Stryker Corp. (NYSE:SYK) is selling off its bone growth products unit to Japan-based Olympus Corp. (OTC:OCPNY) for $60 million.
The Kalamazoo, Mich.-based company’s OP-1 product family, which are made by Hopkinton, Mass.-based subsidiary Stryker Biotech, includes the OP-1 Implant, OP-1 Putty, Opgenra and Osigraft, for use in orthopedic bone applications. The companies’ sale agreement also includes the transfer of Stryker’s Lebanon, N.H. manufacturing facility, according to the company.
The deal would be a step towards Stryker freeing itself of the legal woes related to allegations it promoted the off-label combination of two of its bone growth products.
Federal investigators in Oct. 2009 indicted the company and four managers charging that they led a two-year campaign to promote the combined use of separate bone-healing products, each granted a narrow, provisional “humanitarian device exemption” by the FDA. Combining the treatments and devices — the OP-1 Implant, OP-1 Putty and the bone void filler Calstrux — caused adverse effects in patients ranging from minor irritations to infections requiring follow-up surgeries. The indictment also charged that Stryker and former Stryker Biotech president Mark Philip lied to the FDA about the number of patients treated each year with OP-1 Putty.
The legal proceedings are still ongoing and in November federal prosecutors blasted Stryker Biotech, its former president and three sales reps for seeking the dismissal of the bulk of the 16 criminal charges pending against them in a federal case alleging the illegal promotion of the bone putties.
Stryker reported that the company will incur a one-time non cash charge of approximately $75 to $80 million, net of income tax benefit, in the fourth quarter from its anticipated downgraded income from the sale of the OP-1 unit. The company said there is no change to its guidance for adjusted diluted net earnings per share for 2010, which is expected to be in the range of $3.27 to $3.30.
Stryker plans to reallocation some of the research and development spending related to the OP-1 unit to its clinical efforts underway with the bone morphogenetic protein 7, or BMP-7, for potential use in osteoarthritis, the commercialization for which is not expected for five years, the company said.
