Angiotech executes Settlement and License Termination Agreement with Rex Medical

Angiotech Pharmaceuticals, Inc. today announced that its subsidiary, Angiotech Pharmaceuticals (US), Inc., has executed a Settlement and License Termination Agreement (the "Settlement Agreement") with Rex Medical, LP ("Rex"), providing for the full and final settlement and/or dismissal of all claims (the "Settled Claims") arising under the the License, Supply, Marketing and Distribution Agreement between Angiotech US and Rex, dated March 13, 2008 (as amended, the "Agreement").  The Agreement provides for, among other things, Angiotech US's marketing, sale and distribution of the Option Inferior Vena Cava Filter ("Option") on behalf of Rex.

The Settlement Agreement is in respect of certain disputes, including the preliminary injunction obtained by Rex in the United States District Court for the Southern District of New York (the "District Court"), and the arbitration proceedings as commenced by Rex on November 18, 2010. 

On November 11, 2010, the Company announced that subsequent to various business discussions between the parties, Angiotech determined its need to deliver a notice to Rex, which stated Angiotech's determination that in light of the Company's recent and substantially changed business, operating and liquidity conditions, it would not be commercially reasonable for Angiotech, through Angiotech US, to continue under the existing terms of the Agreement. Subsequent to its receipt of such notice, Rex commenced arbitration proceedings on November 18, 2010, pursuant to which it alleged that Angiotech US wrongfully terminated the Agreement and was seeking monetary damages in excess of $3.0 million, as well as costs, fees and expenses in connection with the arbitration proceeding.

In addition, on November 19, 2010, Rex sought preliminary injunctive relief from the United States District Court for the Southern District of New York in aid of the arbitration. The District Court's Decision and Order, released on December 2, 2010, enjoined Angiotech's subsidiary, Angiotech Pharmaceuticals (US), Inc., from ceasing performance under the Agreement for a period of 180 days, or until the arbitration was concluded.

The Settlement Agreement includes the following principal significant terms: (i) the termination of the Agreement, at March 31, 2011 or at an earlier date if so elected by Rex, upon which Angiotech US will no longer market, sell and distribute Option; (ii) a payment in the amount of $1.5 million, to be made to Rex within five business days of the effective date of the Settlement Agreement, which is the first business day following receipt of approval of the Supreme Court of British Columbia to make such payment in respect of Angiotech's ongoing CCAA proceedings, in final and full payment and settlement of all claims, all royalties due under the Agreement relating to sales of Option recorded by Angiotech US prior to January 1, 2011, and all milestone payments due or that may come due to Rex under the Agreement now or in the future; and (iii) the delivery to Rex of certain materials relating to the marketing and sale of Option.

The Settlement Agreement will be filed by the Company on both SEDAR and EDGAR, and the description of the Settlement Agreement contained in this press release is qualified by the full text of the Settlement Agreement.

Source: ANGIOTECH PHARMACEUTICALS, INC.