There’s an update to the story we covered in December 2011, here, in which Kensey Nash and St Jude Medical had agreed to enter into non-binding mediation to help resolve their differences over royalty payments relating to AngioSeal.
In a press release issued on Friday, Kensey Nash Corporation announced that a settlement had indeed been achieved, which resolves all disputes between the two companies relating to the Angio-Seal vascular closure device licenses, as well as other related claims. As part of the settlement agreement, the companies also agreed to extend their collagen supply agreement through 2017 and expand the minimums to be provided over the contract term to five million units.
It was all about royalties, Kensey Nash believing it was due 8% since 2007, while St Jude had been paying 6%. Kensey Nash had advised St. Jude that, as a result of St. Jude’s incorrect interpretation of the license agreements between the two companies, St. Jude had to date underpaid the Company by over $30 million. Kensey Nash had also been “surprised” to learn that St. Jude “is now asserting that, effective November 2011, the rate at which that it owes royalties with respect to Angio-Seal is to be reduced from 6% to 2% and that St. Jude intends to pay the Company at this reduced rate.”
So it looks like Kensey Nash was chasing $30M plus 6% of revenues through 2014. What it got was an agreement that St Jude will pay a maximum of $39M in 12 equal quarterly payments beginning March 31, 2012, in lieu of all future royalties for the Angio-Seal and all other related claims. To soften the blow for Kensey Nash of not receiving the full claim amount claimed, St Jude has agreed that the Philadelphia company will continue to be the exclusive outside supplier of collagen for the Angio-Seal device through 2017 with approximate minimums over this extension period of $31 million.
Kensey Nash will recognise the $39 million as royalty revenue on a straight line basis beginning January 2012 through April 2014, which is the expiration of the last to expire of patents exclusively licensed by Kensey Nash to St. Jude under the settlement agreement and acknowledged by both parties to cover the Angio-Seal device. Additionally, .
Kensey Nash comments
“We are pleased the mediation process led to a fair and swift resolution for both parties, and we are excited that our long-term relationship with St. Jude will continue through at least 2017. This settlement eliminates the uncertainty that had existed with our royalty income and our role as a long term supplier of collagen,” commented Joe Kaufmann, President and CEO.
Source: PR Newswire via Comtex, Kensey Nash