cryolife8k30210.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
washington,
d.c. 20549
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): March 2,
2010
_______________________
CRYOLIFE,
INC.
(Exact
name of registrant as specified in its charter)
_________________________
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Florida
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1-13165
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59-2417093
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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1655
Roberts Boulevard, N.W., Kennesaw, Georgia 30144
(Address
of principal executive office) (zip code)
Registrant's
telephone number, including area code: (770) 419-3355
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Section 7 Regulation FD
Item 7.01 Regulation FD
Disclosure.
CryoLife, Inc. (“CryoLife”) is
currently party to a nullity action with Tenaxis, Inc. (“Tenaxis”) in Federal
Patent Court in the State of Bavaria in the Federal Republic of Germany in which
Tenaxis is seeking to invalidate CryoLife’s main BioGlue®
patent in Germany. On March 2, 2010, CryoLife received notice from
the Federal Patent Court in Munich that CryoLife’s main BioGlue patent in
Germany will be declared invalid.
Because
we have not received an official court order or pronouncement regarding the
patent, but only a brief notice from the Court, we are not yet able to complete
a more detailed evaluation of the Court’s ruling. However, we
currently expect to appeal the Court’s ruling after we receive the official
court order.
We do not
believe the pronouncement will have a material impact on our BioGlue revenues in
Germany in the near term as Tenaxis has already been selling its product in
Germany. We reiterate our previous guidance given in our February 18,
2010 press release, but we note that our net income guidance for 2010 does not
assume the charges discussed below, that have been accrued with respect to
Tenaxis litigation, will be expensed in 2010.
In the
event that this main BioGlue patent is ultimately declared invalid, CryoLife
would still be able to sell BioGlue in Germany and the rest of the
Europe. The German court’s ruling, if upheld on appeal, would merely
prevent CryoLife from suing a party to prevent them from infringing the main
BioGlue patent in Germany.
We are also currently unable to
determine the impact this ruling will have on our patent infringement suit
against Tenaxis in Patent Court in the State of North Rhein-Westphalia in
Düsseldorf in the Federal Republic of Germany, although it is likely that our
infringement action, originally scheduled for March 30, 2010, will ultimately be
postponed or stayed. It is also possible that it could be
dismissed.
Both the nullity action and the patent
infringement suit are described in our previous filings with the Securities and
Exchange Commission, most recently in our annual report on Form 10-K for the
year ended December 31, 2009, and the descriptions of both actions described
therein are incorporated into this Form 8-K by reference.
We have capitalized legal expenses of
approximately $680,000 associated with the patent nullity action and patent
infringement action for this BioGlue patent in Germany. In the event
that the Company determines that it is not probable it will ultimately prevail
in these matters, it will expense those costs at the time of the
determination. We currently do not have enough information to make
this determination, as we have not received the final decision from the German
Patent Court. We will not be able to determine the likelihood of
prevailing on appeal until we are able to review the final
decision. We also do not know when we will receive the final decision
from the German Patent Court.
The information provided pursuant to
this Item 7.01 is to be considered “furnished” pursuant to Item 7.01 of Form 8-K
and shall not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of
1933, as amended, nor shall it be deemed incorporated by reference into any of
CryoLife’s reports or filings with the Securities and Exchange Commission,
whether made before or after the date hereof, except as expressly set forth by
specific reference in such report or filing.
