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Select Customer Agreements
3 Months Ended
Sep. 30, 2011
Select Customer Agreements [Abstract] 
Select Customer Agreements

Note 4 – Select Customer Agreements

These are select customer agreements not otherwise discussed elsewhere in the notes to the Condensed Consolidated Financial Statements.

St. Jude Medical, Inc.

The License Agreements – Under license agreements with St. Jude Medical, St. Jude Medical has exclusive worldwide rights to manufacture and market the Angio-Seal Vascular Closure Device (the Angio-Seal), for which the Company receives an approximate 6% royalty on end-user product sales by St. Jude Medical.

Prior Component Supply Contract - Under a supply agreement executed with St. Jude Medical in 2005, the Company was the exclusive supplier of 100% of the collagen plug and at least 30% of the bioresorbable polymer anchor components for the Angio-Seal over the term of the agreement, which expired on December 31, 2010.

Current Collagen Supply Agreement - On June 23, 2010, the Company entered into a new two-year supply agreement with St. Jude Medical effective for the period from January 1, 2011 to December 31, 2012. Under this new supply agreement, the Company is the exclusive outside supplier of collagen plugs to St. Jude Medical. The new supply agreement provides for contractual minimum order levels of collagen plugs for calendar years of 2011 and 2012. During the Company's third and fourth quarters of fiscal 2011, St. Jude Medical fulfilled their calendar 2011 contractual minimum order levels under this new supply agreement, resulting in approximately $4 million of collagen plug sales for the Company. As of June 30, 2011, St. Jude Medical placed its calendar 2012 order for approximately $6.4 million of collagen plugs, of which $4.0 million are to be shipped in the second half of fiscal 2012 and $2.4 million in the first half of fiscal 2013. This calendar 2012 order exceeded the contractual minimum level and provides for collagen plug sales to be recognized when the Company ships the product during the Company's second half of fiscal 2012 and first half of fiscal 2013. For the three months ended September 30, 2011, there were no collagen plug sales to St. Jude Medical. The new supply agreement does not call for the Company to supply polymer anchors to St. Jude Medical.

Stryker Corporation / Orthovita, Inc.

The Company has a development, manufacturing and supply agreement with Orthovita under which the Company develops and commercializes products based on Orthovita's proprietary Vitoss Bone Graft Substitute Material in combination with the Company's proprietary biomaterials (the Orthovita Agreement). Under the Orthovita Agreement, the Company manufactures the products, while Orthovita markets and sells the products worldwide. Under the Orthovita Agreement, the Company receives royalty payments on co-developed Vitoss, Vitoss Foam and Vitoss Bioactive Foam products based upon Orthovita's net total end-user sales of such products.

In a separate transaction in August 2004, the Company entered into an agreement (the Assignment Agreement) whereby the Company acquired the intellectual property rights of a third party having rights in the Vitoss technology, an inventor of the Vitoss technology (the Inventor), for $2.6 million. Under the Assignment Agreement, the Company received all intellectual property rights of the Inventor that had not previously been assigned to Orthovita. Also under the Assignment Agreement, the Company primarily receives a royalty on the sale of all Orthovita products containing the Vitoss technology, up to a total to be received of $4,036. The entire cost of these proprietary rights was amortized over an 83 month period. As of September 30, 2011, the Company had recognized the total cumulative royalty income of $4,036 under the Assignment Agreement.

In June 2011, Stryker Corporation acquired Orthovita.

Synthes, Inc.

On May 24, 2011, the closing date of the Company's Norian asset acquisition pursuant to an Asset Purchase Agreement, the Company also entered into a Supply Agreement with Synthes USA Sales, LLC, a subsidiary of Synthes. This Supply Agreement provides for the Company to be the exclusive manufacturer and supplier of the Norian product lines acquired by the Company under the Asset Purchase Agreement, pursuant to which Synthes will purchase all of its requirements for such products exclusively from the Company, on the terms set forth in the Supply Agreement. The Supply Agreement, which was effective on the date of acquisition, has a term of 10 years and will automatically renew for successive two-year terms. Also, on May 24, 2011, the Company entered into a research and development agreement with Synthes to develop certain related future products.