UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
washington,
d.c. 20549
|
FORM
8-K
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CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): January 13,
2010
_______________________
CRYOLIFE,
INC.
(Exact
name of registrant as specified in its charter)
_________________________
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Florida
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1-13165
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59-2417093
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(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
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(IRS
Employer
Identification
No.)
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1655
Roberts Boulevard, N.W., Kennesaw, Georgia 30144
(Address
of principal executive office) (zip code)
Registrant's
telephone number, including area code: (770) 419-3355
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
|
x
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Section 2 Financial
Information
Item 2.02 Results of Operations and Financial
Condition.
On January 13, 2010, CryoLife, Inc.
(“CryoLife”) issued a press release and related documents (the “Announcements”)
announcing its acquisition of 1,606,005 shares of the common stock of Medafor,
Inc. (“Medafor”) and CryoLife’s proposal to combine the two
companies. Among the information disclosed in the Announcements,
attached hereto as Exhibit 99.1, CryoLife reported that its sales of Hemostase
for the year ended December 31, 2009 were $6 million.
Section 8 Other Events
Item 8.01 Other
Events.
As described in Item 2.02 above, on
January 13, 2010, CryoLife issued the Announcements to make public its
acquisition of 1,606,005 shares of the common stock of Medafor and CryoLife’s
proposal to combine the two companies. The Announcements are
available at www.cryolife.com/medaforoffer
or have otherwise been disseminated by CryoLife.
This filing and the Announcements
are provided for informational purposes only and are not offers to purchase nor
a solicitation of offers to sell shares of Medafor or CryoLife. Subject to
future developments, CryoLife may file a registration statement and/or tender
offer documents and/or proxy statement with the SEC in connection with the
proposed combination. Shareholders should read those filings, and any
other filings made by CryoLife with the SEC in connection with the combination,
as they will contain important information. Those documents, if and
when filed, as well as CryoLife’s other public filings with the SEC, may be
obtained without charge at the SEC’s website at www.sec.gov and at CryoLife’s
website at www.cryolife.com.
Except for the historical information
contained in this report, the statements made by CryoLife are forward-looking
statements that involve risks and uncertainties. All such statements are subject
to the safe harbor created by the Private Securities Litigation Reform Act of
1995. Please refer to the Announcements for further discussion about
forward-looking statements. For further information on risk factors, please
refer to “Risk Factors” contained in CryoLife’s Form 10-K for the year ended
December 31, 2008, as filed with the SEC, and any subsequent SEC filings, as
well as in the Announcements. CryoLife disclaims any obligation or duty to
update or modify these forward-looking statements.
Section
9 Financial Statements
and Exhibits
Item
9.01(d) Exhibits.
(a)
Financial Statements.
Not applicable.
(b) Pro
Forma Financial Information.
Not applicable.
(c) Shell
Company Transactions.
Not applicable.
-2-
(d)
Exhibits.
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Exhibit Number
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Description
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99.1
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Information
available at www.cryolife.com/medaforoffer
or otherwise disseminated by
CryoLife
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-3-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, CryoLife, Inc. has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CRYOLIFE,
INC.
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|
|
Date: January
13, 2010
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By:
/s/ D.A. Lee
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|
Name: D.
Ashley Lee
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|
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Title: Executive
Vice President, Chief
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|
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Operating Officer and
Chief
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|
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Financial
Officer
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-4-
EXHIBIT
99.1
Home
CryoLife’s
goal is to maximize the potential of Medafor’s assets, particularly HemoStase®
and the product’s underlying technology, in order to deliver greater value for
Medafor and CryoLife shareholders.
In
pursuit of this goal, CryoLife has acquired approximately 8 percent of Medafor
common stock, based on the most recent information available from Medafor
shareholders, including its founders, and is seeking to acquire full control of
the company.
CryoLife
has presented a compelling proposal to Medafor’s board of directors to purchase
the remaining outstanding stock of Medafor for $2.00 per share in cash and
CryoLife stock, and has requested that Medafor’s board enter into discussions
with CryoLife about this proposal.
CryoLife
has made numerous past attempts to engage with Medafor’s management and board
about a potential value-creating acquisition of the company by
CryoLife. To date, Medafor has summarily rejected all of these
overtures and refused to negotiate with us. By providing our fellow
Medafor shareholders with complete and timely information about our latest
proposal, CryoLife hopes to encourage Medafor’s management and board to join
CryoLife in negotiations.
To ensure
proper consideration of its proposal, CryoLife has created this Web site and is
encouraging Medafor shareholders to contact the Medafor board of directors to
express their opinions regarding this proposal.
CryoLife
encourages Medafor shareholders to review the materials on this Web site
thoroughly and plans to post updated information as it becomes
available.
For
answers to frequently asked questions, please go here (link to FAQ
section). If your question is not addressed, please email
medaforinfo@cryolife.com or contact Nina Devlin at 212-704-8145.
ADDITIONAL
IMPORTANT INFORMATION
This
document is provided for informational purposes only and is not an offer to
purchase nor a solicitation of an offer to sell shares of Medafor or CryoLife.
Subject to future developments, CryoLife may file a registration statement
and/or tender offer documents and/or proxy statement with the SEC in connection
with the proposed combination. Shareholders should read those filings, and any
other filings made by CryoLife with the SEC in connection with the combination,
as they will contain important information. Those documents, if and when filed,
as well as CryoLife’s other public filings with the SEC, may be obtained without
charge at the SEC’s website at www.sec.gov and at
CryoLife’s website at www.cryolife.com.