Except for the historical information
contained in this report, the statements made by CryoLife are forward-looking
statements that involve risks and uncertainties. All such statements are subject
to the safe harbor created by the Private Securities Litigation Reform Act of
1995. These statements include CryoLife’s expectation that it will appeal the
Court’s decision and that the pronouncement will not have a material impact on
BioGlue revenues in the near term, as well as CryoLife’s guidance for
2010. These statements are subject to a number of risks that are
outside of our control, including the potential responses and actions of German
courts and judges, Tenaxis and current and potential CryoLife customers. These
risks and uncertainties also include that actions by the German Patent Court or
other events could cause us to conclude that our main German BioGlue patent is
likely to ultimately be held invalid, in which event we would recognize a
$680,000 expense related to capitalized legal costs from the patent nullity and
infringement actions associated with this German BioGlue patent, we are
significantly dependent on our revenues from BioGlue and are subject to a
variety of risks affecting this product, we are subject to stringent domestic
and foreign regulation which may impede the approval process of our tissues and
products, hinder our development activities and manufacturing processes and, in
some cases, result in the recall or seizure of previously cleared or approved
tissues and products, our proposed acquisition of Medafor poses a number of
risks, Medafor’s management has rejected our acquisition offer and refused to
negotiate with us, and if we attempt to launch a hostile offer to acquire
Medafor we will incur significant expense and may not succeed; in the event such
a hostile offer does succeed, , we will not have the benefit of due diligence
and may incur unanticipated costs or liabilities, the lawsuit we filed against
Medafor regarding our distribution agreement with Medafor may adversely impact
our relationship with Medafor and could hinder our distribution of HemoStase or
prevent us from distributing HemoStase, healthcare policy changes, including
pending proposals to reform the U.S. healthcare system, may have a material
adverse effect on us, uncertainties related to patents and protection of
proprietary technology may adversely affect the value of our intellectual
property, uncertainties related to patents and protection of proprietary
technology for products distributed by CryoLife may adversely affect our ability
to distribute those products, the tissues we process and our products allegedly
have caused and may in the future cause injury to patients, and we have been and
may be exposed to product liability claims and additional regulatory scrutiny as
a result, we are dependent on the availability of sufficient quantities of
tissue from human donors, our CryoValve SGPV post-clearance study may not
provide expected results, demand for our tissues and products could decrease in
the future, which could have a material adverse effect on our business, the
success of many of our tissues and products depends upon strong relationships
with physicians, consolidation in the health care industry could lead to demands
for price concessions or limits or eliminate our ability to sell to certain of
our significant market segments, our existing insurance policies may not be
sufficient to cover our actual claims liability, we may be unable to obtain
adequate insurance at a reasonable cost, if at all, the loss of any of our
sole-source suppliers could have an adverse effect on our revenues, financial
condition, profitability, and cash flows, intense competition may affect our
ability to operate profitably, regulatory action outside of the U.S. has
affected our business in the past and may affect our business in the future,
rapid technological change could cause our services and products to become
obsolete, continued fluctuation of foreign currencies relative to the U.S.
dollar could materially and adversely impact our business, our credit facility
limits our ability to pursue significant acquisitions, key growth strategies may
not generate the anticipated benefits, there are limitations on the use of our
net operating loss carry forwards, our ability to borrow under our credit
facility may be limited, we may not be successful in obtaining necessary
clinical results and regulatory approvals for services and products in
development, and our new services and products may not achieve market
acceptance, extensive government regulation may adversely affect our ability to
develop and market services and products, investments in new technologies and
acquisitions of products or distribution rights may not be successful, if we are
not successful in expanding our business activities in international markets, we
may be unable to increase our revenues, we are not insured against all potential
losses, and natural disasters or other catastrophes could adversely affect our
business, financial condition, and profitability, and we are dependent on key
personnel. These risks and uncertainties include the risk factors detailed in
our Securities and Exchange Commission filings, including our Form 10-Q filing
for the quarter ended March 31, 2009, our Form 10-Q filing for the quarter ended
June 30, 2009, our Form 10-Q filing for the quarter ended September 30, 2009,
our Form 10-K filing for the year ended December 31, 2009 and the Company's
other SEC filings. The Company does not undertake to update its
forward-looking statements For further information on additional risk factors,
please refer to “Risk Factors” contained in CryoLife’s Form 10-K for the year
ended December 31, 2009, as filed with the SEC, and any subsequent SEC filings.
CryoLife disclaims any obligation or duty to update or modify these
forward-looking statements.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, CryoLife, Inc. has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CRYOLIFE,
INC.
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Date: March
5, 2010
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By: /s/
D. A. Lee
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Name: D.
Ashley Lee
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Title: Executive
Vice President, Chief
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Operating Officer and Chief
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Financial Officer
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