Osteotech Off 12% On Patent-Issue Rumors, Analyst Says
Dow Jones Newswires
By Dinah Wisenberg Brin
PHILADELPHIA (Dow Jones)--Rumors of a patent-infringement lawsuit sent shares of Osteotech Inc. (OSTE) tumbling as much as 16% Tuesday, according to an analyst, who said the company had not been served with any court papers.
"This selloff of the shares is related to a rumor that the company has had a lawsuit filed against them over patent issues related to its bone dowel," said Dr. Wade H. King, senior research analyst with BancBoston Robertson Stephens & Co.
Osteotech has been anticipating legal action from the University of Florida Tissue Bank, which has a patent on a similar product, and addressed the matter during a conference call with analysts a month ago, King said.
It was unclear whether the tissue bank has filed a legal complaint that hasn't reached yet Osteotech. An Osteotech official did not immediately return a call for comment, nor did a spokeswoman for a tissue bank spinoff, Regeneration Technologies.
The bone dowel is used in lumbar fusion procedures.
Osteotech, an Eatontown, N.J., provider of ceramic-based surgical products and of bone, ligaments and tendons for transplantation, configured its dowel to be different from the one designed by the Florida Tissue Bank, King said.
The company pursued multiple legal opinions in advance to assure it would not duplicate the tissue bank design, "and believes strongly that it is not infringing on the Florida Tissue Bank patents," he said.
"We think Osteotech will be vindicated here," King said. BancBoston reiterated its buy rating on Osteotech stock.
King said he knew of no other reason for the drop in share price.
Osteotech shares recently traded at 48 3/4, down 15/16, or 10.9%, on volume of 465,500, compared with average daily volume of 158,200. Earlier Tuesday, after opening at 54 3/4, the shares traded as low as 46, a decline of 15.9% from Monday's close of 54 11/16. The shares set a 52-week high of 58 5/8 on Feb. 4.
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