Aortech Share Discussion Threads

[landy90] 20/10/2012 15:40

St Jude seems to have a bit of a split personality problem. They told mass device that the Aortech Optim supply issue was not a problem and they had contingency plans. Starks then mentioned Aortech's publicity efforts not being material and that they had plenty of stock and no risk.

The damage they claim in the TRO could be two fold 1) no supply of Optim and 2) the publicity that is being focused on them.
How funny would it be if in the TRO submission to court they copied the mass device article as evidence of Aortech's publicity efforts.

The statement SJM made in Mass device would be enough to have it dismissed without Aortech having to respond?

[gac141] 20/10/2012 12:33

My hotmail alerts me to posts here today.. It shows a few between 8-9 this morning but see nothing.. Anyone see them?

[bowmans] 20/10/2012 10:56

guru, I think a court would be entitled to take a view that the CEO did know, and if not should have known.

[guru] 19/10/2012 18:19

I think the business ethics issue may have even a bigger impact on St Jude than the legal case. If an employee was "recruited", "poached" or "offered" a position, and St. Jude did not consult Aortech, that sounds like quite an underhand approach to business dealings and certainly would not be compliant with the Business Code of Conduct signed off by the CEO of St. Jude. I wonder whether the CEO knew this at the time of the conference call?


Message from CEO

We cannot be successful as a company unless we conduct ourselves with the highest degree of professional ethics and integrity. This includes compliance with the St. Jude Medical Code of Business Conduct and all applicable laws and regulations.

Our culture of integrity is an important market differentiator for our customers, our employees and all other external stakeholders. Our reputation is central to our ability to build our business and serve our customers across the globe. We must remain focused on quality and integrity as we grow. St. Jude Medical's reputation as a company of the highest integrity rests in each of our hands.

Dan Starks
Chairman, President and CEO

[25october1969] 19/10/2012 17:48

Nice One G


Is St. Jude Medical's battle against Optim supplier more than just a "headache?"

October 19, 2012 12:30 pm by Arundhati Parmar | 0 Comments

October has not been kind to St. Jude Medical. (NYSE:STJ)

On Wednesday, the company, apparently against all industry precedent, warned Wall Street of a possible warning letter from the Food and Drug Administration, and saw its shares decline 6 percent.

But earlier in October it received communication from a key supplier that may have a significant impact in its Cardiac Rhtyhm Management division. AorTech plc makes a polymer – the so-called Optim coating or insulation- that is used in many St. Jude Medical products, including the much-touted Durata defibrillator lead. The durability and safety of the Durata lead is under the spotlight ever since previous generations of leads lacking the Optim coating have been recalled for causing deaths and for their potential to cause severe injury. St. Jude has repeatedly talked about the strength of the Optim coating although a recent study calls that into question.



In early October, AorTech sent St. Jude Medical a "Rectification Letter" in which it alleged that St. Jude Medical had breached its contract with the company and threatened that it would stop making the Optim polymer starting Nov. 4.

On Tuesday, St. Jude asked for legal relief from a Los Angeles District court that would require AorTech to continue supplying the polymer by clearing St. Jude of any alleged breach as cited by AorTech. From that document it appears that AorTech has taken umbrage over St. Jude hiring an AorTech employee, among other alleged breaches.

Before St. Jude filed for that injunction, an analyst described the AorTech situation as "another headache" for St. Jude. Raj Denhoy of Jefferies said this in a research note on Oct. 12:

Optim insulation has been used in STJ CRM leads since July, 2006. STJ is all in on Optim as the material is widely used across the company's entire CRM portfolio. Currently all STJ leads'pacing, LV [left ventricle] and defibrillation' are coated with Optim. STJ has an exclusive supply agreement with AorTech for the material that extends into perpetuity. The terms of the contract have not been favorable for AorTech and the company has operated at a loss every year since. AorTech put itself up for sale earlier this year and the company has disclosed 11 companies looked but no deal was consummated. There was one nonbinding offer for the polymer business. Given the backstory of AorTech pursuing a sale of the polymer division and recently the company as a whole, the rectification notice has been viewed skeptically. However, as a public company, AorTech could not make baseless claims without ramification and the company has been insistent that their position is sound.

Denhoy estimates, after a conversation with AorTech's chairman that St. Jude likely has an 18 month supply of Optim.

St. Jude CEO Dan Starks has sought to calm investors by saying that the company has contingency plans, but it's not clear what they are.

And whatever they are, they are likely undermined by what St. Jude Medical said in the temporary restraining order it filed Thursday. In that motion, St. Jude said that it has "suffered immediate and irreparable harm as a result of AorTech's threatened repudiation and termination of [Pacesetter's] supply of licensed products."

