Conceptus (NasdaqGS: CPTS - News) recently received a favorable ruling from a jury in the District Court of the Northern District of California in a patent litigation against Hologic (NasdaqGS: HOLX - News). The jury ruled that Hologic’s Adiana Permanent Contraception infringes two of Conceptus' patents related to the Essure procedure. As a result, Conceptus was awarded $18.8 million as compensation for damages.
Conceptus presently plans to seek an injunction in order to stop Hologic from selling Adiana products in US. This issue will be addressed by the Court in future proceedings. The company is expected to provide further details on the case during its third quarter 2011 financial results.
Conceptus derives a major share of its revenue from Essure, which is approved in many countries, including the US, Europe, Australia, Canada, Mexico, Central and South America, and New Zealand.
However, the company has been witnessing severe challenges in the recent past. During the second quarter of fiscal 2011, domestic sales of Essure slipped 11.4% year over year to $24.8 million impacted by lower patient visits to OB/GYN offices and trialing of Adiana by physicians.
In a bid to retrieve the situation, the company is expanding its sales coverage and gradually witnessing success in reducing the impact of competition, particularly from physicians’ trialing other competing products. In September this year, the US Food and Drug Administration (FDA) approved the removal of nickel hypersensitivity contraindication from the Essure procedure Instructions for Use (IFU), which will further help Conceptus to gain traction in its domestic business.
Moreover, sales of the Essure system also depend on the number of physicians trained to perform the procedure. Conceptus is striving toward enhancing the availability of the system worldwide by raising consumer and physician awareness as well as imparting training to the physicians for performing the procedure.
We remain ‘Neutral’ on Conceptus over the long term, in line with its peer.HOLOGIC INC (HOLX): Read the Full Research ReportZacks Investment Research
- District Court of the Northern District of California