Conceptus obtains Ovion intellectual property rights from American Medical Systems

Oct 6 2009

Conceptus, Inc. (Nasdaq:CPTS), developer of the Essure® procedure, the first proven non-incisional permanent birth control method available, today announced that it has acquired Ovion intellectual property rights from American Medical Systems Holdings, Inc. (Nasdaq: AMMD) (AMS) for a cash purchase price of $23.6 million. The intellectual property rights acquired in the transaction include all patents and intellectual property associated with the Ovion business acquired by AMS in 2005. In addition, AMS has released Conceptus from any future royalty obligations under the 2003 Settlement Agreement between Ovion and Conceptus.

Under the 2003 Settlement Agreement, Conceptus had been making royalty payments to AMS equal to 3.25% of the Company’s Essure sales. Following this acquisition, the Company will no longer owe these royalty payments. Commencing with the fourth quarter of 2009, Conceptus will amortize the cost of the intangible assets acquired over the remaining life of the patents, which is approximately eight years. The amortization of intangible assets is expected to be less than the previous royalty payments, making this transaction accretive for Conceptus. The Company anticipates recording a benefit of $0.05 per fully diluted share in the third quarter of 2009 as a result of the acquisition due to the release of the Company’s royalty obligations under the 2003 Settlement Agreement. Other than as discussed above, the Company is not updating or commenting on its financial guidance for the third quarter or full year 2009 at this time.

"This is a well-timed acquisition that further solidifies our ownership of intellectual property around the Essure procedure and increases our freedom to develop the next generation Essure product,” commented Mark Sieczkarek, president and chief executive officer of Conceptus. “The transaction also has a strong financial rationale, as we expect it will lead to immediate increases in gross profit margin and earnings per share.”

http://www.conceptus.com/