Meanwhile, AorTech said Friday that it will do everything it can to prevent St. Jude's attempt to prevent a contract termination."

[1prophet] 19/10/2012 17:29

From documents I have seen over here. That would be the case. Pretty serious stuff for STJ if that is correct and they are in breach.

[marlint111] 19/10/2012 17:03

Discussion on cafepharma suggests that the 'breach' was St Jude hiring a key Aortech employee without their knowledge/consent.

[1prophet] 19/10/2012 15:54

St Jude in a hole with this one! Dan has contradicted himself and exposes him and St Jude to searching questions as to the validity of his comments at the earnings call.

[guru] 19/10/2012 15:36

Pacesetter Inc - $75m turnover business, 200 employees, based in Sylmar which I assume is the same place where the FDA audit is taking place?

[deswalker] 19/10/2012 15:36

Presumably this application has not been disclosed to STJ shareholders this morning ? If not, why not ? It would seem serious enough judging by the wording ...

It matters not a jot whether they have "suffered immediate and irreparable harm". If they've breached the contract, and doubly-so if this breach has caused other parties to reassess their interest in buying all or part of AOR, then they are in trouble. This application is simply an attempt to buy some time and must be held up as such by the AOR Board with reference to Dan Starks' recent conference call answers.

The sooner we down tools the better ...

[guru] 19/10/2012 15:25

The only way I can reconcile it is that Pacesetter is a small insignificant business of St Jude i.e. Not Material!

[bearfoot] 19/10/2012 15:20

Hmmm....Very big STJ legal resources versus who??? And how funded??

[landy90] 19/10/2012 15:09

Can anyone reconcile the statement from Dan Starks stating to the market that there is no risk with a statement to the court the very next day that they have suffered irreparable harm?

Can both statements be correct?

I wonder what the analyst who asked the question makes of it?

[papillon88] 19/10/2012 15:07

topped up bought 2500

[gac141] 19/10/2012 14:58

IT HAS GONE!

Together with the confidence they displayed when asked about it in Conf call...

[25october1969] 19/10/2012 14:56

It's a funny old world, only a couple of days ago when referring to termination of supplies of Optim to St Judes, Dan Starks said "there is not risk. We have a good supply of material, and we have contingency plans in addition to that. So there's no risk"

Yesterday in the request for a temporary restraining order we learn:

"In its Application Pacesetter alleged it has "suffered immediate and irreparable harm as a result of AorTech's threatened repudiation and termination of [Pacesetter's] supply of Licensed Products"

Maybe they need to invest in mouse traps - where has all the stocks gone.....where has the contingency plan gone

[deswalker] 19/10/2012 11:20

Another interesting article ...

[bearfoot] 19/10/2012 10:52

marlin111, I got into https://www.lasuperiorcourt.org/onlineServices/civilIndex/
and was able to eventually pay for and complete a search but there was 'nil return'. looks like the right one....but there seems to be no way of getting in. :-( Surely there must be SOME way of understanding what the allegations are on both sides.

At least the presiding judge seems positive:

Interesting to note that Pacesetter (aka St Jude) has virtually no legal filing history over the last 10 years in/through this court though.....



So, where's the money coming from to fight this?

[gac141] 19/10/2012 09:30

This will bring ST Jude to the table and give us the result I think we are all hoping for. It is clear they cannot do without us and have gone to desperate lengths to protect their source of supply despite saying they had contingency plans and no negatives!

Now it's just the price... I think it will be a very interesting next week or so..

[marlint111] 19/10/2012 07:37

Apparently the suit information is available here: https://www.lasuperiorcourt.org/onlineServices/civilIndex/ . Can anyone access this? I have tried, but seems you need a US address to be able to do so.

Would be interesting to see what's really going on here...

[gac141] 18/10/2012 19:16

US getting this St Jude are in Trouble?

[gac141] 18/10/2012 17:43

Guru Agreed......... This is the position.

[guru] 18/10/2012 17:39

Sounds like this has backfired on St Jude:

1) Forces St Jude to Negotiate with Aortech
2) Raises the profile of this dispute with all the investors, particularly one day after the conference call when ST Jude dismissed the issue as "without merit", "no risk" "publicity stunt" etc etc
3) Raises question marks about the security of supply
4) Raises question marks about the way ST Jude are handling this

I would have thought St Jude's Investors would not be happy with any tactics by St Jude to drag this out.....they would want this resolved quickly and not have this dark cloud hanging over the company.