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EXHIBIT A
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UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C. 20436 IN THE MATTER OF CERTAIN CATHETERS, CONSOLES AND OTHER APPARATUS FOR CRYOSURGERY, AND COMPONENTS THEREOF Inv. No. 337-TA-
COMPLAINT UNDER SECTION 337 OF THE TARIFF ACT OF 1930, AS AMENDED Complainants CryoCor, Inc. 9717 Pacific Heights Boulevard San Diego, California 92121 (858) 909-2200 (858) 909-2300 - Facsimile AMS Research Corporation 10700 Bren Road West Minnetonka, Minnesota 55343 (952) 930-6300 (952) 930-6373 - Facsimile Counsel for Complainants Leland G. Hansen Wil L. Rao MCANDREWS, HELD & MALLOY, LTD. 500 West Madison Street Chicago, Illinois 60661 (312) 775-8000 (312) 775-8100 - Facsimile Email: [email protected] Email: [email protected] Attorneys for AMS Research Corp. Kevin O'Brien Kevin Sullivan BAKER & MCKENZIE LLP 815 Connecticut Avenue, NW Washington, DC 20006-4078 (202) 452-7000 (202) 452-7074 - facsimile Email: kevin.m.o'[email protected] Proposed Respondent CryoCath Technologies, Inc. 16771 Chemin Ste-Marie Kirkland, Quebec, H9H 5H3, Canada (877) 694-1212 (514) 694-6279 - Facsimile
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Howard N. Wisnia James P. Conley BAKER & MCKENZIE LLP 12544 High Bluff Drive, Third Floor San Diego, California 92130-3051 (858) 523-6200 (858) 259-8290 - facsimile Email: [email protected] Attorneys for CryoCor, Inc.
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TABLE OF CONTENTS I. II. INTRODUCTION .............................................................................................................. 1 THE PARTIES.................................................................................................................... 2 A. B. III. Complainants CryoCor and AMS Research ........................................................... 2 Respondent CryoCath ............................................................................................. 4
THE PRODUCTS AT ISSUE ............................................................................................ 4 A. B. Complainant CryoCor's System and Components Thereof.................................... 4 Respondent CryoCath's Products and Components Thereof.................................. 7
IV.
THE ASSERTED PATENTS ............................................................................................. 8 A. B. C. D. E. Identification, Ownership, and Enforcement Rights of the Asserted Patents......... 8 The 694 Patent ...................................................................................................... 10 The 610 Patent ...................................................................................................... 12 The RE 049 Patent ................................................................................................ 13 Foreign Counterparts of the Respective Asserted Patents .................................... 15
V. VI. VII. VIII. IX. X.
UNFAIR ACTS CRYOCATH IS INFRINGING THE ASSERTED PATENTS ......... 15 IMPORTATION AND SALE .......................................................................................... 18 LICENSES........................................................................................................................ 21 DOMESTIC INDUSTRY................................................................................................. 22 RELATED LITIGATION ................................................................................................ 24 REQUESTED RELIEF..................................................................................................... 25
