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Kensey Nash Corporation ( ) has entered into a manufacturing agreement with London-based medical devices maker Orteq Sports Medicine. The deal includes a minority equity investment in Orteq by Kensey.
Orteq is a global leader in the field of biodegradable polymer technology. The company has developed Actifit for the treatment of meniscal tears, the most common injury of the knees afflicting roughly 1.5 million people annually across the globe. Sports injuries (such as sudden twist of the knee) are the most common cause of meniscal tears.
Actifit, a biocompatible polymer meniscal scaffold, has been designed to offer sports medicine surgeons a novel therapy option for treating irreparable partial meniscal tears. The product is currently marketed throughout Europe and Orteq expects to secure approval of the Food and Drug Administration (“FDA”) to commence U.S. clinical trials in 2011. Actifit is expected to address a target market in excess of $1 billion.
The FDA clearance the U.S. trial will result in an additional $1 million investment in Orteq by Kensey Nash, which will take the total investment to roughly $5 million. This will correspond to approximately 10% stake in Orteq. The deal also provides Kensey Nash with the exclusive worldwide manufacturing rights and entitles it to receive future royalty payments. Other terms are not divulged by the companies.
Pennsylvania-based Kensey Nash is a medical devices company which provides resorbable biomaterials used in a wide variety of medical procedures and endovascular devices. The company’s products are used in cardiovascular, sports medicine, spine, extremities and endovascular markets.
Kensey Nash is currently the exclusive supplier of collagen plugs (one of the key components of the Angio-Seal vascular closure device) to St. Jude Medical ( STJ - Analyst Report ) . The company books a 6% royalty on Angio-Seal net sales by St. Jude.
Kensey Nash reported tepid first-quarter fiscal 2011 results with revenues and net income declining 14% and 21% year over year, respectively. Sports medicine products sales plummeted 26% year over year due to fluctuation in ordering patterns.
The company has pruned its revenue and earnings guidance for fiscal 2011 citing the unfavorable impact of a soft economy on its core businesses. Nevertheless, Kensey Nash expects sales from its sports medicine products to rebound in second-half fiscal 2011.
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