Aortech Share Discussion Threads

[loverat] 27/11/2012 10:01

Some movement here again. I wonder if we will see another good rise.

[tadders2] 22/11/2012 18:16

Very interesting.

[gac141] 22/11/2012 11:10

From the States..

Interesting

"In the study, both Optim and Pursil 35 were exposed in laboratory tests to water and heating techniques aimed to accelerate aging of the materials. While the Pursil 35 material changed faster than Optim, both materials lost substantial strength in the tests, said Dr. Frank S. Bates, a professor at the University of Minnesota and a Medtronic consultant who was involved in the study.

A spokesman for Medtronic, Christopher Garland, said the study results led the company recently to cancel the development of a new lead that would have used Pursil 35 as an insulating material. St. Jude has an exclusive arrangement with the developer of Optim to use it in heart device leads. Mr. Garland said that Medtronic had also been looking at that material's use in other kinds of medical devices.

He added that Medtronic was working with producers of both materials to find ways to resolve some of the problems detected in the laboratory study.

[semper vigilans] 16/11/2012 07:49

Thanks for the update gac - nice to see someone has faith in the 'strange' US legal system!

[gac141] 15/11/2012 16:54

No it has been delayed at Aortech's request - Reading the court sections until the 30th November. I am confident that justice will prevail.

[semper vigilans] 15/11/2012 14:57

Court case starts today?

[bowmans] 12/11/2012 19:08

gac141, It's not simply the move to America, it's US companies & courts belief that us law is trumps all other law, anywhere in the world. US prosecutors are now probing whether Barclays made any improper payments to secure a banking license in Saudi Arabia. Yet it is not that long ago in America since, not only was bribery both acceptable and legal, it was also tax deductible.

[darrinr] 12/11/2012 16:59

Check on Company House website; registered office in Glasgow c/o Brodies LLP, used to be called Dalglen (No.646) Ltd plus a number of other Aortech conmpanies registered at the same address. Registered office changed to above on 16-7-10. Numerous company names with same registered address, which has changed twice.

[gac141] 12/11/2012 15:45

Good question... There must be a business in the UK and a business in the US. With the move to the US does that take precedence?

[bowmans] 12/11/2012 14:58

Although AOR is an AIM stock but where is it incorporated? anybody please.

[1400] 12/11/2012 13:04

Seems a little early in the proceedings to be writing them off now.

[papillon88] 12/11/2012 11:46

Like I said in an earlier post the best indicator of the direction of the share price is the availabilty of stock in the market when MMs are bidding for stock and not offering the price will rise and vice versa, at present it is easy to buy shares but difficult to sell which suggests more downside.

[marlint111] 12/11/2012 11:24

It is not looking good for AOR. As I guessed at the time, this was a last, desperate throw of the dice, which looks like it is going to fail...

[darrinr] 12/11/2012 11:20

I tried to sell my shares about 10 minutes ago and was unable to!!!!!

[papillon88] 12/11/2012 10:48

sale of 20 000 aor at 45p

[papillon88] 12/11/2012 09:53

The share price certainly suggests that things are not quite going to plan the value of the company has halved since funding

[bearfoot] 11/11/2012 19:57

from cafepharma.......an apparently accurate precis of the the current legal situation.....



Quote: Originally Posted by Anonymous
Here is an excerpt from the judge's unsealed order from PACER.

The case ID is 2:12-cv-08871-DMG-PJW. The document number is 49 and it was filed 11/8.
.

Technically that's an excerpt from the order to unseal the TRO. Here are excerpts from the order itself. Looks like Aortech is fighting for its very survival as an independent company. It seems to be that at issue is whether St. Jude violated the Asset Purchase Agreement (APA) and whether or not that constitutes a termination breach in the Exclusive License and Supply Agreement (LSA). Both of those agreements weren't signed until June 16, 2011 which is pretty amazing.


"First, the LSA sets forth the terms and conditions under which Defendant supplies
Plaintiff certain biomedical polymer technology ("Licensed Products"). .... The LSA provides that either party may terminate the LSA upon the occurrence of a "Termination Event," which includes material breach of "a material term of this Agreement" that is not rectified within an agreed-upon period of 30 days. Second, the APA delineates the parties' agreement for the sale and purchase of certain assets, rights, and properties necessary for the manufacture of the Licensed Products, including equipment, know-how, and records. The APA also affects the transfer of Defendant's manufacturing facility in Minnesota to Plaintiff, and it restricts Plaintiff's right to recruit, solicit, and hire certain of Defendant's employees."

Did you catch that? RESTRICTS ST. JUDE's RIGHT TO RECRUIT, SOLICIT, AND HIRE SOME AORTECH EMPLOYEES... The judge also note that those typically arent' enforceable in California court. Looks like STJ made the right decision to file in California. Maybe Aortech can sue under breach of the APA in Hennepin County courts which the judge references as being in michigan but which i believe are located in Minnesota.