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EXHIBITS Exhibit 1 Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 Confidential Exhibit 7 U.S. Patent No. 6,572,610 (certified) ("610 Patent") U.S. Patent Reissue No. RE 40,049 (certified) ("RE 049 Patent") U.S. Patent No. 6,471,694 (certified) ("694 Patent") CryoCor, Inc.'s Third Quarter 2007 10-Q American Medical Systems Holdings, Inc.'s 2006 Annual Report American Medical Systems Holdings, Inc.'s Third Quarter 2003 10-Q Confidential 08/31/2000 License Agreement between Cryogen, Inc. and CryoCor, Inc. ("08/31/2000 License Agreement") (submitted separately and concurrently as Appendix A pursuant to Commission Rules 201.6(b) and 210.5(d)) Assignments for the 694 Patent, 610 Patent and RE 049 Patent (issued originally as U.S. Patent No. 6,237,355) from American Medical Systems Gynecology, Inc. to AMS Research Corporation (certified) CryoCath Technologies, Inc.'s Third Quarter 2007 Report CryoCor Inc.'s Summary of Safety and Effectiveness to the U.S. Food and Drug Administration, P050024 CryoCor Cryoablation System ("CryoCor's Summary of Safety and Effectiveness") 01/30/2008 Webpage printout from CryoCor Inc.'s website at http://www.cryocor.com/Corpprofile/Procedure.Htm and http://www.cryocor.com/Clinical/Atrial_Flutter.Htm CryoCath Technologies, Inc.'s Summary of Safety and Effectiveness to the U.S. Food and Drug Administration, P020045 CryoCath Freezor Cardiac Cryoablation Catheter and CTT.2 CryoConsole System ("CryoCath's Summary of Safety and Effectiveness") CryoCath Technologies, Inc.'s "The Freezor Family" Product Illustration (with U.S. Flag) 01/30/2008 Webpage printout from CryoCath Technologies, Inc.'s website at www.Cryocath.Com/En/4.Products/40.1.4.Ep.Usa.Console.Asp
Exhibit 8
Exhibit 9 Exhibit 10
Exhibit 11
Exhibit 12
Exhibit 13 Exhibit 14
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Exhibit 15
Assignments for the 694 Patent, 610 Patent and RE 049 Patent (issued originally as U.S. Patent No. 6,237,355) from the respective inventor(s) to Cryogen, Inc. (certified) Assignments for the 694 Patent, 610 Patent and RE 049 Patent (issued originally as U.S. Patent No. 6,237,355) from Cryogen, Inc. to American Medical Systems Gynecology, Inc. (certified) Public, redacted 06/28/2007 Development and License Agreement among CryoCor, Inc., Boston Scientific Corporation and Boston Scientific Scimed, Inc. ("06/28/2007 License Agreement") (submitted separately and concurrently as Appendix B) A list of each foreign patent, each foreign patent application (not already issued as a patent) and each foreign patent application that has been designated corresponding to the 694 Patent, with an indication of the prosecution status of each such patent application A list of each foreign patent, each foreign patent application (not already issued as a patent) and each foreign patent application that has been designated corresponding to the 610 Patent, with an indication of the prosecution status of each such patent application A list of each foreign patent, each foreign patent application (not already issued as a patent) and each foreign patent application that has been designated corresponding to the RE 049 Patent (issued originally as U.S. Patent No. 6,237,355), with an indication of the prosecution status of each such patent application 12/06/2007 Webpage printout from the U.S. Food and Drug Administration website for 7F Freezor Cardiac Cryoablation Catheter and CCT.2 CryoConsole System P-20045 at http://www.Fda.Gov/Cdrh/PDF2/P020045.Html 01/31/2008 Webpage printout of CryoCath Technologies, Inc.'s website "Product U.S.A., Electrophysiology, Ordering Information [in the USA]" at http://www.Cryocath.Com/En/4.Products/40.1.5.ep.USA.ordering.i nfo.asp 01/31/2008 Website printout of "Akron Children's Hospital Replay of Pediatric Cardiac Cryoablation" Procedure at http://www.Or-Live.Com/akronchildrens/1562/ 01/31/2008 Website printout of "Virtual Hands-On: CryoCath Technologies Cryoablation" at http://www.hrsonline.Org/Education/Selfstudy/VHO/Cryocath_Te chnologies_Cryoablation.cfm
Exhibit 16
Exhibit 17
Exhibit 18
Exhibit 19
