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Artimplant And SBi Revise Terms Of Five License, Supply And Distribution Agreements

Artimplant AB (Artimplant) and Small Bone Innovations, Inc. (SBi) have agreed to amend and consolidate the terms of five different license, supply and distribution agreements relating to the Artelon range of biodegradable spacers. The agreements have been converted to non-exclusive in exchange for lower minimum sales commitments from SBi. Artimplant has committed to support SBi with additional clinical documentation in exchange for a higher share of profit from SBi sales.

The revisions are retroactive to January 1, 2009.

Artimplant and SBi are parties to five license, supply and distribution agreements covering the Artelon CMC Spacer, CMC Spacer Arthro, MTP Spacer, STT Spacer and DRU Spacer (Original Agreements). Artimplant and SBi have renegotiated the following material terms of the Original Agreements that have been incorporated into a single new restated agreement (New Agreement):

The Agreements have been converted to non-exclusive.

Minimum sales quotas are lowered and SBi’s geographical territory is adjusted.

Artimplant commits to support SBi with additional clinical documentation.

The payment due to Artimplant per unit sale is significantly increased.

The Initial Term of the New Agreement will run from 1/1/09 – 12/31/14.

An option agreement providing Artimplant the right to sell and SBi the right to purchase regulatory files have been terminated.

Long-term the changes in terms are deemed to be very positive for both SBi and Artimplant. Artimplant will take on an increased responsibility in strengthening the clinical documentation and SBi will receive a stronger scientific basis on which it can increase sales. Moreover, the New Agreement enables Artimplant to more actively work in collaboration with SBi’s management to drive sales in and outside the US.

In the short-term, the changes are cash-flow negative for Artimplant. The changes release SBi from its bi-annual purchase and sales obligations under the Original Agreements, as well as releasing the company from its obligation to purchase regulatory files from Artimplant. However, the increased flexibility and anticipated growth of Artelon® Spacer products with higher returns make the changes very attractive for both companies.

Hans Rosén, chief executive officer (CEO) of Artimplant says;

“We are very pleased to improve both margin and flexibility in our business relationship with SBi. The revised agreement will create a more efficient working relationship where the respective strength of the partners is better utilized. SBi is our primary business partner for resurfacing of small bones and joints. Artimplant will increase its efforts to support the growth of SBi sales in a long term prosperous relationship.”

Anthony G. Viscogliosi, chairman and CEO of SBI says;

“We are delighted to have revised our working agreements to create greater synergies between SBi’s marketing and distribution strength and Artimplant’s research, development, clinical documentation and manufacturing skills. The New Agreement provides increased incentive for both our companies to continue to build the Artelon® brand. To date, the Artelon® platform has been an important part of SBi’s success, and this New Agreement promises to strengthen Artelon’s role as a key element of our upper limb portfolio.”