"On October 5, 2012, Defendant sent Plaintiff a Rectification Notice pursuant to the LSA,
asserting that Plaintiff breached the LSA by hiring Ajay Padsalgikar, Defendant's Chief
Scientist, and by engaging in excessive ordering. .... In addition, the Rectification Notice asserts that Plaintiff's conduct breached its duty of good faith and fair dealing. The Rectification Notice stated Defendant's belief that the material breaches are not curable, and informed Plaintiff that Defendant intended to terminate the agreement in the absence of a cure after 30 days, or on November 4, 2012."

So St. Jude hired their chief scientist and the guy that essentially manages Aortech's entire patent portfolio. Ajay was an officer of Aortech right? Couldn't Aortech sue him for breach of his fiduciary duty?

"TROs are governed by the same standard applicable to preliminary injunctions. ... A
plaintiff seeking injunctive relief must show that (1) it is likely to succeed on the merits; (2) it is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in its favor; and (4) an injunction is in the public interest."

"Breach of the LSA by Hiring Mr. Padsalgikar in Violation of the APA"
"Without deciding whether Plaintiff breached the APA by hiring Mr. Padsalgikar, the Court finds that a breach of the APA does not constitute a material breach of the LSA justifying termination under ¶ 18.2.1 of the LSA. ...Therefore, without deciding whether the hiring of Mr. Padsalgikar was improper under the APA, the Court finds that Plaintiff is likely to succeed in its claim that the alleged breach of the APA does not justify termination of the LSA."

Not good for Aortech.

"Breach of the LSA by Excessive Ordering"
"To the extent this failure would constitute a breach of LSA ¶ 2.2.1, it appears that Defendant has waived its objection to Plaintiff's performance by continuing to sell Plaintiff the Licensed Products based on Plaintiff's long-term purchase orders alone. ...Accordingly, on the current record, Plaintiff has established a likelihood of success in refuting the alleged
"excessive ordering" breach."

Also not good.

"Breach of the Implied Covenant of Good Faith and Fair Dealing"
"The Rectification Notice also asserts that Plaintiff's hiring of Mr. Padsalgikar and its
alleged excessive ordering breached its duty of good faith and fair dealing.... In this case, the present record does not support Defendant's claim that Plaintiff intentionally submitted excessive orders in an attempt to frustrate the purposes of the LSA or APA... (explaining that Plaintiff temporarily increased its orders to rebuild and maintain its "reserve inventory" and planned to return to its normal ordering levels after doing so in February 2013) [Doc. # 25]. While the record may later bear out some other less innocent explanation for the spike in orders, the present record does not show that Plaintiff sought to undermine the agreement in a manner that would give rise to a breach of any implied covenant. See Wolf, 162 Cal. App. 4th at 1120. Accordingly, the Court finds that Plaintiff has established a likelihood that its conduct did not breach the implied covenant of good faith and fair dealing."

And the hits keep on coming for for Aortech. Yet in the 'good faith' argument, a glimmer of hope.

"Plaintiff Will Suffer Irreparable Harm"
"Although harm that is compensable by money damages is generally not irreparable,
"intangible injuries," such as damage to goodwill and reputation, qualify as irreparable harm. ... Plaintiff submits that if the LSA is terminated, however, it will be faced with a choice: either acquire Defendant's polymer division outright or find a new source of the Licensed Products and seek new FDA approval for the alteration of its own products... If Plaintiff attempts to acquire Defendant's polymer division, it may lose the competitive advantage it holds as a licensee and instead become "just one of possibly several suitors for the company" in a competition that may tighten after termination of the agreement. Id. If Plaintiff opts not to acquire the polymer division and instead finds a new supplier, obtaining new FDA approval could take several years, well beyond the period that Plaintiff's current supply would last."

Wait. I thought Starks said there was no risk? That sounds like a lot of risk to me.

Surely the judge means goodwill in the stock market sense and not goodwill with customers.

"Thus, according to Chateau, although the effects of the imminent termination of the LSA may not materialize immediately, Plaintiff's ability to take remedial measures will be drastically reduced or eliminated if the agreement is terminated on November 4, 2012. .... Additionally, Plaintiff has shown that Defendant's threatened termination has caused confusion and skepticism among shareholders, which also affects Plaintiff's goodwill and reputation. .... Accordingly, the Court finds that Plaintiff has established that it is likely to face irreparable harm in the absence of an injunction."

"The Balance of Hardships and Public Interest Weigh in Favor of Plaintiff"
"Plaintiff has established that the balance of hardships tips in its favor. Defendants have continued to perform their obligations under the LSA throughout the Rectification period,
and continuation of that performance in the short term is not likely to cause hardship beyond that which Plaintiff will suffer if the agreement is terminated and it is forced to seek a new supplier or acquire Defendant's polymer division. Finally, Plaintiff has established that the public interest weighs in its favor, as "[t]he public has an interest in valid contracts being upheld."

