ATLANTA, March 19 /PRNewswire-FirstCall/ --- CryoLife,
Inc. (NYSE: CRY), an implantable biological medical device and
cardiovascular tissue processing company, today responded to
Medafor's allegation that it has repudiated the Exclusive
Distribution Agreement ("Agreement") between the two companies.
On March 18, 2010, Medafor
informed CryoLife that it is treating the Agreement as terminated.
Medafor alleges that it had reasonable grounds, pursuant to
Georgia law, to demand that
CryoLife provide adequate assurances that it would perform under
the Agreement and that CryoLife has repudiated the Agreement by not
providing adequate assurances. After completing its
preliminary analysis, CryoLife believes that Medafor's position
that it may treat the Agreement as terminated is not valid and that
Medafor's request that CryoLife give adequate assurance of due
performance under the Agreement was not reasonable or made in good
faith.
This is Medafor's fourth attempt to terminate the Agreement.
CryoLife is currently evaluating all of its options related
to this most recent termination attempt by Medafor.
On March 16, 2010, CryoLife placed
a purchase order of approximately $500,000 of HemoStase® product to be delivered to
CryoLife on April 15, 2010. On
March 18, 2010 after notifying
CryoLife that it was treating the EDA as terminated, Medafor
notified CryoLife that it would not fulfill this order because
CryoLife submitted the order 30 days prior to shipment, instead of
the minimum 35 days set forth in the Agreement and the amount
requested was more than CryoLife had forecasted as set forth in the
Agreement. Assuming Medafor's effort to deem of the Agreement
as being terminated is not successful, CryoLife may simply submit a
new purchase order.
If Medafor is ultimately successful in terminating the Agreement
or if Medafor fails to ship HemoStase as ordered by CryoLife,
CryoLife's previously issued financial guidance for fiscal 2010 may
be materially affected.
In 2009, CryoLife filed a lawsuit against Medafor for, among
other things, breach of contract, fraud, negligent
misrepresentation, and violations of Georgia Racketeer Influenced
and Corrupt Organizations Act ("Georgia RICO"), alleging that
Medafor has violated the Agreement by, among other things, allowing
other companies to distribute HemoStase in territories and medical
fields reserved exclusively for CryoLife per the terms of the
Agreement. CryoLife's lawsuit alleges that Medafor, contrary
to its representations in the Agreement, had numerous distribution
agreements regarding HemoStase with other distributors in the U.S.
and internationally, allowing them to market and distribute
HemoStase in the territory and field given exclusively to CryoLife.
Medafor is alleged to have knowingly and purposefully
withheld from CryoLife disclosure of all but three of these
agreements; to have knowingly and purposefully misrepresented that
the three distributors with these agreements would not be allowed
to compete with CryoLife after the effective date of the Agreement
except in several explicitly identified facilities, and then only
for a short period of time; and to have intentionally
misrepresented to CryoLife that no such contracts existed with any
other distributors, and that no such contracts would exist after
CryoLife's exclusive rights commenced. The lawsuit also
alleges that Medafor has failed to take reasonable steps to prevent
other distributors from distributing HemoStase in CryoLife's
exclusive field and territory, and that Medafor breached its
contractual obligation to prevent competing products from violating
Medafor's intellectual property rights in HemoStase, thereby
impairing the value of CryoLife's exclusive distributorship.
As specified in the lawsuit, CryoLife brought these
transgressions to Medafor's attention on numerous occasions and
attempted to work with Medafor to secure its compliance with the
terms of the parties' Agreement, but was unable to get Medafor to
follow the terms of the Agreement. CryoLife believes that
Medafor's actions have deprived CryoLife of significant sales
volume and have impaired and delayed CryoLife's development of
relationships with customers in its exclusive territory.
About CryoLife, Inc.
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 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. BIOGLUE Aesthetic® Medical Adhesive is
CE marked in the European Community for periosteal fixation
following endoscopic browplasty (brow lift) in reconstructive
plastic surgery and is distributed by a third party for this
indication. CryoLife 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.
Except for the historical information contained in this press
release, the statements made by CryoLife are forward-looking
statements that involve risks and uncertainties. All such
statements are subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. These statements include
CryoLife's belief that termination of the Agreement and/or
Medafor's rejection of purchase orders may have a material affect
on previously announced financial guidance, CryoLife's belief that
Medafor does not have a valid reason to terminate the Agreement and
CryoLife's intention to withdraw its proposal to acquire all
outstanding Medafor stock. These statements are subject to a
number of risks that are outside CryoLife's control, including the
risk that Medafor will not act reasonably in this matter or that a
court could disagree with CryoLife's interpretation of the
Agreement and its rights thereunder. Also, previously
announced anticipated revenue for fiscal 2010 includes revenue from
the Agreement and termination of the Agreement would reduce those
revenues and the related profits. These risks and
uncertainties also include the risk factors detailed in our
Securities and Exchange Commission filings, including our Form 10-K
filing for the year ended December 31,
2009. The Company does not undertake to update its
forward-looking statements.
For additional information about the company, visit CryoLife's
Web site:
www.cryolife.com.
Media
Contacts:
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D. Ashley Lee
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Executive Vice
President, Chief Financial Officer and
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Chief Operating
Officer
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Phone:
770-419-3355
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Nina
Devlin
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Edelman
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Phone:
212-704-8145
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SOURCE CryoLife, Inc.