL).  This crude heparin was referred to in the companies' own internal records as "the cheap stuff."  Baxter and SPL knew that the plant had never been inspected by the U.S. FDA (which the FDA later attributed to clerical error) or Chinese regulatory officials.  When the Chinese plant was finally inspected by the FDA after the heparin contamination crisis, multiple violations were found resulting in an import ban.  Additional evidence also brought to light during the trial established that Baxter and SPL failed to establish and comport with quality/purity specifications, including an impurity profile, and failed to trace and control their supply chain.  At trial, the Court granted partial directed verdict in favor of Mr. Johansen holding that the product sold by Baxter and SPL was defective as a matter of law.

According to the verdict, the award of compensation was for pain and suffering and was found against Baxter and the Chinese supplier, Scientific Protein Laboratories LLC.
Baxter spokeswoman Deborah Spak said the company is taking responsibility for legitimate cases of harm related to the contamination seriously, adding that Baxter will "vigorously defend claims that are not consistent with the definition established by public health authorities."
Baxter's therapies treat serious medical problems such as cancer, immune disorders and trauma. The company is coming off a challenging year due to economic weakness, costs pegged to the U.S. health-care overhaul and some product-quality and regulatory challenges.

CryoLife, Inc. (CRY) Downgraded by The Benchmark Company to “Hold”‎

CRY executives say no more Hemostats....

PerClot and HemoStase [More on that HERE and HERE]

Revenues from the sale of PerClot and HemoStase increased 17% for the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. This increase was primarily due to a 40% increase in the volume of grams sold, which increased revenues by 34%, partially offset by a decrease in average selling prices, which decreased revenues by 17%...

CryoLife may begin manufacturing PerClot from plant starch modified by Starch Medical Inc. under the terms of the License Agreement, which is anticipated to occur sometime in late 2011 or in 2012. The License Agreement extends for an indefinite period. Following the start of manufacturing and U.S. regulatory approval... [after transition from the current Chinese site of manufacture].

Excerpt Benchmark Cryolife Q1

Operator

Our next question comes from Raymond Myers with Benchmark. Please proceed with your question.

Raymond Myers – Benchmark

Great, thank you. Most of my questions have been answered, but let me ask this one. PerClot revenue in Q1 was 660,000. We’ll have a lot to compare that with except for Q4 where……(technical difficulty)

Steve Anderson

We lost you.

Ashley Lee

We lost you Ray.

Raymond Myers – Benchmark:

…… after having a very strong $660,000 in Q1, is any of that due to stocking and what does that tell you about the potential for the product over the course of the year?

Ashley Lee

We have actually seen the majority of our distributors reorder already. So we remain very optimistic about PerClot revenues for the balance of this year and our expectations are included in the guidance that we gave for all powdered hemostats that we talked about earlier.

Raymond Myers – Benchmark

I guess what I’m driving at is trying to understand how contributed that guidance is. I’m assuming, for starters, we’re not going to sell any more hemostats, correct?

Steve Anderson

That is correct.

Raymond Myers – Benchmark

And PerClot increased by well over 200% sequentially from Q4 to Q1. Was any of that due to stocking orders that you don’t expect to repeat in Q2?

Steve Anderson

No, most of the distributors have reorders by this time. Not all, but most.

Raymond Myers – Benchmark

So with that kind of a quarter-on-quarter growth rate, what kind of PerClot revenue would we expect in Q2?

Ashley Lee

We don’t give quarterly guidance out Ray, but again we gave for powdered HemoStase, it could be as much as 5 million for the full year and we would expect to see sequential growth in PerClot revenues over the balance of this year, so we’ll leave it to that.

Steve Anderson

One of the things that we have pointed in the previous calls is that our R&D people feel that the PerClot absorbs two to three times the amount of fluid that the prior product absorbed and I can tell you that the difference in the activity of the product is striking, but you exhibit them side by side. Now it’s very hard to describe that conversationally. But what I would suggest is the next time we have a booth at a convention that you ask to personally see the demonstration of the two products side by side because the doctors’ reaction to the activity, the chemical activity of PerClot has been extraordinary, and we are very, very enthusiastic about that product.

Raymond Myers – Benchmark

Well, that sounds great. I’ll do that and look forward to growth in that area. Thanks.