A Brief History of
CryoLife
Founded
in 1984, CryoLife was the first biomedical company to specialize in the
ultra-low temperature preservation of human heart valves used for cardiac
reconstruction, primarily in children born with heart defects. Since
those initial efforts, the company’s preservation technology has been expanded
to include the preservation of human saphenous and femoral veins and aorto-iliac
vessels for peripheral and central vascular reconstruction
procedures. The company’s proprietary processes for preserving these
cardiovascular tissues have dramatically improved and enhanced the lives of tens
of thousands of patients, primarily in North America.
In 1996,
the company acquired the initial patents and technology for a surgical adhesive,
BioGlue®, a
protein hydrogel polymer, from its inventor, Nicholas Kowanko,
Ph.D. After product development and testing, it received a CE Mark
approval for all countries in the European Community in 1997. In
2001, BioGlue received FDA approval for distribution in the
U.S. Since its introduction, BioGlue has been used in more than
500,000 surgical procedures worldwide.
The
company’s protein hydrogel technology platform was expanded in 2009 with the CE
Mark approval of BioFoam®
Surgical Matrix. BioFoam contains an expansion agent which causes the
material to expand its volume by a factor of four or five times and is intended
for use as an adjunct in the sealing of abdominal parenchymal tissues (liver and
spleen). The development of BioFoam has been funded by a series of
grants totaling $5.5 million from the United States Department of
Defense.
With
studies begun in 1991, Steven Goldstein, Ph.D. of our staff pushed the company
into the forefront of a new approach in implantable device technology with the
development of technologies that became the SynerGraft®
process. The SynerGraft decellularization process is designed to
reduce cells and antigens from the implantable tissues while preserving the
integrity of the tissues’ collagen matrix. SynerGraft processed
pulmonary human heart valves were cleared by the FDA in May of 2008, and
SynerGraft processed pulmonary cardiac patch tissue was cleared by the FDA in
August of 2009. These tissues are routinely used by surgeons for a
variety of cardiac reconstructive surgeries.
Since its
early beginnings in a 2,400 sq. ft. laboratory with six employees near
Hartsfield-Jackson Airport, Atlanta, Georgia, the company has grown into a
multi-national company with over 390 employees and sales in over seventy
countries. The company occupies a 200,000 sq. ft. facility on a 21
acre campus in northwest Atlanta. Its wholly-owned subsidiary,
CryoLife Europa, Ltd., is located near Heathrow Airport outside of London,
England, and serves as a European and Mediterranean distribution center for all
of CryoLife’s cryopreserved tissues and implantable medical
devices.
For more
detailed information on CryoLife, log onto our web site at www.cryolife.com
ADDITIONAL
IMPORTANT INFORMATION
This
document is provided for informational purposes only and is not an offer to
purchase nor a solicitation of an offer to sell shares of Medafor or CryoLife.
Subject to future developments, CryoLife may file a registration statement
and/or tender offer documents and/or proxy statement with the SEC in connection
with the proposed combination. Shareholders should read those filings, and any
other filings made by CryoLife with the SEC in connection with the combination,
as they will contain important information. Those documents, if and when filed,
as well as CryoLife’s other public filings with the SEC, may be obtained without
charge at the SEC’s website at www.sec.gov and at
CryoLife’s website at www.cryolife.com.
Executive Management
Team
ADDITIONAL
IMPORTANT INFORMATION
This
document is provided for informational purposes only and is not an offer to
purchase nor a solicitation of an offer to sell shares of Medafor or CryoLife.
Subject to future developments, CryoLife may file a registration statement
and/or tender offer documents and/or proxy statement with the SEC in connection
with the proposed combination. Shareholders should read those filings, and any
other filings made by CryoLife with the SEC in connection with the combination,
as they will contain important information. Those documents, if and when filed,
as well as CryoLife’s other public filings with the SEC, may be obtained without
charge at the SEC’s website at www.sec.gov and at
CryoLife’s website at www.cryolife.com.
Executive
Management Team
[picture
of Mr. Anderson]
Steven G. Anderson
- - Steve is a founder of CryoLife and has served as its
President and CEO since the company was founded in 1984. Prior to
founding CryoLife, Steve was the Senior Executive Vice President of Intermedics
Pacemakers (now owned by Boston Scientific) from 1976 to 1982. He has
specialized in the marketing and sales of implantable medical devices since
1967, when he joined Medtronic as a sales representative in Milwaukee. He is a
native of St. Paul, Minnesota, and has a B.A. in Liberal Arts from the
University of Minnesota.
[picture
of Mr. Lee]
D. Ashley Lee, CPA – Ashley is
CryoLife’s Executive Vice President, Chief Operating Officer and Chief Financial
Officer. Ashley has been with the company for 15 years, first as its
Controller, then as Vice President of Finance and Chief Financial
Officer. He was promoted to his current position in
2004. Prior to joining the company, Ashley was the Assistant Director
of Finance for Compass Retail, Inc. a subsidiary of Equitable Real
Estate. From 1987 to 1993, Ashley was a Certified Public Accountant
with Ernst & Young, LLP. Ashley received his B.S. in Accounting
from the University of Mississippi.
[picture
of Mr. Burris]
Jeffrey W. Burris, Esq. – Jeff
is General Counsel of CryoLife. Prior to joining CryoLife in February
of 2008, Jeff was Senior Legal Counsel for Waste Management’s Southern Group
with a focus on acquisitions and divestitures for four years. He was
a practicing attorney for Arnall Golden Gregory of Atlanta, Georgia,
specializing in issues associated with biotechnology companies, for the six
years prior to his tenure at Waste Management. Jeff graduated Magna
Cum Laude with a B.A. from the University of Tennessee, (Phi Beta Kappa) and his
J.D. from the University of Chicago Law School.