Exhibit 20
Exhibit 21
Exhibit 22
Exhibit 23
Exhibit 24
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Exhibit 25 Exhibit 26 Exhibit 27 Exhibit 28 Exhibit 29 Confidential Exhibit 30 Exhibit 31
Claim charts for infringement of the 694 Patent by CryoCath Technologies, Inc. with supporting Exhibits A through J Claim charts for infringement of the 610 Patent by CryoCath Technologies, Inc. with supporting Exhibits A through E Claim charts for infringement of the RE 049 Patent by CryoCath Technologies, Inc. with supporting Exhibits A through K CryoCath Technologies, Inc.'s Operator's Manual FreezorTM Cardiac Cryoablation Catheter (7F) and CCT.2 CryoConsole CryoCath Technologies, Inc.'s notes for videos located in Electrophysiology Knowledge Center Confidential Declaration of Gregory J. Tibbitts 1/31/2008 Webpage printout from the U.S. Food and Drug Administration website, CryoCath Technologies, Inc.'s 510k Premarket Notification Database Summary CryoCath Technologies, Inc.'s 2007 Progress Report Claim charts for the 694 Patent and products of CryoCor, Inc. with Exhibits A through G Claim charts for the 610 Patent and products of CryoCor, Inc. with Exhibits A through G Claim charts for the RE 049 Patent and products of CryoCor, Inc. with Exhibits A through G 08/01/2007 U.S. Department of Health and Human Services letter to CryoCor, Inc., P050024 CryoCor Cryoablation System 02/21/2008 Docket Report, CryoCor Inc. et al. v. CryoCath Technologies, Inc., Case No. 08-031-GMS (D. Del.) 02/21/2008 Docket Report, CryoCath Technologies, Inc. v. CryoCor, Inc., Case No. 07-631-GMS (D. Del.) Imported catheter of CryoCath Technologies, Inc. Domestic catheter of CryoCor, Inc.
Exhibit 32 Exhibit 33 Exhibit 34 Exhibit 35 Exhibit 36 Exhibit 37 Exhibit 38 Physical Exhibit 39 Physical Exhibit 40
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Exhibit 41
02/27/08 Webpage printout of Cryocath Technologies Inc.'s website of how to "Contact a Medical Advisor" at http://www.cryocath.com/en/2.patients/2.8medical.advisor.asp
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APPENDICES (Separately and concurrently submitted with the complaint) Appendix A Confidential Exhibit 7, 8/31/2000 License Agreement between Cryogen, Inc. and CryoCor, Inc. in triplicate ("8/31/2000 License Agreement") Public, redacted 06/28/2007 Development and License Agreement among CryoCor, Inc., Boston Scientific Corporation and Boston Scientific Scimed, Inc. in triplicate ("06/28/2007 License Agreement") Prosecution History for the 694 Patent (certified not available yet) ("694 Prosecution History") with three additional copies Four copies of each patent and technical reference mentioned in the 694 Prosecution History Certified Prosecution History for the 610 Patent ("610 Prosecution History") with three additional copies Four copies of each patent and technical reference mentioned in the 610 Prosecution History Certified Prosecution History for the RE 049 Patent ("RE 049 Patent Prosecution History") with three additional copies Four copies of each patent and technical reference mentioned in the RE 049 Patent Prosecution History
Appendix B
Appendix C Appendix D Appendix E Appendix F Appendix G Appendix H
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I.
INTRODUCTION 1.1. CryoCor, Inc. ("CryoCor") and AMS Research Corporation ("AMS Research")
(collectively "Complainants") respectfully request that the U.S. International Trade Commission ("the ITC") commence an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended. See 19 U.S.C. § 1337 ("Section 337"). Complainants request that the ITC remedy the unlawful importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of certain catheters, consoles, and other apparatus for cryosurgery, and components thereof, that infringe one or more of Complainants' patents. 1.2. On information and belief, the proposed respondent, CryoCath Technologies, Inc.
