EXTON, Pa., May 13 Kensey Nash Corporation(Nasdaq: KNSY) announced it has entered into a definitive agreement to sellits endovascular business, including the ThromCat(TM), QuickCat(TM) andSafeCross(TM) products, to Spectranetics Corporation (Nasdaq: SPNC). KenseyNash will receive up to $24 million in cash consisting of a $10 millioninitial cash payment, $8.0 million in future product development milestonepayments, and a $6.0 million milestone associated with cumulative sales. Inaddition, Kensey Nash will receive royalties on future sales of theThromCat(TM) and SafeCross(TM) products upon the transfer of productmanufacturing to Spectranetics. There will be no royalty payments related tofuture sales of the QuickCat product. Under the terms of the manufacturingagreement, Kensey Nash will manufacture the ThromCat and SafeCross productsfor Spectranetics for an initial three-year period. The QuickCat product willbe manufactured by Kensey Nash for a minimum of six months. Spectraneticswill be exclusively responsible for worldwide sales and marketing of allendovascular products.
The transaction, which is subject to customary closing conditions, isexpected to close by June 30, 2008.
The net after-tax improvement in annual earnings per share for fiscal 2009is estimated to be in the range of $0.40 to $0.50, compared to fiscal year2008 earnings per share. The fiscal year 2008 comparison does not include ananticipated one-time charge which will consist primarily of severance andrelated costs, in an amount which will be determined after the closing. Thisimprovement reflects the anticipated savings in sales and marketing expenses,partially offset by reduced margins, compared to fiscal 2008, on Endovascularproduct sales as a result of lower transfer pricing to Spectranetics.
Joseph W. Kaufmann, President of CEO of Kensey Nash, commented, "Aspreviously announced, the Company has been exploring options to maximize thevalue of our endovascular business. Spectranetics is an ideal partner for usand is extremely well-positioned to maximize adoption of our technologies inthe thrombus removal and chronic total occlusion markets. This partnership isstructured similarly to our successful partnerships in the biomaterials marketand allows Kensey Nash to focus on core competencies in R&D, regulatory,clinical development and manufacturing while utilizing the strengths of ourpartners' existing well-established sales and marketing organizations."
"Spectranetics is well respected as a market leader in treating arterialblockages with its unique laser atherectomy platform," continued Mr. Kaufmann."The addition of our Thrombectomy and CTO products to Spectranetics' businesswill create a market leading entity that combines Spectranetics'well-established sales and marketing organization in the thrombus managementand CTO markets with Kensey Nash's product development and manufacturingcapabilities. Physicians and patients will continue to benefit from the highlevels of innovation, quality and service long associated with Kensey Nash.For Kensey Nash, the transaction eliminates the significant cost of our directsales and marketing organization and will reduce the cost of developing nextgeneration devices. Of significant importance, we will retain the ability toparticipate in the future growth of these products," he concluded.
"The acquisition of the endovascular business of Kensey Nash will bothstrengthen and broaden our existing presence in the treatment of thrombus andchronic total occlusions," commented John G. Schulte, Spectranetics' Presidentand Chief Executive Officer. "The QuickCat aspiration catheter and theThromCat mechanical thrombectomy catheter provide a continuum of options fortreating thrombus and certainly complement laser ablation for complex disease.The SafeCross wire, which utilizes radiofrequency energy, fits nicely with ourQuickCross(R)