[picture
of Dr. Heacox]
Albert E. Heacox, Ph.D. – Al
is Senior Vice President of Research and Development. Al joined the
company in 1985, served as the Director and then Vice President of Laboratory
Operations and was promoted to Senior Vice President in 2004. Prior
to joining the company, he worked as a researcher for the U.S. Department of
Agriculture developing methods for the cryopreservation of cells. He
received a B.A. and an M.S. in Biology from Adelphi University, a Ph.D. in
Zoology from Washington State University and completed his post-doctorate in
cell biology at the University at Cologne, Germany.
[picture
of Mr. Seery]
Gerald B. Seery – Gerry is
Senior Vice President, Sales and Marketing. He has been with CryoLife
since 1993. He began his career with the company as Director of
Vascular Marketing and was promoted to Vice President, Marketing in
1995. In 2002, Gerry and his family moved to the United Kingdom where
he served as President of CryoLife Europa, Ltd. through the summer of
2005. He has been Senior Vice President, Sales and Marketing since
October 2005. Gerry received a B.A. from The Catholic University of
America in Washington DC and an M.B.A. from Columbia University in New
York.
[picture
of Mr. Anderson]
Bruce G. Anderson – Bruce is
the Vice President, U.S. Sales and Marketing. He joined CryoLife in
1994 as a field technical representative in Tennessee. During his
time at the company he has been a Product Manager for Cardiac Technologies,
Director of Global Cardiovascular Marketing, Director of Cardiovascular Field
Services, Director and then Senior Director of U.S. Sales and
Marketing. He was promoted to Vice President in
2008. Prior to joining the company, Bruce was an Account Executive at
Dun & Bradstreet for four years. Bruce received his B.A. from the
University of South Florida.
[picture
of Mr. Capps]
Scott B. Capps – Scott is Vice
President of Clinical Research and is responsible for overseeing and
implementing clinical trials to achieve FDA and International approvals of
CryoLife’s products. In 1995, he joined CryoLife as Project Engineer
for the allograft heart valve program and was promoted to Director, Clinical
Research in 1999. Scott and his family moved to the United Kingdom in
2003 where Scott served as Director of European Clinical Affairs until 2005 and
then as Vice President, General Manager of CryoLife Europa, Ltd. until
2007. He received his Bachelor of Industrial Engineering from the
Georgia Institute of Technology and his M.S. in Bioengineering from Clemson
University.
[picture
of Mr. Fronk]
David M. Fronk – Dave is the
Vice President of Regulatory Affairs and Quality Assurance of
CryoLife. He was Vice President of Clinical Research at CryoLife from
1998 to 2005 when he assumed his present position. Prior to joining
CryoLife in 1992, he held research and product development positions at Baxter
Healthcare Corporation and Zimmer, Inc. He has specialized in the
product development and regulatory affairs of implantable medical devices for
the past 23 years. He received his B.S. in Mechanical Engineering and
his M.S. in Biomedical Engineering from Ohio State University.
[picture
of Mr. Gridley]
Richard C. Gridley – Rich is
Vice President of International Sales and Marketing. Rich joined the
company in 2005 and has served in various positions within the sales and
marketing areas. He was promoted to Vice President in
2008. Rich has 15 years of experience in sales and
marketing. Prior to joining the company, he held various positions at
3M Company, Global Link Logistics and Teleflex Medical. He received
his Bachelor of Arts degree in Political Science from Winthrop University in
1994.
[picture
of Mr. Neja]
Timothy M. Neja – Tim is Vice
President of Laboratory Operations and has been with CryoLife since
1997. Prior to joining CryoLife, he spent nine years at Armour
Pharmaceuticals/Centeon, with responsibilities for various aspects of the
manufacturing of human plasma derived biopharmaceuticals. He is
certified as a Tissue Banking Specialist by the American Association of Tissue
Banks. Tim has a B.A. in Economics and Chemistry from Knox College,
an M.S. in Analytical Chemistry from Governors State University, and an M.B.A.
from the University of Chicago Graduate School of Business.
[picture
of Dr. Northrup]
William F. Northrup III, M.D.
– Bill is Vice President of Physician Relations and Education. Prior
to joining the company in 2008, he spent nearly three decades in clinical
practice in the Twin Cities of Minneapolis and St. Paul, Minnesota focused
primarily on heart valve reconstruction. At CryoLife he is expanding
the use of biological simulators and e-learning tools to provide basic training
in aortic root surgery through Aortic Allograft Workshops, Ross Summits, Ross
Community website and guest lectureships and workshops. He received
his M.D. from the University of Southern California and his General and Thoracic
Surgical Residency training at the University of Minnesota.
[picture
of Ms. Horton]
Amy D. Horton, CPA – Amy has
served as Chief Accounting Officer of CryoLife since 2006. She has
been with the company since January 1998, serving as Controller from April of
2000 to August of 2006 and as Assistant Controller prior to
that. From 1993 to 1998, Amy was employed as a Certified Public
Accountant with Ernst & Young, LLP. She received her B.S. and
Master’s degrees in Accounting from Brigham Young University in Provo,
Utah.
CryoLife Europa,
Ltd.
[picture
of Dr. Hollinworth]
David N. Hollinworth, Ph.D. –
David is Vice President and General Manager of CryoLife Europa,
Ltd. David has specialized in the marketing and development of
implantable medical devices for eleven years. Prior to joining
CryoLife in 2007, David was the CEO of Chameleon BioSurfaces, a start-up
cardiology company. He worked with Medtronic from 1997 to 2003, first
as the U.K. Marketing Manager and then as the European Market Development
Manager. David holds an M.B.A. from the London Business School and a
Ph.D. in biochemistry from the University of Bristol in the U.K.