("CryoCath"), is a company headquartered in Canada that has engaged in unfair acts in violation of Section 337 through the unlicensed importation, sale for importation, or sale after importation into the United States of certain catheters, consoles, and other apparatus for cryosurgery, which include at least CryoCath's cryoconsoles and CryoCath's cryoablation catheters such as Freezor, Freezor Xtra, and Freezor MAX catheters (collectively the "CryoCath Products"). 1.3. CryoCath's CryoCath Products and their intended use infringe one or more claims
of United States Patent Nos. 6,471,694 (the "694 Patent"), 6,572,610 (the "610 Patent") and RE 40,049 (the "RE 049 Patent") (collectively the "Asserted Patents"), which are owned by AMS Research and exclusively licensed to CryoCor in certain fields of use. Pursuant to Commission Rule 210.12(a)(9)(i), certified copies of the 610 Patent, the RE 049 Patent, and the 694 Patent are attached to this Complaint as Exhibits 1, 2 and 3, respectively. 1.4. As required by Section 337(a)(2) and (3), a domestic industry for the 694 Patent,
the 610 Patent, and the RE 049 Patent, and for products and technology protected by these patents, exists and/or is in the process of being established in the United States.
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1.5.
Complainants seek an order pursuant to Section 337(d) excluding from entry into
the United States all products imported by CryoCath that infringe the Asserted Patents. Complainants further seek a cease and desist order pursuant to Section 337(f) directing CryoCath and those acting in conjunction with CryoCath to cease the importation, promotion, marketing, advertising, demonstration, and warehousing of inventory for distribution, sale, and use of such products within the United States. II. THE PARTIES A. 2.1. Complainants CryoCor and AMS Research Complainant CryoCor is a medical technology company based in the United
States. It is incorporated in the state of Delaware. CryoCor is headquartered at 9717 Pacific Heights Boulevard, San Diego, California 92121. CryoCor's most recent quarterly report accompanies this Complaint. (See Ex. 4, CryoCor Inc.'s Third Quarter 2007 10-Q, at 6.) 2.2. CryoCor is an industry leader in developing and manufacturing cryogenic
technology to treat certain cardiac arrhythmias by creating lesions using cryoenergy, or extreme cold. CryoCor's core product line is called The CryoCorTM Cardiac Cryoablation System ("the CryoCor Cryoablation System") and comprises a cryoablation catheter and a refrigeration console. In August 2007, CryoCor received FDA approval for the treatment of AFL with the CryoCor Cardiac Cryoablation System. 2.3. Complainant AMS Research is a Delaware corporation, and has its principal place
of business at 10700 Bren Road West, Minnetonka, Minnesota 55343. AMS Research Corporation is a wholly owned subsidiary of American Medical Systems, Inc., which is a wholly-owned subsidiary of American Medical Systems Holdings, Inc. ("AMS Holdings"). 2.4. AMS Holdings is headquartered in the United States, is a Delaware corporation,
and has its principal place of business at 10700 Bren Road West, Minnetonka, Minnesota 55343.
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AMS Holdings' most recent annual report accompanies this Complaint. (Exhibit 5, American Medical Systems Holdings, Inc.'s 2006 Annual Report.) AMS Holdings is the world's leading independent company focused on developing, manufacturing and marketing medical devices that restore male and female pelvic health. (Id.) 2.5. On or about December 30, 2002, AMS Holdings acquired Cryogen, Inc.
("Cryogen") by merger. (Ex. 6, American Medical Systems Holdings, Inc.'s Third Quarter 2003 10-Q, at 8.) At the time, Cryogen was a corporation based in the United States and headquartered in San Diego California, and had entered into an exclusive, worldwide license agreement with CryoCor in a certain field of use involving patents and applications, including those that issued as the 694 Patent, the 610 Patent, and U.S. Patent No. 6,237,355, which later reissued as the RE 049 Patent. (Ex. 7, Confidential 08/30/2000 License Agreement.) Pursuant to 19 C.F.R. § 210.12(c), three copies of this confidential license agreement accompany this complaint. (Id.) 2.6. In conjunction with the merger, AMS Holdings paid $36.2 million plus $4.7
million of acquisition-related costs. (Ex. 6, American Medical Systems Holdings, Inc.'s Third Quarter 2003 10-Q at 6.) In addition to the initial consideration, AMS Holdings also agreed to make an additional payment of up to $110 million, depending on product sales. (Id.) A principal purpose of the Cryogen acquisition by AMS Holdings was to "gain access to CryoGen's products and technology." (Id.) AMS Research now has all right, title and interest in the Asserted Patents, and stands as the licensor of the exclusive, worldwide field of use license to CryoCor. (See Ex. 8, Assignments for the 694 Patent, 610 Patent and RE 049 Patent from American Medical Systems Gynecology, Inc. to AMS Research Corporation; see also Exhibits 15 and 16.)
