Cynosure Enters Into Patent Cross-License Agreement with Palomar Medical Technologies
November 07 2006 - 8:00AM
PR Newswire (US)
WESTFORD, Mass., Nov. 7 /PRNewswire-FirstCall/ -- Cynosure, Inc.
(NASDAQ:CYNO), a leading developer and manufacturer of a broad
array of light-based aesthetic treatment systems, today announced
that it has entered into a patent license agreement with Palomar
Technologies, Inc. (NASDAQ:PMTI). Under the agreement, Cynosure
obtains a non-exclusive license to integrate into its product line
certain hair removal technology covered by specified U.S. and
foreign patents held by Palomar, and Palomar obtains a
non-exclusive license under certain U.S. and foreign patents held
by Cynosure. Cynosure will make a one-time payment to Palomar of
$10 million for royalties related to prior sales of hair
removal-only systems including Cynosure's Apogee(R) family of
products and the PhotoLight(TM), Acclaim(R) 7000 and PhotoSilk Plus
systems. The payment was recorded as an operating expense in the
Company's third-quarter 2006 financial results, announced in a
separate news release today. Cynosure has agreed to pay a royalty
to Palomar on Cynosure's future sales of certain hair removal
products until all of the specified patents expire or all of the
claims under the specified patents are no longer valid. The royalty
rate will range from 3.75% to 7.5% of net sales beginning October
1, 2006, depending upon product configuration and energy sources.
On a blended basis, Cynosure's royalty rate is expected to be
approximately 3.5% of the Company's current total revenue.
Cynosure's flagship products, including the Affirm(TM) system, the
Cynergy(R) system with MultiPlex(TM) technology and the TriActive
LaserDermology(SM) system, are not subject to any past or future
royalties under this agreement. "We believe our decision to enter
into a licensing agreement with Palomar is in the best interest of
Cynosure and its stockholders," said President and Chief Executive
Officer Michael Davin. "We avoided the potentially long and
expensive legal battle that a number of our competitors are facing.
In fact, to this point, we have incurred minimal legal expenses
related to the Palomar patents and the agreement does not require
Cynosure to pay interest or penalties on past royalties. The
ability of Cynosure to license certain patents to Palomar speaks to
the value of our intellectual property portfolio and has allowed us
to negotiate a lower royalty rate on the Apogee Elite(TM) System
for a two-year period. In licensing the Palomar technology, we have
gained significant intellectual property in the form of licenses to
two key patents that we plan to use to enhance our current
hair-removal product portfolio." "This agreement also provides a
number of intangible benefits," Davin continued. "With this
agreement in place and the patent licensing issues with Palomar
resolved, management's time, energy and resources can remain
entirely focused on advancing Cynosure's leadership position within
the aesthetic laser marketplace. From the perspective of our
shareholders, customers and strategic partners, the specter of
litigation with Palomar -- and the distractions associated with it
-- has been eliminated." About Cynosure, Inc. Cynosure, Inc.
develops and markets aesthetic treatment systems that are used by
physicians and other practitioners to perform non-invasive
procedures to remove hair, treat vascular lesions, rejuvenate skin
through the treatment of shallow vascular and pigmented lesions and
temporarily reduce the appearance of cellulite. Cynosure's products
include a broad range of laser and other light-based energy
sources, including Alexandrite, pulsed dye, Nd:YAG and diode
lasers, as well as intense pulsed light. Cynosure was founded in
1991. For corporate or product information, contact Cynosure at
800-886-2966, or visit http://www.cynosurelaser.com/. Any
statements in this press release about future expectations, plans
and prospects for Cynosure, Inc., including statements about the
anticipated blended royalty rate on Cynosure's current total
revenue, Cynosure's planned usage of the patents licensed from
Palomar, and other statements containing the words "believes,"
"anticipates," "plans," "expects," "will," and similar expressions,
constitute forward-looking statements within the meaning of The
Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those indicated by such forward-looking
statements as a result of various important factors, including our
history of operating losses, our reliance on sole source suppliers,
competition in the aesthetic laser industry, economic, market,
technological and other factors discussed in Cynosure's Annual
Report on Form 10-K filed with the SEC. In addition, the
forward-looking statements included in this press release represent
Cynosure's views as of the date of this press release. Cynosure
anticipates that subsequent events and developments will cause its
views to change. However, while Cynosure may elect to update these
forward-looking statements at some point in the future, it
specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing Cynosure's views as of any date subsequent to the date
of this press release. Contact: Scott Solomon Vice President Sharon
Merrill Associates, Inc. 617-542-5300 DATASOURCE: Cynosure, Inc.
CONTACT: Scott Solomon, Vice President of Sharon Merrill
Associates, Inc., +1-617-542-5300, Web site:
http://www.cynosurelaser.com/
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