Press
Release
FOR
IMMEDIATE RELEASE
Media
Contacts:
D. Ashley
Lee
Executive
Vice President, Chief Financial Officer and
Chief
Operating
Officer
Phone:
770-419-3355
Nina
Devlin
Edelman
Phone:
212-704-8145
CryoLife
Becomes Largest Shareowner of Medafor, Inc. and Proposes Combination Between the
Two Companies
ATLANTA, GA (January 13, 2010) --
CryoLife, Inc. (NYSE: CRY), an implantable biological medical device and
cardiovascular tissue processing company, announced today that it has purchased
approximately 1.6 million shares of Medafor’s common stock from Medafor’s
founders and certain principal shareholders for approximately $2.00 per
share. Based on the most recent information available to CryoLife,
these shares represent approximately 8 percent ownership of
Medafor. CryoLife currently has the exclusive right to distribute
Medafor’s MPH®
polysaccharide hemostatic technology under the private label
HemoStase® within
the U.S. for use in cardiac and vascular surgery and in many international
markets for cardiac, vascular, and general surgery, subject to certain
exclusions. CryoLife achieved $6 million in sales of HemoStase in
2009. With its purchase of these shares of Medafor common stock,
CryoLife believes that it is now the largest single shareholder of Medafor, in
addition to being Medafor’s largest distributor.
In
addition, on January 13, 2010, CryoLife sent a letter to Medafor’s management
and board requesting to enter into discussions with them regarding a potential
acquisition by CryoLife of the remaining outstanding common stock of Medafor for
$2.00 per share in cash and CryoLife stock. A copy of this letter can
be found near the end of this press release.
Steven G.
Anderson, CryoLife’s chairman, president and chief executive officer, said, “We
have acquired this significant stake in Medafor as a first step in our efforts
to acquire full control of HemoStase and the hemostatic technology on which it
is based in order to help realize its significant, untapped growth
potential. This technology serves as a perfect complement to our
BioGlue®
technology, allowing us to offer surgeons a full range of products to assist
them in controlling and preventing bleeding. We believe this
technology has tremendous untapped growth potential, provided Medafor is able to
surmount the capital constraints currently facing the company, obtain the
liquidity needed to invest in the technology’s market rollout, and put in place
the skilled management necessary to oversee the technology’s
development. We believe that a combination with CryoLife can help
Medafor overcome these obstacles and create greater value for both companies and
their shareholders.”
Mr.
Anderson continued, “We have presented Medafor with a proposal that represents
full and fair value, reflecting both the upside from the growth potential of
HemoStase and related products, as well as the downside presented by the IP
restrictions on this product. We believe that our proposal also
represents a significant premium to the price at which Medafor’s own board and
management have recently offered to convert debt into equity. We also
believe that our offer would provide Medafor shareholders with certain value
through a cash component, as well as the opportunity to participate in future
upside through continued ownership of the combined company under CryoLife
leadership. Our proposal would also minimize the dilution that would
otherwise likely result from Medafor repeatedly accessing traditional capital
markets in the absence of such a combination.”
“CryoLife
has made numerous past attempts to engage with Medafor’s management and board
about a potential value-creating acquisition of the company by
CryoLife. To date, Medafor has summarily rejected all of our
overtures and refused to negotiate with us. By providing our fellow
Medafor shareholders with complete and timely information about our latest
proposal, we hope to encourage Medafor’s management and board to join CryoLife
in negotiations,” concluded Mr. Anderson.
Medafor shareholders can find
additional information about CryoLife and its proposal to acquire Medafor at
www.cryolife.com/medaforoffer.
The full
text of CryoLife’s most recent letter to the Medafor board of directors
follows:
January
13, 2010
VIA
FEDEX
Michael
F. Pasquale, Chairman of the Board
Medafor,
Inc.
Dear
Michael:
I am writing to inform you that
CryoLife has purchased approximately 1.6 million shares of Medafor common stock
and, concurrently with this letter, has notified Medafor of this purchase and
requested the issuance of those shares to CryoLife.
As you know, CryoLife has been
interested for some time in negotiating an acquisition of Medafor by CryoLife,
and we have made multiple past attempts to engage you in discussions about a
potential combination.
CryoLife has great regard for your
hemostatic technology and believes it has significant, untapped growth
potential; however, we do not believe that Medafor has the resources to maximize
this potential on its own given the capital and other constraints facing the
company. I believe that our financial strength, strong direct sales
force, international distribution network, and experienced management team would
allow us to drive additional growth of HemoStase® and
related products, beyond Medafor’s capabilities, and deliver value to both
CryoLife and Medafor stockholders. We believe that Medafor’s
hemostatic technology serves as a perfect complement to CryoLife’s BioGlue®
technology, and a combination of our companies would allow us to offer surgeons
a full range of products to assist them in controlling and preventing
bleeding.
Given the strategic logic for this
transaction, we are proposing to acquire all of Medafor’s remaining outstanding
shares for $2.00 per share in cash and stock, subject to completion of
reasonable due diligence. We believe our offer is both fair and
generous and provides an opportunity for Medafor shareholders to receive
immediate and certain value through a cash component, as well as the opportunity
to participate in future upside through continued ownership of the combined
company.
The price we are offering represents a
significant premium to that which we understand Medafor’s management and board
have recently offered to convert debt into equity and is equivalent to the value
at which recent stock transactions have taken place. It is also in
line with the valuations of comparable public companies and with recent
comparable publicly disclosed M&A transactions.
In the course of a negotiated
transaction, and as part of our due diligence efforts, CryoLife will of course
be willing to take into consideration any factors that we may not have accounted
for when undertaking our valuation analysis, including any updated financial
information.
This is a great opportunity for both
our companies, and I urge you and your board to begin a dialogue with us as soon
as possible so that we can begin to share our vision with you. We
believe that the sooner the parties are able to reach agreement on a
combination, the easier the transaction between the parties will be and the
sooner we will be able to create value for both Medafor and CryoLife
shareholders.