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B. 2.7.
Respondent CryoCath On information and belief, Respondent CryoCath is a corporation based in
Canada. CryoCath is a corporation organized and existing under the laws of the province of Quebec, Canada and has a principal place of business at 16771 Chemin Ste-Marie, Kirkland, Quebec, H9H 5H3, Canada. One of CryoCath's most recent quarterly reports accompanies this Complaint. (See Ex. 9, CryoCath Technologies, Inc.'s Third Quarter 2007 Report, at 47.) 2.8. CryoCath is a medical technology company and operates in a single business
segment, namely the development, manufacture and sale of cryoablation therapeutic technologies, including consoles and disposables (e.g., catheters and probes). CryoCath, among other things, uses, sells, offers for sale, imports and/or has imported into the United States cryosurgical products to treat cardiac arrhythmias. (Id. at 5 ("Today, the majority of our revenue is derived in the United States, with a significant portion coming from recurring, single use product sales." (emphasis added).) III. THE PRODUCTS AT ISSUE A. 3.1. Complainant CryoCor's System and Components Thereof The products at issue generally pertain to treatment of cardiac arrhythmias.
Cardiac arrhythmias are dysfunctions in the electrical activity that normally controls and maintains the highly coordinated contractions of the heart. Arrhythmias cause the heart to pump blood less efficiently, cause potentially debilitating symptoms, and can result in life threatening events such as stroke. CryoCor's development efforts have focused on a system for treating the two arrhythmias that are most difficult to treat: atrial fibrillation, or AF, and right atrial flutter, or AFL. AF is the most prevalent arrhythmia. AFL is the second most prevalent arrhythmia and can lead to, and often coexists with, AF. 3.2. Until recently, the standard approach for the treatment of atrial fibrillation has
been anti-arrhythmic drug therapy, which often is ineffective and may cause serious, and 4
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sometimes life-threatening, complications. (Ex. 10, CryoCor's Summary of Safety and Effectiveness, at 3 of 15.) Other approaches include surgery, pacing therapies such as implantable pacemakers or cardioverter-defribrillators (ICDs), and ablation of the arrhythmogenic cardiac tissue using radiofrequency catheters. (Id.) Because of the limitations and complications of these approaches, there has been substantial demand for a safe and effective catheter ablation technology for the treatment and cure of atrial fibrillation and other complex arrhythmias. 3.3. The CryoCor Cryoablation System addresses this demand. Using the CryoCor
Cryoablation System, a physician can permanently interrupt the electrical signals that cause an abnormal heart rate or rhythm. (Id. at 1.) 3.4. The CryoCor Cryoablation System provides a novel technology for localizing and
treating cardiac arrhythmias. CryoCor's proprietary system comprises the CryoCor Cryoablation Console (which features an articulating arm housing a pre-cooler), as depicted below on the right, and the CryoCor CryoBlator Catheter (a sterile, disposable, single-use percutaneous cryoablation catheter), as depicted below on the left. (See id.) The system is designed to be operated as a unit. (Id.)
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3.5.
As an example, the CryoCor Cryoablation System can be operated as follows.
First, the CryoCor sheath dilator is inserted at the groin and the catheter is advanced into the sheath, through the femoral vein, and into the right atrium, as illustrated below in Image A. The catheter is then articulated within the heart to the location where the physician wishes to make an ablation (Image B). In the example below, the catheter is guided to edge of the tricuspid valve and a cryoablation is performed (Image C). Additional ablations are then performed as necessary; in this example, ablations sufficient to create a lesion from the tricuspid valve to the ostium of the inferior vena cava are performed (Image D). (Ex. 11, 01/30/2008 Webpage printout From CryoCor, Inc.'s Website at http://www.cryocor.com/corpprofile/procedure.htm at http://www.cryocor.com/clinical/atrial_flutter.htm.)
