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LeMaitre Vascular To Acquire XenoSure Rights For $4.6mm

Stocks in this article: LMAT

BURLINGTON, Mass., Oct. 1, 2012 (GLOBE NEWSWIRE) -- LeMaitre Vascular, Inc. (Nasdaq:LMAT), a provider of peripheral vascular devices and implants, announced today that it has signed an agreement to acquire the manufacturing and distribution rights to XenoSure® from Neovasc, Inc. on October 31, 2012 for $4.6mm, subject to standard closing conditions. XenoSure is a bovine pericardium patch used primarily for carotid and vascular reconstructions. As part of the transaction, the two parties have also signed a back-up supply agreement to assure product availability during the manufacturing transfer. LeMaitre Vascular (the "Company") recorded XenoSure revenues of $4.5mm in the twelve months ending September 30, 2012 vs. $2.8mm in the prior 12-month period, a 61% increase.   

In January 2009 the Company became the exclusive U.S. vascular distributor of XenoSure, inheriting sales of approximately $600,000 per year. Since then, the Company has secured exclusive worldwide distribution rights and is now selling the implant through its direct sales force in the US, Europe and Canada. The original distribution agreement was to have expired in January 2016, while the exclusive acquisition option period was to have begun in January 2014.   LeMaitre Vascular owns the XenoSure trademark.

Neovasc retains the right to process and distribute bovine pericardium for all other applications that do not compete directly with the Xenosure vascular surgical patch business.

"We look forward to acquiring this high-growth product 14 months ahead of schedule, allowing us to secure manufacturing and distribution rights. Following the manufacturing transfer, we expect our XenoSure gross margin will improve from approximately 50% to 65%. In addition, this option exercise will enable us to extend and enhance the product line," said David B. Roberts, President of LeMaitre Vascular.

Business Outlook

During the manufacturing transfer, the Company expects $300,000 of incremental expenses in Q4 2012 and $600,000 in 2013. Beginning in 2014, the transaction is expected to be accretive to operating income by approximately $1.0mm a year, growing at the same rate as XenoSure's sales.

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