We believe that we can achieve much
more together than Medafor will be able to achieve on its own, and regardless of
our prior history, as your largest shareholder, we must now work together to
realize the greatest value for our shareholders. Please contact me as
soon as possible to discuss this proposal.
I look forward to speaking with you
soon, and I feel certain that we can reach a mutually beneficial
agreement.
Very truly yours,
Steven G. Anderson,
President, CEO and Chairman of the
Board
cc: Board
of Directors of Medafor
Gary J. Shope
ADDITIONAL
IMPORTANT INFORMATION
This
announcement is provided for informational purposes only and is not an offer to
purchase nor a solicitation of an offer to sell shares of Medafor or
CryoLife. Subject to future developments, CryoLife may file a
registration statement and/or tender offer documents and/or proxy statement with
the SEC in connection with the proposed combination. Shareholders
should read those filings, and any other filings made by CryoLife with the SEC
in connection with the combination, as they will contain important
information. Those documents, if and when filed, as well as
CryoLife’s other public filings with the SEC, may be obtained without charge at
the SEC’s website at www.sec.gov and at CryoLife’s website at
www.cryolife.com.
About
CryoLife, Inc.
Founded
in 1984, CryoLife, Inc. is a leader in the processing and distribution of
implantable living human tissues for use in cardiac and vascular surgeries
throughout the U.S. and Canada. The Company's CryoValve® SG
pulmonary heart valve, processed using CryoLife's proprietary SynerGraft®
technology, has FDA 510(k) clearance for the replacement of diseased, damaged,
malformed, or malfunctioning native or prosthetic pulmonary
valves. The Company’s CryoPatch® SG
pulmonary cardiac patch has FDA 510(k) clearance for the repair or
reconstruction of the right ventricular outflow tract (RVOT), which is a surgery
commonly performed in children with congenital heart defects, such as Tetralogy
of Fallot, Truncus Arteriosus, and Pulmonary Atresia. CryoPatch SG is
distributed in three anatomic configurations: pulmonary hemi-artery, pulmonary
trunk, and pulmonary branch. The Company's BioGlue®
Surgical Adhesive is FDA approved as an adjunct to sutures and staples for use
in adult patients in open surgical repair of large vessels. BioGlue
is also CE marked in the European Community and approved in Canada and Australia
for use in soft tissue repair. The Company's BioFoam®
Surgical Matrix is CE marked in the European Community for use as an adjunct in
the sealing of abdominal parenchymal tissues (liver and spleen) when cessation
of bleeding by ligature or other conventional methods is ineffective or
impractical. BIOGLUE Aesthetic™ Medical Adhesive
is CE marked in the European Community for periosteal fixation following
endoscopic browplasty (brow lift) in reconstructive plastic surgery and is
distributed by a third party for this indication. CryoLife
distributes HemoStase, a hemostatic agent, in much of the U.S. for use in
cardiac and vascular surgery and in many international markets for cardiac,
vascular, and general surgery, subject to certain exclusions.
Statements
made in this press release that look forward in time or that express
management's beliefs, expectations or hopes are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include those regarding our efforts to acquire
full control of HemoStase and Medafor’s hemostatic technology, our belief that
such an acquisition would enable us to drive additional growth of HemoStase and
related products, and deliver earnings and revenue growth for CryoLife and
Medafor shareholders. These future events may not occur as and when
expected, if at all, and, together with our business, are subject to various
risks and uncertainties. These risks and uncertainties include that
any transaction with Medafor may not occur due to circumstances and events
beyond our control, including legal impediments, we may not be able to realize
the anticipated benefits of a transaction with Medafor, our plans to acquire
Medafor may change, and Medafor’s management may act in ways that differ from
our current expectations. Also, the success of any transaction
between CryoLife and Medafor is subject to risks facing both
companies. These risks include that CryoLife is significantly
dependent on revenues from BioGlue and there are a variety of risks affecting
BioGlue, CryoValve SG pulmonary heart valves and other SynerGraft processed
tissues and products may not be accepted by the marketplace, the CryoValve SG
pulmonary heart valve has a one year shelf life, the CryoPatch SG has a one year
shelf life, we are dependent on the availability of sufficient quantities of
tissue from human donors, the CryoValve SG pulmonary heart valve post-clearance
study requested by the FDA may not provide the expected positive results, our
products and tissues we process and preserve have allegedly caused and may in
the future cause injury to patients, and we have been and may be exposed to
tissue processing and product liability claims and additional regulatory
scrutiny as a result, the possibility that the FDA could impose additional
restrictions on our operations, issue a 483, or warning letter, or require a
recall, or prevent us from processing and distributing tissues or manufacturing
and distributing other products, our failure to adequately comply with
government regulations could result in loss of revenues and customers as well as
additional compliance expense, our ability to borrow under our credit facility
may be limited, the credit facility limits our ability to pursue significant
acquisitions, the financial and credit liquidity crisis may adversely affect our
ability to borrow money or raise capital, the current economic crisis and future
economic crises may adversely affect our business and financial condition, there
are limitations on our use of net operating loss carry-forwards that could
result in our inability to use them fully or at all, adverse regulatory action
outside of the U.S. could affect our business, physicians have been and may be
reluctant to implant or use our preserved tissues or products, our existing
insurance policies may not be sufficient to cover our actual claims liability,
current economic conditions may impact demand for our tissues and products,
intense competition may affect our ability to operate profitably, we may be
unable to obtain adequate insurance at a reasonable cost or at all,
uncertainties related to patents and protection of proprietary technology may
adversely affect the value of our intellectual property, uncertainties related
to patents and protection of proprietary technology for products distributed by
us may adversely affect our ability to distribute those products, we are
dependent on key personnel, we may not be successful in obtaining necessary
