A year and a half after their business relations thunderously collapsed, to put it one way, Jerusalem-based stent-maker

Medinol

has found somebody to replace its erstwhile partner

Boston Scientific

(NYSE:BSX).

The company that will distribute Medinol's medical technology around the world is

W.L. Gore & Associates

, based in Flagstaff, Arizona, which also specializes in stents and other medical technologies.

Stents are wire-mesh tubules that prop open major blood vessels, primarily following cardiac surgerical procedures. Medinol originally focused on cardiac stents, but has recently developed a new family suitable for additional areas, including in the limbs. Gore's stents are for vascular applications.

Gore is getting exclusive rights to market Medinol's stents in the world and the companies will also cooperate on product development.

Gore is a private company run by Bill Gore and his family. It boasts annual sales of about $1.4 billion a year. The Gores founded it out of their basement in 1958, starting with a polymer called ePTFE, an insulating material for industrial and textile applications.

Today the company employs 6,000 people and maintains offices in 45 nations around the world.

Forbes

magazine estimates that Gore has become one of the 200 biggest privately-held companies in the United States.

Restoring Medinol to former glory

"We gave Gore exclusivity because we have faith in its marketing prowess and technological abilities," explained Medinol's chief executive, Judith Richter, who controls Medinol with her husband Kobi Richter. They hold 64% of its shares.

She sees Gore restoring Medinol to its former market share, which peaked in 1998-1999 at some 30% of the world market for stents. The Israeli company was selling, through Boston Scientific, at a pace of $400 million a year. But when relations with Boston curdled, their market share sank below 15% in 2001. Medinol has sued Boston, claiming theft of intellectual property and trade secrets.

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Richter declined to discuss the business goals Gore and Medinol have set for themselves, which are an internal matter, she says. They did not discuss any investment in Medinol, she adds, a subject that had come up with Boston.

Until now, Gore has not acted in the field of cardiac stents, which is ruled by four companies -

Guidant

,

Medtronic Physio-Control

(NYSE:MDT),

Johnson & Johnson

(NYSE:JNJ) - and Boston Scientific. But Judith Richter predicts that Gore will hold its own against the four mammoths. "Cardiology is a natural area for Gore's vascular operations to expand," she says. "Gore and Medinol are not unknown or new companies in the market."

To kick off the new partnership, Medinol still needs to get U.S. Food and Drug Administration marketing approval for its new product line, the Nirflex stents. The company submitted a marketing request this week, Richter says, after wrapping up clinical trials. In parallel, it is seeking approval for the production processes of its Jerusalem plant. She sees the permits forthcoming in a matter of months. Meanwhile, Gore can push the stents in Europe, where Medinol is armed with the requisite approvals.

Richter refused to discuss the distribution of profits from sales, not even which company would get the bigger share. Both sides are pleased with the agreement, she avers.

Sour grapes

In its agreement with Boston, Medinol was entitled to 30% of the proceeds Boston generated from stent sales, which generated the Israeli company a 90% gross margin. A year ago, Kobi Richter called a press conference at the height of the fight with Boston and claimed that the U.S. company had been disgruntled at Medinol's margins, and had tried to copy its production line at its Ireland plant.

Another aspect that differs from the Boston deal, is that Medinol today holds sway over the entire system stents and delivery system.

In its agreement with Boston, Medinol had been responsible for the stent, while Boston handled the system that delivered the device into the patient. A year ago, when the fractious relations with Boston were severed, Medinol acquired technology to deliver the stents into the body. Its petitions for FDA approval today cover not only the tubing, but the delivery system too, which is what Medinol intends to sell through Gore. At a later stage, Gore may use Medinol's stents with its own delivery systems.

The choice of Gore was based on the American company's corporate culture and technological orientation, Judith Richter says. "Both companies have an organizational culture that encourages innovation and creativity, and share similar values, too," she says. "Gore is known for its high standard of norms and professional ethics. We have a great deal of faith in the company and its team."

Gore's corporate culture views its employees not as humdrum workers but as associates, as it explains in its website. It encourages personal contacts and abhors hierarchical structures. Its plants are based on workforces not exceeding 200 people, in order to facilitate teamwork. Gore, according to

Fortune

magazine, is one of the 100 best places to work in the United States. And that is Medinol's new partner.