ArthroCare and Smith & Nephew Bury the Hatchet
BY JOHN MCCORMICK, SEPTEMBER 7, 2005
ArthroCare Corp. has settled all legal disputes with the Smith & Nephew PLC Endoscopy division by signing product supply and license agreements for bipolar and monopolar arthroscopy products. The various agreements resolve all of ArthroCare's pending litigation against Smith & Nephew.
This new deal has some notable features. First, Smith & Nephew will re-introduce its SAPHYRE™ bipolar RF and ELECTROBLADE™ electromechanical resector products into the US market. The second key aspect of this is a product supply deal where ArthoCare will make bipolar and monopolar arthroscopy products for sale by Smith & Nephew. The third aspect is a licensing pact where ArthroCare would receive royalties for bipolar products sold domestically by Smith & Nephew, and for bipolar shaver products sold by Smith & Nephew worldwide. The company also said it was granted a license for the global sale of spine products. Finally, ArthroCare stated that it will receive a one-time cash payment at signing and a series of milestone payments over the next year.
Since 2001, ArthroCare has been seeking patent infringement damages from Smith & Nephew charging. Last year, a federal court in Delaware barred Smith & Nephew from selling the disputed products in the United States (click here to see how significant the ruling was).
The deal has been incporporated into ArthroCare's 2006 earnings forecast. For fiscal 2006, the company projected earnings per share between $1.25 to $1.35, on estimated revenue between $255 million to $265 million.
According to Thomson Financial, the Street's consensus view for 2006 is currently $1.26 per share on projected revenue of $256.8 million.