clinical results and regulatory approvals for products and services in
development, and our new products and services may not achieve market
acceptance, we may be unable to effectively leverage our existing sales force to
sell HemoStase, the lawsuit we filed against Medafor regarding our distribution
agreement with Medafor may continue to adversely impact our relationship with
Medafor and could hamper or prevent us from distributing HemoStase, Medafor may
in the future attempt to terminate our distribution agreement, rapid
technological change could cause our services and products to become obsolete,
extensive government regulation may adversely affect our ability to develop and
sell products and services, we have experienced operating losses and negative
cash flows in the past, and we must continue to address the underlying causes in
order to continue to operate profitably and generate positive cash flows,
investments in new technologies and acquisitions of products or distribution
rights may not be successful, if we are not successful in expanding our business
activities in international markets, we will be unable to pursue one of our
strategies for increasing our revenues, continued deflation of foreign
currencies relative to the U.S. dollar could materially and adversely impact our
foreign revenues, and future healthcare policies, healthcare reimbursement
methods, and healthcare reimbursement policies may affect the availability,
amount, and timing of our revenues, financial condition, and
profitability. These risks and uncertainties include the risk factors
detailed in our Securities and Exchange Commission filings, including our Form
10-K filing for the year ended December 31, 2008, our Form 10-Q filing for the
quarter ended March 31, 2009, our Form 10-Q filing for the quarter ended June
30, 2009, our Form 10-Q filing for the quarter ended September 30, 2009, and the
Company's other SEC filings. Medafor’s business is also subject to a
number of risks, including the risk that HemoStase does not have adequate
intellectual property protection, that additional regulatory approvals may not
be obtained in a timely fashion, if at all, and that product liability lawsuits
could be filed in connection with the use of HemoStase. In addition,
the acquisition of Medafor by CryoLife, if it occurs, could result in unexpected
costs or liabilities to CryoLife due to potential non-compliance by Medafor
under applicable laws and regulations, although CryoLife is currently not aware
of any material non-compliance, or due to other factors that we are not
currently able to predict, as we have not had the opportunity to perform a due
diligence review with respect to Medafor. The Company does not
undertake to update its forward-looking statements. In addition, the
calculation of the estimated percentage of Medafor’s outstanding shares owned by
CryoLife is based on 20,340,314 shares outstanding, the number of outstanding
shares shown in Medafor’s audited financial statements for its fiscal year ended
December 31, 2008. This calculation does not take into account any
shares that may have been repurchased or issued by Medafor since that date,
including any shares issued in connection with the conversions of debt attempted
by Medafor in late 2009. As a result, CryoLife’s actual percentage
ownership of Medafor’s outstanding common stock may be greater or less than
8%. If the debt conversions were successful, it is possible that our
actual percentage ownership is significantly less than 8%.
For
additional information about the company, visit CryoLife’s Web
site:
www.cryolife.com.
END
FAQ
ADDITIONAL
IMPORTANT INFORMATION
This
document is provided for informational purposes only and is not an offer to
purchase nor a solicitation of an offer to sell shares of Medafor or CryoLife.
Subject to future developments, CryoLife may file a registration statement
and/or tender offer documents and/or proxy statement with the SEC in connection
with the proposed combination. Shareholders should read those filings, and any
other filings made by CryoLife with the SEC in connection with the combination,
as they will contain important information. Those documents, if and when filed,
as well as CryoLife’s other public filings with the SEC, may be obtained without
charge at the SEC’s website at www.sec.gov and at
CryoLife’s website at www.cryolife.com.
|
· Why is CryoLife acquiring a
stake in Medafor?
· How much of Medafor does
CryoLife now own?
· What are the terms of the
proposal CryoLife made most recently to Medafor?
· Why did CryoLife choose to make
this proposal public?
· Is
the proposal made to the Medafor board available to Medafor
shareholders?
· How does CryoLife intend to
effect an acquisition of Medafor without agreement from their
management/board given that Medafor is a private
company?
· Why
should Medafor sell itself to CryoLife?
· How
has Medafor failed to help HemoStase reach its full potential? What will
CryoLife do differently?
· How
did CryoLife come to this current proposal?
· Does
CryoLife’s Medafor stake give CryoLife any additional powers outside those
of a normal shareholder?
· What
are CryoLife’s next steps?
· When
does CryoLife plan to communicate with Medafor shareholders?
· What is the timing for this
process?
· Who
can shareholders contact if they have
questions?
|
Why
is CryoLife acquiring a stake in Medafor?
We have
acquired this significant stake in Medafor as a first step in our efforts to
acquire full control of HemoStase and Medafor’s hemostatic
technology. We are taking this step in order to help HemoStase and
related products realize their full potential. If we are successful,
we believe that our experienced management team, strong direct sales force,
international distribution network, and financial strength will allow us to
drive additional growth of HemoStase and related products, and create value for
CryoLife and Medafor shareholders. In the event we are unable to
acquire control of Medafor in the near term, we believe we will be able to
recover the value of this investment in the future.
How
much of Medafor does CryoLife now own?
CryoLife
believes it owns approximately 8 percent of the outstanding Medafor common stock
and that it is now the largest single shareholder of Medafor, in addition to
being Medafor’s largest distributor.
What
are the terms of the proposal CryoLife made most recently to
Medafor?
On
January 13, 2010, CryoLife sent a letter to Medafor’s management and board
requesting to enter into discussions with them regarding a potential acquisition
by CryoLife of the remaining outstanding common stock of Medafor for $2.00 per
share in a combination of cash and CryoLife stock, subject to completion of
reasonable due diligence. This would provide Medafor
shareholders with certain value through a cash component, as well as the
opportunity to participate in future upside through continued ownership of the
combined company under CryoLife leadership.
