The company chalks up Durata’s resilience to lead abrasion to a polymer insulation called Elast-Eon that St. Jude has re-branded as Optim. St. Jude licenses Elast-Eon from AorTech International plc, a U.K. holding company whose U.S. operation in Minnesota actually manufactures the material for St. Jude. St. Jude has previously said that it has worked with AorTech and its predecessor since 1999, testing and developing the Elast-Eon product.
Now, AorTech has put itself up for sale.
There is deep sensitivity regarding the performance of Durata. Before it was proven immaterial, a single negative report about the lead sent St. Jude’s stock plunging in one day. So, given how St. Jude has previously said that the Optim insulation in Durata and other leads is 50 times more resistant to lead abrasion, an anomaly that plagued Riata, the question is whether St. Jude would either have to acquire AorTech’s technology or buy the company?
“As a policy, St. Jude Medical does not comment on merger and acquisition rumors,” said Amy Jo Meyer, a spokeswoman, in an email. “However, it’s important to note that St. Jude Medical has acquired the exclusive intellectual property rights and necessary assets for the manufacture of Optim insulation used in CRM leads.”
While that may be true, Meyer declined to be more specific on what those assets were citing confidentiality agreements.
Meanwhile, AorTech International Chairman Bill Brown stressed that the company owns the IP behind the technology so key to St. Jude.
“I can categorically confirm that the intellectual property rights over the material that is known as Elast-Eon that St. Jude has re-branded as Optim is owned by AorTech International plc,” Brown said in an interview from the U.K. Tuesday. “I have to say that I was really quite upset to read in your journal claims from St. Jude people that they had spent 10 years in developing Optim. It is our material. They have a license. It is not their material.”
Brown added that St. Jude holds the license in perpetuity, but he declined to address whether it would have to strike any new agreement with any potential acquirer to continue to access the technology. He added that AorTech is the sole supplier of the Optim polymer material, but St. Jude could elect to manufacture it on its own although it would prove to be a complicated, time-consuming process.
Meanwhile, the spotlight on the Durata continues. The company fielded a question from Barclays analyst Matthew Taylor who asked how the company is managing the negative perception of Durata. St. Jude Medical’s president of its Cardiac Rhythm Management business responded that the company is focusing on educating consumers about the differences in design between Riata and Durata by underscoring its performance data.
[Photo Credit: Freedigitalphotos.net]
UPDATE: Due to an error in communication, an earlier version of this article wrongly suggested that St. Jude was disputing the ownership of the intellectual property behind the Optim.