ATLANTA, Sept. 28 /PRNewswire-FirstCall/ -- CryoLife, Inc. (NYSE: CRY), an implantable biological medical device and cardiovascular tissue processing company, announced today that it has entered into a worldwide distribution agreement and a manufacturing agreement with Starch Medical Inc. (SMI) of San Jose, California for Chinese manufactured PerClot®, a novel polysaccharide hemostatic agent used in surgery.
Effects of an absorbable polysaccharide hemostat PerClot(r) on fracture healing of the cranial bone
PerClot is a unique, absorbable powder hemostat that has CE Mark designation allowing commercial distribution into the European Community and other markets. It is indicated for use in surgical procedures, including cardiac, vascular, orthopedic (no mention of OrthoClot was made in the release), spinal, neurological, gynecological, ENT and trauma surgery as an adjunct hemostat when control of bleeding from capillary, venous, or arteriolar vessels by pressure, ligature, and other conventional means is either ineffective or impractical. CryoLife plans to file an Investigational Device Exemption (IDE) with the United States Food and Drug Administration (FDA) to begin clinical trials for the purpose of obtaining Pre-Market Approval (PMA) to distribute PerClot in the U.S."PerClot is an exciting technology platform that has already seen significant success in Europe. Its unique formulation allows for full and rapid absorption, while showing excellent hemostatic capabilities. We are very pleased to have secured the rights to this second generation hemostatic agent and its laparoscopic delivery devices via an agreement that will allow us to serve a broader range of medical specialties and leverage the continued opportunities in the large and growing hemostatic agent market," said Steven G. Anderson, president and chief executive officer.
The U.S. hemostatic market is estimated to be $732 million in 2010 growing to approximately $1.1 billion in 2014, while the European market is estimated to be $279 million in 2010 growing to approximately $430 million in 2014.(1)
CryoLife intends to distribute both PerClot and HemoStase® until CryoLife can no longer sell HemoStase as a result of Medafor's termination of the parties' distribution agreement for HemoStase. Alternatively, CryoLife believes that in accordance with the terms of the agreement, at its sole discretion, CryoLife can return its inventory of HemoStase to Medafor for reimbursement. CryoLife anticipates that it will commence distribution of PerClot in several international markets in the fourth quarter of 2010 and will obtain U.S. FDA approval by the end of 2013.
"We were restricted by Medafor's continued attempts to terminate our agreement, including interruptions in product shipments. In addition, our agreement with Medafor limited our ability to sell HemoStase in all surgical specialties. Our international and largely unrestricted distribution agreement with SMI for PerClot addresses these issues and allows us to remain active in this important market," said Mr. Anderson.
Transaction Terms
Under the terms of the agreements, CryoLife receives the worldwide rights, excluding China, Taiwan, Hong Kong, Macau, North Korea, Iran and Syria, to commercialize PerClot for all approved surgical indications and a license to manufacture the PerClot product, exclusive of rights to sell PerClot with an endoscope.
As part of the transaction, CryoLife will pay SMI $6.75 million in cash and $1.25 million in restricted CryoLife stock, which includes $1.5 million in prepaid royalties. CryoLife will pay an additional $2.75 million to SMI if certain FDA regulatory and other commercial milestones are achieved, and will also pay royalties on sales of PerClot manufactured by CryoLife.
The PerClot distribution agreement contains certain minimum purchase requirements and has a term of 15 years. CryoLife may begin manufacturing PerClot from plant starch modified by SMI once the technology transfer from SMI has been completed, which is anticipated to occur sometime in 2011 or 2012. Following the technology transfer and U.S. regulatory approval, CryoLife may terminate the distribution agreement. In addition to allowing CryoLife to manufacture PerClot, the license agreement grants CryoLife a three-year option to purchase the remaining technology from SMI.
CryoLife estimates that the costs to develop PerClot and gain U.S. FDA approval will be between $5.0 million and $6.0 million, of which up to $750,000 is expected to be incurred in the fourth quarter of 2010 and the remainder over the next six to eight quarters. Additionally, the Company estimates that it will incur up to $300,000 in product launch and other costs related to PerClot in the fourth quarter of 2010. The Company will update its 2010 financial guidance and issue its initial 2011 financial guidance on its third quarter financial conference call.
About PerClot
PerClot is a medical device composed of absorbable modified polymer (AMP®) particles and delivery applicators. AMP particles are derived from purified plant starch. PerClot contains no human or animal components. It is intended for use as an absorbable hemostatic system to control bleeding during surgical procedures or following traumatic injuries.
PerClot is ready to use, requiring no mixing and/or other components and does not need special handling or storage conditions. Pre-clinical evaluations, clinical studies and surgical use have shown the efficacy of PerClot to be comparable to the current popular choice of surgical hemostatic materials while its unique formulation allows for rapid absorption. PerClot particles are readily dissolved by saline irrigation and are degraded rapidly by human enzymes, primarily amylase, within several days.
About CryoLife
Founded in 1984, CryoLife, Inc. is a leader in the processing and distribution of implantable living human tissues for use in cardiac and vascular surgeries throughout the U.S. and Canada. The Company's CryoValve® SG pulmonary heart valve, processed using CryoLife's proprietary SynerGraft® technology, has FDA 510(k) clearance for the replacement of diseased, damaged, malformed, or malfunctioning native or prosthetic pulmonary valves. The Company's CryoPatch® SG pulmonary human cardiac patch has FDA 510(k) clearance for the repair or reconstruction of the right ventricular outflow tract (RVOT), which is a surgery commonly performed in children with congenital heart defects, such as Tetralogy of Fallot, Truncus Arteriosus, and Pulmonary Atresia. CryoPatch SG is distributed in three anatomic configurations: pulmonary hemi-artery, pulmonary trunk, and pulmonary branch. The Company's BioGlue® Surgical Adhesive is FDA approved as an adjunct to sutures and staples for use in adult patients in open surgical repair of large vessels. BioGlue is also CE marked in the European Community and approved in Canada and Australia for use in soft tissue repair. The Company's BioFoam® Surgical Matrix is CE marked in the European Community for use as an adjunct in the sealing of abdominal parenchymal tissues (liver and spleen) when cessation of bleeding by ligature or other conventional methods is ineffective or impractical. CryoLife currently distributes HemoStase®, a hemostatic agent, in much of the U.S. for use in cardiac and vascular surgery and in many international markets for cardiac, vascular, and general surgery, subject to certain exclusions, although CryoLife has received notice from Medafor that it has terminated its HemoStase distribution agreement with CryoLife.
