CryoLife acquires distribution rights for ProCol Vascular Bioprosthesis from Hancock Jaffe Laboratories

In addition, beginning 24 months after execution of the agreement, CryoLife has the right to acquire the ProCol product line from Hancock Jaffe.

Key aspects of transaction:

– CryoLife will reimburse Hancock Jaffe for up to $2.3 million of its ProCol production costs over the next four quarters, beginning with the second quarter of 2014, with no more than $650,000 payable in any quarter.

– In exchange for these payments, CryoLife will receive exclusive worldwide distribution rights for ProCol for up to five years (a three-year term with two one-year renewal terms at CryoLife’s option), a purchase option on the ProCol product line, first right of refusal on certain other applications of the ProCol technology, and approximately 4,000 units of ProCol inventory. The 4,000 units are comprised of approximately 200 units of existing commercially saleable ProCol inventory, which will be transferred to CryoLife immediately, while the remaining units of inventory will be transferred when Hancock Jaffe receives FDA approval of the PMA Supplement associated with its new manufacturing facilities.

– Profits from CryoLife’s sales of ProCol after the initial approximately 4,000 units will be shared equally by the parties, after taking into account the transfer price paid to Hancock Jaffe and a distribution fee earned by CryoLife.

– After 24 months, CryoLife has the option, during the term of the distribution agreement, to acquire the ProCol product line.

CryoLife chairman, president, and CEO Steven G. Anderson noted that the ProCol Vascular Bioprosthesis is an excellent product for vascular access, with a small but loyal base of existing customers.

"We believe it has significant potential to gain market share when sold through our established commercial organization, which includes 36 sales representatives selling into the cardiovascular and vascular access markets.

"In addition, ProCol is complementary to the HeRO Graft, and many of its existing customers are also HeRO Graft users. We look forward to working with Hancock Jaffe, and we are eager to launch ProCol through our team in the second half of 2014," Anderson added.

CryoLife intends to sell the currently available units of ProCol to existing ProCol customers beginning in the second quarter of 2014, with sales of additional units beginning immediately following FDA approval of the PMA Supplement associated with Hancock Jaffe’s new manufacturing facilities, which is expected to occur during the second half of 2014.

The company expects to complete the training of its cardiovascular sales team by July, with the full U.S. commercial launch in the second half of 2014, pending FDA approval of Hancock Jaffe’s PMA Supplement.

CryoLife will provide additional details on the distribution agreement and updated financial guidance in conjunction with its first quarter 2014 financial results conference call in April 2014.