American Medical Systems (AMMD) recently announced that it has agreed to sell its female sterilization assets and technology to Conceptus Inc. (CPTS).

Under the $23.6 million cash deal, Conceptus acquired all patents and intellectual property associated with the Ovion business, which was acquired by American Medical Systems in July 2005. American Medical Systems acquired Ovion Inc. to further broaden its gynecology franchise. Ovion, a pre-commercialization company, developed an office-based technology for the delivery of a permanent birth control solution for women.

Conceptus intends to make use of the Ovion technology to develop future versions of its Essure permanent female contraceptive. Essure, a non-incisional permanent birth control method, received approval from the U.S. Food and Drug Administration (FDA) in 2002.

Under the terms of the present agreement, Conceptus will not be required to make any royalty payments to American Medical Systems. Furthermore, the transaction releases Conceptus from making any royalty payments. Conceptus was making royalty payments of 3.25 % on sales of Essure to American Medical under a 2003 settlement agreement. The deal is expected to add 5 cents per share to the third quarter earnings of Conceptus due to the release of the royalty obligations under the 2003 agreement.

Headquartered in Minnetonka, Minnesota and founded in 1972, American Medical Systems focuses on men’s and women’s pelvic health. The company’s products treated approximately 320,000 patients in 2008. In addition to U.S. sales, the company sells its products in Canada, Asia, Australia, Europe, and South America. Based on product line, men’s health products and women’s health products contributed approximately 44% and 33%, respectively to 2008 revenue. The balance was contributed by benign prostate hyperplasia (BPH) therapies. On a geographic basis, the U.S. and international operations contributed 71% and 29%, respectively, to total 2008 revenue.

American Medical Systems competes with Johnson & Johnson (JNJ) and Boston Scientific Corp. (BSX).

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