We
believe this proposal to Medafor represents full and fair value, reflecting both
the upside from the growth potential of HemoStase and the product’s underlying
technology, as well as the downside presented by the IP restrictions on this
product.
Our
proposal also represents a significant premium to the price at which we believe
Medafor’s own board and management have recently offered to convert debt into
equity.
Why
did CryoLife choose to make this proposal public?
CryoLife
has made every effort to work with Medafor as partners in an amicable and
productive manner. We have made numerous attempts to engage with
Medafor’s management and board about a potential value-creating acquisition of
the company by CryoLife. To date, Medafor has summarily rejected all
of our overtures and refused to negotiate with us. By providing our
fellow Medafor shareholders with complete and timely information about our
proposal, we hope to encourage Medafor’s management and board to come to the
table.
Is
the proposal made to the Medafor board available to Medafor
shareholders?
Not at
this time. It is our hope that by making our proposal public, we will
encourage Medafor’s management and board to engage in discussions with us, or at
least remove any legal barriers that would prevent us from purchasing additional
shares from Medafor shareholders.
How
does CryoLife intend to effect an acquisition of Medafor without agreement from
their management/board given that Medafor is a private company?
It is our
hope that having demonstrated our commitment to a value-creating transaction by
publicly announcing our proposal, Medafor’s management and board will agree to
engage in discussions with us. Further, we believe that as a
substantial shareholder of Medafor, we have a right to a voice in Medafor’s
management, and we will exercise that right to its fullest potential in order to
remove any impediments that currently block Medafor shareholders from being able
to sell their shares to us. If necessary, we may consider additional
actions to facilitate a transaction with Medafor that would not require the
approval of current board members.
Why
should Medafor sell itself to CryoLife?
Medafor
needs to accelerate its rollout of HemoStase and the underlying hemostatic
technology. Such a rollout inherently requires a significant outlay
of capital. We think CryoLife can facilitate this rollout in a way
that would prevent the need for repeatedly accessing traditional equity
markets. Accessing equity markets will likely produce unnecessary
further dilution for Medafor’s current shareholders. We note that
current management has increased outstanding shares by almost 13 million shares
since 2005 (at that time there were only 7.7 million shares outstanding), and
has not been able to generate an exit strategy that provides value to existing
Medafor shareholders. At the same time, as Medafor’s largest
distributor, we feel that integrating our two companies would produce the
greatest revenue growth and profitability for this technology, and increase
returns for both Medafor and CryoLife shareholders.
How
has Medafor failed to help HemoStase reach its full potential? What
will CryoLife do differently?
Medafor
has failed to maximize the potential of HemoStase and the product’s underlying
technology for its shareholders. Medafor’s capital constraints
prevent it from conducting significant research and development and investing in
its sales force and distribution network in a meaningful way. With
significantly greater resources, CryoLife would remedy this.
Our
management team has over 150 years combined experience in the medical device
business. We have a direct sales force in the U.S. and an
international distribution network comprised of both direct employees and third
party representatives who are focused on cardiac, vascular and general
surgeons. HemoStase is a perfect complement to CryoLife’s BioGlue
technology; together BioGlue and HemoStase offer a full range of products to our
surgeon customers to assist them in the control and prevention of
bleeding. We have already demonstrated our ability to sell HemoStase
(having achieved $6 million in sales in 2009) and have the resources available
to us to ensure that HemoStase and related products properly penetrate the
market.
How
did CryoLife come to this current proposal?
The
proposal price results from a detailed analysis of Medafor, its products, and
the market conducted by CryoLife in conjunction with its financial and legal
advisors. The valuation is consistent with comparable company
valuations, similar M&A transactions, and other relevant metrics and
methodologies. We believe our proposal to Medafor represents full and
fair value, reflecting both the upside from the growth potential of HemoStase
and the product’s underlying technology, as well as the downside presented by
the IP restrictions on this product. Of course, our analysis is based
upon the best information available to us. We remain open to
negotiating our proposal further with Medafor’s management and board, and have
indicated our desire to enter into discussions and consider further information
about Medafor. Any final offer will be contingent upon the
conclusion of reasonable due diligence
Does
CryoLife’s Medafor stake give CryoLife any additional powers outside those of a
normal shareholder?
Minnesota
corporate law gives special rights to persons who own 3% or more of the common
stock in Medafor. Thus, CryoLife has the right to propose amendments
to the Articles of Incorporation or bylaws of Medafor at a regularly scheduled
meeting of shareholders, and if a meeting has not been held during the last 15
months, CryoLife can demand one.
What
are CryoLife’s next steps?
We hope
to begin negotiations with the Medafor board. If necessary, however,
we may consider additional actions to facilitate a transaction with Medafor that
would not require the approval of current board members.
When
does CryoLife plan to communicate with Medafor shareholders?
Outside
of this information, if we are unable to meet with or reach agreement with the
Medafor board in a timely fashion, we plan to communicate with Medafor
shareholders about our offer for Medafor and our strategy for the company going
forward at a future date.
What
is the timing for this process?
If
Medafor’s board agrees to negotiate with us and we ultimately reach agreement,
we believe this process could take several months. If Medafor’s board
refuses to negotiate with us, then we will evaluate our options.
Who
can shareholders contact if they have questions?
You may
contact Nina Devlin at Edelman at 212-704-8145 for more
information. You may also leave a question at the following email
address medaforinfo@cryolife.com and someone will contact you.
