Urologix Delays Part Of $7.5M Payment to Medtronic
Plymouth-based Urologix, Inc., on Monday announced that it’s restructuring its payment plan to Fridley-based Medtronic, Inc., delaying payment of a portion of the $7.5 million it owes as part of a licensing agreement.
Urologix develops, manufactures, and markets minimally invasive medical products for the treatment of benign prostatic hyperplasia (BPH)—the medical term for an enlarged prostate, a condition that the company says affects 9 million men in the country.
A licensing agreement struck in 2011 gave Urologix rights for Medtronic’s Prostiva Radio Frequency Therapy System—which uses radio frequency to treat BPH—for 10 years. Urologix said that Prostiva complements its other product, Cooled ThermoTherapy, which also treats BPH—using microwave energy combined with a cooling mechanism.
According to Urologix, the restructuring pertains to a $7.5 million payment obligation that total covers all outstanding inventories payable to Medtronic, a portion of $500,000 for its initial licensing fee, other transition expenses, and the first year of royalties for sold products.
Under the original terms of the licensing agreement, about $6.2 million of the $7.5 million owed was due to Medtronic on June 30. Instead, Urologix paid Medtronic $2 million in cash and agreed to pay an additional $5.3 million, which bears 6 percent annual interest rate, in five equal installments to be paid between 2015 and 2019.
“We are encouraged by the improved financial flexibility this restructuring provides. Lowering the immediate cash obligation due at fiscal year-end and extending the balance of payables due thereafter at a modest interest rate provides us the opportunity to allocate our resources towards our strategic initiatives in growing the in-office BPH market,” Urologix CEO Greg Fluet said in a Monday statement. “Medtronic’s willingness to restructure these payments demonstrates Medtronic’s continued support of the company and the broader urology community.”
The Prostiva product line accounts for about 35 percent of Urologix’s total revenue, and its Cooled ThermoTherapy comprises the remainder.
When the deal was originally struck in September 2011, Urologix expected the agreement to bring the company’s total revenue up to between $18 million and $20 million by June 2012. But, although the company’s total revenue did see an increase of 35 percent from 2011, it was just short of expectations, at $17 million.
At the end of its 2012 fiscal year, the company projected revenue to reach $17.5 million to $19 million in its 2013 fiscal year. However, revised that guidance to between $16 million and $17 million after it released its first-quarter results in November.
According to preliminary financial results, Urologix was able to meet its revised expectations for its most recent fiscal year, ended June 30, with revenue totaling about $16.6 million, down about 3 percent year-over-year. The company’s fourth-quarter revenue totaled about $4.2 million, down about seven percent from the same period in 2012.
Earlier this year, Urologix transferred its stock from the Nasdaq exchange to an “over-the-counter“ market, as it was unable to meet Nasdaq’s minimum bid price requirement of $1 per share and failed to meet Nasdaq’s minimum shareholder’s equity requirement of $21.5 million.
Shares of Urologix’s stock were trading down about 1.16 percent Tuesday afternoon at $0.19.
Urologix is Minnesota’s 15th-largest publicly traded medical-device manufacturer based on revenue.