Healthcare Industry News: vascular closure
News Release - July 10, 2007
Kensey Nash to Exit Embolic Protection MarketsDecision expected to result in significant annual cost savings
EXTON, Pa., July 10 (HSMN NewsFeed) -- Kensey Nash Corporation (Nasdaq: KNSY ) today announced its Board of Directors has approved a management plan to cease all activities on its embolic protection platform. After a thorough review, the strategic decision was made to reduce costs and allow the Company's sales force to focus more on its thrombectomy and chronic total occlusion platforms and was made primarily in response to changing embolic protection market dynamics, particularly in the carotid market. All of the Company's embolic protection activities will cease, including the ProGuard clinical trial, product manufacturing, sales and marketing, and research and development activities, resulting in significant cost reductions within the Company's endovascular business.
The Company believes that the embolic protection market dynamics are negative, and the costs to participate effectively in these markets are too high to warrant further investment. The Company has been carefully reviewing its endovascular strategy over the last several quarters and believes this action will allow for better resource allocation for both the endovascular and biomaterials businesses.
Kensey Nash will conclude its efforts to commercialize its TriActiv® System platforms and, as such, will not be re-launching its TriActiv® FX product line in the U.S. and will no longer be offering the TriActiv® ProGuard(TM) System in Europe. In addition, the ProGuard clinical trial studying the efficacy of the product in the carotid anatomy will be terminated. The Company expects this decision will result in ongoing annual savings of approximately $3.6 million, or $0.20 per share tax effected. The Company also estimates costs savings of $4.0 million, or $0.22 per share tax effected, related to the cancellation of the PROGUARD clinical trial, of which approximately $1.0 million and $3.0 million would have occurred in fiscal years 2008 and 2009, respectively. The Company will be incurring certain charges, which will include severance costs, clinical trial and other contract cancellation costs and write-offs of certain embolic protection inventory and equipment. The total of these charges is anticipated to be approximately $5.1 million of which approximately $4.4 million, or $0.24 per share tax effected, and $700,000, or $0.04 per share tax effected, will be recorded in fiscal years 2007 and 2008, respectively. These charges will be presented within the Company's results of continuing operations.
The Company based its decision on several factors, including the cost of commercializing the TriActiv® ProGuard(TM) in the U.S. carotid market, the time it will take the carotid market to develop given the recent decision to limit reimbursement coverage in the U.S. markets, the size of the saphenous vein graft market (the initial indication for the platform in the U.S.) which has not developed as expected, and the dominance of filter devices (as opposed to the Company's balloon based devices) in this highly competitive market.
"Unfortunately our efforts in the embolic protection markets have not been commercially successful despite good clinical data and we needed to make this decision," commented Joe Kaufmann, President and CEO of Kensey Nash. "We now have the opportunity to focus our company on the two core endovascular markets of thrombectomy and chronic total occlusions, in addition to our strong biomaterials business, which present better opportunities to add value to Kensey Nash. The management and the board of directors will continue to evaluate the performance of all of our business segments to ensure we are serving the best interests of our shareholders and employees," he concluded.
Conference Call and Webcast. The Company will host a conference call on Tuesday, July 10, 2007 at 11:00 a.m. Eastern Time. To participate in the conference call, interested parties should dial 612-332-0630. In addition, a live webcast of the call can be accessed by visiting the Investor Relations page under the Conferences & Webcasts link of the Kensey Nash website at www.kenseynash.com and clicking on Webcast. The teleconference call will also be available for replay starting Tuesday, July 10, 2007 at 2:30 p.m. Eastern Time through Tuesday, July 24, 2007 at 11:59 p.m. Eastern Time by dialing 1- 800-475-6701 with an access code of 880319.
About Kensey Nash Corporation. Kensey Nash Corporation is a leading medical technology company providing innovative solutions and technologies for a wide range of medical procedures. The Company provides an extensive range of products into multiple medical markets, primarily in the endovascular, sports medicine and spine markets. Many of the products are based on the Company's significant expertise in the design, development, manufacturing and processing of absorbable biomaterials, which has led to partnerships to commercialize technologies. Kensey Nash has also commercialized a series of innovative endovascular products through its own direct sales force. The Company is known as a pioneer in the field of arterial puncture closure, as the inventor and developer of the Angio-Seal(TM) vascular closure Device, which is licensed to St. Jude Medical, Inc.
Cautionary Note Regarding Forward-Looking Statements. This press release contains forward-looking statements that reflect Kensey Nash's current expectations about its prospects and opportunities, including, without limitation, expectations regarding Kensey Nash's endovascular products. Kensey Nash has tried to identify these forward-looking statements by using words such as "plans," "believes," "expects," "anticipates," "will," "should" or similar expressions, but these words are not the exclusive means for identifying such statements. Kensey Nash cautions that a number of risks, uncertainties, and other important factors could cause Kensey Nash's actual results, performance or achievements to differ materially from those expressed in, or implied by, these forward-looking statements, including, without limitation, the ability of Kensey Nash to obtain necessary regulatory approvals for new endovascular products, the ability of Kensey Nash to successfully market its endovascular products, and competition from other technologies. For a more detailed discussion of these and other factors, please see Kensey Nash's filings with the Securities and Exchange Commission. Except as expressly required by the federal securities laws, Kensey Nash undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.
Source: Kensey Nash
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