Statements
made in this document that look forward in time or that express management's
beliefs, expectations or hopes are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements include those regarding future actions we may take with respect to
Medafor, our efforts to acquire full control of HemoStase and Medafor’s
hemostatic technology, our ability to help HemoStase realize its full potential
and drive additional sales of HemoStase and related products, and create value
and increase returns for CryoLife and Medafor shareholders, our belief that we
will be able to recover the value of our investment in Medafor, our plans to
communicate with Medafor shareholders about our offer for Medafor and our
strategy for the company going forward at a future date, and our beliefs
regarding the potential timing of a transaction. These future events
may not occur as and when expected, if at all, and, together with our business,
are subject to various risks and uncertainties. These risks and
uncertainties include that any transaction with Medafor may not occur or may be
delayed due to circumstances and events beyond our control, including legal
impediments, we may not be able to realize the anticipated benefits of a
transaction with Medafor, our plans to acquire Medafor may change, our plans to
communicate publicly regarding the proposed transaction may change and may be
influenced by various legal and regulatory considerations, and Medafor’s
management may act in ways that differ from our current
expectations. The timing of and our ability to communicate with
Medafor shareholders may be impacted by the actions of Medafor
management. Also, the success of any transaction between CryoLife and
Medafor is subject to risks facing both companies. These risks
include that CryoLife is significantly dependent on revenues from BioGlue and
there are a variety of risks affecting BioGlue, CryoValve SG pulmonary heart
valves and other SynerGraft processed tissues and products may not be accepted
by the marketplace, the CryoValve SG pulmonary heart valve has a one year shelf
life, the CryoPatch SG has a one year shelf life, we are dependent on the
availability of sufficient quantities of tissue from human donors, the CryoValve
SG pulmonary heart valve post-clearance study requested by the FDA may not
provide the expected positive results, our products and tissues we process and
preserve have allegedly caused and may in the future cause injury to patients,
and we have been and may be exposed to tissue processing and product liability
claims and additional regulatory scrutiny as a result, the possibility that the
FDA could impose additional restrictions on our operations, issue a 483, or
warning letter, or require a recall, or prevent us from processing and
distributing tissues or manufacturing and distributing other products, our
failure to adequately comply with government regulations could result in loss of
revenues and customers as well as additional compliance expense, our ability to
borrow under our credit facility may be limited, the credit facility limits our
ability to pursue significant acquisitions, the financial and credit liquidity
crisis may adversely affect our ability to borrow money or raise capital, the
current economic crisis and future economic crises may adversely affect our
business and financial condition, there are limitations on our use of net
operating loss carry-forwards that could result in our inability to use them
fully or at all, adverse regulatory action outside of the U.S. could affect our
business, physicians have been and may be reluctant to implant or use our
preserved tissues or products, our existing insurance policies may not be
sufficient to cover our actual claims liability, current economic conditions may
impact demand for our tissues and products, intense competition may affect our
ability to operate profitably, we may be unable to obtain adequate insurance at
a reasonable cost or at all, uncertainties related to patents and protection of
proprietary technology may adversely affect the value of our intellectual
property, uncertainties related to patents and protection of proprietary
technology for products distributed by us may adversely affect our ability to
distribute those products, we are dependent on key personnel, we may not be
successful in obtaining necessary clinical results and regulatory approvals for
products and services in development, and our new products and services may not
achieve market acceptance, we may be unable to effectively leverage our existing
sales force to sell HemoStase, the lawsuit we filed against Medafor regarding
our distribution agreement with Medafor may continue to adversely impact our
relationship with Medafor and could hamper or prevent us from distributing
HemoStase, Medafor may in the future attempt to terminate our distribution
agreement, rapid technological change could cause our services and products to
become obsolete, extensive government regulation may adversely affect our
ability to develop and sell products and services, we have experienced operating
losses and negative cash flows in the past, and we must continue to address the
underlying causes in order to continue to operate profitably and generate
positive cash flows, investments in new technologies and acquisitions of
products or distribution rights may not be successful, if we are not successful
in expanding our business activities in international markets, we will be unable
to pursue one of our strategies for increasing our revenues, continued deflation
of foreign currencies relative to the U.S. dollar could materially and adversely
impact our foreign revenues, and future healthcare policies, healthcare
reimbursement methods, and healthcare reimbursement policies may affect the
availability, amount, and timing of our revenues, financial condition, and
profitability. These risks and uncertainties include the risk factors
detailed in our Securities and Exchange Commission filings, including our Form
10-K filing for the year ended December 31, 2008, our Form 10-Q filing for the
quarter ended March 31, 2009, our Form 10-Q filing for the quarter ended June
30, 2009, our Form 10-Q filing for the quarter ended September 30, 2009, and the
Company's other SEC filings. Medafor’s business is also subject to a
number of risks, including the risk that HemoStase does not have adequate
intellectual property protection, that additional regulatory approvals may not
be obtained in a timely fashion, if at all, and that product liability lawsuits
could be filed in connection with the use of HemoStase. In addition,
the acquisition of Medafor by CryoLife, if it occurs, could result in unexpected
costs or liabilities to CryoLife due to potential non-compliance by Medafor
under applicable laws and regulations, although CryoLife is currently not aware
of any material non-compliance, or due to other factors that we are not
currently able to predict, as we have not had the opportunity to perform a due
diligence review with respect to Medafor. The Company does not
undertake to update its forward-looking statements. In addition, the
calculation of the estimated percentage of Medafor’s outstanding shares owned by
CryoLife is based on 20,340,314 shares outstanding, the number of outstanding
shares shown in Medafor’s audited financial statements for its fiscal year ended
December 31, 2008. This calculation does not take into account any
shares that may have been repurchased or issued by Medafor since that date,
including any shares issued in connection with the conversions of debt attempted
by Medafor in late 2009. As a result, CryoLife’s actual percentage
ownership of Medafor’s outstanding common stock may be greater or less than
8%. If the debt conversions were successful, it is possible that our
actual percentage ownership is significantly less than 8%.