"IV.CONCLUSION
Plaintiff has established that a TRO is warranted under the circumstances to preserve the
status quo pending determination of whether a preliminary injunction is appropriate.
Accordingly, Plaintiff's Ex Parte Application for a TRO and OSC re Preliminary Injunction is
GRANTED:
(1) Defendants shall refrain from terminating the LSA on November 4, 2012;
(2) The parties shall continue to perform their contractual obligations under the LSA while
the parties await hearing on the OSC re preliminary injunction;
(3) Absent a stipulation between the parties to extend the effective date of the TRO, a
hearing on the OSC re preliminary injunction is set for November 15, 2012 at 2:00 p.m.;
(4) Plaintiff may file any supplemental brief in support of its request for preliminary
injunction by November 5, 2012 and Defendant may file any supplemental opposition to
the request for preliminary injunction by November 9, 2012;
(5) In addition to any supplemental arguments or evidence, the parties shall address the issue of the amount of the bond that must accompany any preliminary injunction under Fed. R. Civ. P. 65(c); and
(6) Due to references to the parties' contracts which may contain confidential information,
this Order shall be filed under seal. Within seven days from the date of this Order, the
parties will meet and confer regarding which portions of the Order they propose to be
redacted such that a redacted version of the Order may be filed. The parties shall file a
joint report with the Court by no later than November 9, 2012 regarding the proposed
redacted version of the Order."

[loverat] 10/11/2012 10:42

I am sure this has been covered before but St Jude are a massive company and AOR tiny in comparision. St Jude need what AOR have and AOR need what St Jude have. Probably pointless speculating about what has happened in the past but the obvious question is why have both parties allowed this situation to develop into a full scale dispute damaging to both? I suppose the question should be directed at St Jude who seem to have the most by far to lose.

[vega44] 10/11/2012 09:55

There seems too be some confusion between the TRO (granted) and the injunction (awaiting hearing). As i understand it US media mean the TRO when they talk about the injunction.

The commentary in st Jude's quarterly filing re aortech is also worth looking at.

[gac141] 10/11/2012 09:36

Latest..
It's Getting Ugly As St.Jude Wins Injunction Against AorTech's Threat To Pull Optim Supply
November 9, 2012

In short

A few weeks ago AorTech's share price was soaring as it looked like it was about to escape from its contract to supply St.Jude subsidiary business Pacesetter with the coating for its Durata ICD leads. Now, however, AorTech's shareprice has dropped almost 50% from its peak three weeks ago as St.Jude wins an injunction against the termination of the contract.

Background

We covered this unfolding tale in October, here. The story, as far as we're given to believe, relates to the relationship between St.Jude's Pacesetter subsidiary (so St.Jude then) and Scottish company AorTech, the latter being provider of the clever polymer coating that St.Jude is pinning its hopes on as its Durata ICD lead strives manfully to repair the commercial damage done by its predecessor.

Anyway, to cut a long story short, AorTech decided that St.Jude had breached its contract, for reasons it didn't disclose at the time. In St.Jude's pursuit of legal countermeasures, proceedings suggested that the breach was for St.Jude placing "excessive supply orders intended to cause AorTech to default on its supply obligations". It also seems the company allegedly broke another agreement entered into when it acquired AorTech's manufacturing assets "by entering into an employment agreement with an AorTech employee at his request".

Back to the story, AorTech said it would terminate the supply agreement in the event that the breach(es) was(were) not rectified and clearly believed that this would happen. The contract to supply one of the world's biggest cardiovascular device companies was clearly so bad for AorTech that it's share price shot up on the very thought of its termination.

So St.Jude, clearly determined to shore up its supply of its so-called Optim coating, sued AorTech and have now been granted an injunction against the termination of the supply agreement.

And why wouldn't St.Jude want the arrangement to continue? It owns the manufacturing assets for the coating material, but not the IP, so that could get messy in the event of a split. It doesn't to our knowledge have an alternative supplier, and even if it did one can only imagine that switching would be a painful process. And finally, it has just announced preliminary results from an analysis of registry data pertaining to Durata which rather supports its long-held view that the device with its AorTech-manufactured coating is performing rather well, with rates of insulation abrasion and mechanical failure of Riata ST Optim and Durata leads appearing to be very low. Find that release here.

What happens next? To be honest we've absolutely no idea, but one possibility seems to be that the antagonists may decide it was all a big misunderstanding, have a few too many drinks to patch things up and fall into bed together. AorTech wants to sell and St.Jude has reasons to buy...that's all we're saying.

[papillon88] 05/11/2012 09:35

Weakness in the share price again today.

[vega44] 04/11/2012 08:09

My understanding is the the judge has granted a restraining order on termination, but only for a very short period of time to allow arguments to be presented to the court regarding the request by st Jude for an injunction.

[bearfoot] 03/11/2012 20:10

hmm.....am I right (from reading the cafepharma site) in thinking that the court has 'restrained' Aortech from terminating supply? (ie. it has NOT allowed them to terminate?)....if so, on what basis? what happens next?

[tadders2] 03/11/2012 18:38

Everything seems to have gone very quiet.