Break out the wallet boys. Cook will not be cheap to buy now.
UPDATE 1-U.S. court sides with Boston Scientific
THURSDAY, JUNE 13, 2002 12:40 PM
- Reuters U.S. Company News
(Recasts first sentence, adds Cook comment paragraph 3, updates share movement, adds analyst comments and other details)
CHICAGO, June 13 (Reuters) - A U.S. judge on Thursday ruled in favor of Boston Scientific Corp. in a dispute, leaving its rival medical device maker, Guidant Corp., scrambling to find a way to enter the market for a new and lucrative treatment for heart disease.
A U.S. District Court judge in Chicago ruled against privately held Cook Inc., which had an agreement with Guidant (GDT) . Boston Scientific (BSX) challenged that pact, saying it violated a previously existing co-licensing agreement.
A Cook spokesman said the company is "very disappointed" and plans to appeal.
The dispute involved the use of the drug paclitaxel to coat stents, tiny mesh tubes that keep arteries from reclogging after angioplasty. Boston Scientific and Cook have a co-exclusive licensing agreement with the drug's producer, Toronto-based Angiotech Pharmaceuticals Inc. (CA:ANP)
Shares of Boston Scientific jumped almost 10 percent after the ruling, rising $2.43 to $27.55 on the New York Stock Exchange. Guidant shares fell 6.3 percent, down $2.15 at $32.
Cook also entered into additional deals with Guidant, effectively giving Guidant the right to distribute a stent coated with paclitaxel. The judge called that pact "a sham."
"Cook may only engage in activities which do not infringe Boston Scientific's co-exclusive right," said U.S. District Court Judge Charles Kocoras in the Northern District of Illinois.
"The Angiotech agreement has not afforded Cook the right to have products distributed by a third party," he added. "Cook has attempted to grant a de facto sub-license."
Analysts expect the drug-coated devices to revolutionize the treatment of coronary artery disease. Some have estimated the use of drug-coated stents could double the size of the coronary stent market to some $5 billion as early as next year.
Guidant was counting on the deal with Cook for its entrance into the lucrative market. Analysts said Guidant is now likely considering separate business arrangements, for example royalty payments to Boston Scientific, or even an acquisition of Cook.
"He (the judge) couldn't have been more unequivocal," said Daniel Lemaitre, analyst with Merrill Lynch, adding that Boston Scientific "got everything they wanted."
"This really is going to send Guidant people scrambling to stay in the game," Lemaitre said. |