A B
C
D
3.6.
To provide extreme cold at the tip of the cryoablation catheter, the console
delivers a primary refrigerant in an open loop. The primary refrigerant is liquefied by a closed loop pre-cooling refrigeration stage. (Ex. 10, CryoCor's Summary of Safety and Effectiveness, at 4.) Pre-cooling occurs in a heat exchanger located near the catheter/console interconnect, at
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the end of the console's articulating arm. (Id.) The primary refrigerant reaches its lowest temperature via the phase change of the fluid (liquid to gas) after it exits a capillary tube at the distal tip of the cryoablation catheter. (Id.) The primary refrigerant (as a gas) is then returned from the catheter through the console to an outlet. (Id.) 3.7. Accompanying this complaint as Physical Exhibit 40 is a CryoCor catheter, as
well as various photographs of the Physical Exhibit 40 at Exhibit 40. B. 3.8. Respondent CryoCath's Products and Components Thereof Respondent CryoCath's Products include the Freezor Cardiac Cryoablation
Catheter (the "Freezor Catheter"), umbilicals and accessories, and the CCT.2 CryoConsole (the "CryoConsole"). (Ex. 12, CryoCath's Summary of Safety and Effectiveness to the U.S. Food and Drug Administration, P020045 CryoCath Freezor Cardiac Cryoablation Catheter and CTT.2 CryoConsole System, at 2 of 15; Ex. 13, CryoCath Technologies, Inc.'s "The Freezor Family" Product Illustration (with U.S. Flag); Ex. 14, 01/30/2008 Webpage printout of CryoCath's Website, http://www.cryocath.com/en/4.products/40.1.4.ep.usa.console. asp.) The CryoCath Products at issue in this investigation are imported into the United States and offered for sale, sold, and used in the United States. 3.9. Accompanying this complaint as Physical Exhibit 39 is a CryoCath Freezor
Cardiac Cryoablation Catheter acquired in the United States, as well as various photographs of the Physical Exhibit 40 at Exhibit 40. 3.10. A Freezor Catheter and CryoConsole are depicted below. Cryogenic
temperatures are produced at the distal tip of the catheter. (Ex. 12, CryoCath's Summary of Safety and Effectiveness to the U.S. Food and Drug Administration, P020045 CryoCath Freezor Cardiac Cryoablation Catheter and CTT.2 CryoConsole System, at 2 of 15.) The distal
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tip is placed on the inner walls of a beating heart, reached through the body's vasculature from a puncture in the skin. (Id.)
IV.
THE ASSERTED PATENTS A. 4.1. Identification, Ownership, and Enforcement Rights of the Asserted Patents Three Asserted Patents are the subject of this investigation: U.S. Patent Nos.
6,471,694, 6,572,610, and RE 40,049. 4.2. The 694 Patent duly and legally issued to Cryogen, Inc. as assignee on October
29, 2002, based on an application filed on August 9, 2000. The 694 Patent is entitled "Control System For CryoSurgery." 4.3. Each of the named inventors assigned all right, title and interest in the 694 Patent
to Cryogen. A certified copy of the assignment documents, as duly filed with the U.S. Patent and Trademark Office, is attached in Ex. 15. 4.4. The 610 Patent duly and legally issued to Cryogen, Inc. as assignee on June 3,
2003, based on an application filed on August 21, 2001, which was published on February 27,
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2003 as US 2003/0040740. The 610 Patent is entitled "Cryogenic Catheter With Deflectable Tip." 4.5. Each of the named inventors assigned all right, title and interest in the 610 Patent
to Cryogen. A certified copy of the assignment documents, as duly filed with the U.S. Patent and Trademark Office, is attached in Ex 15. 4.6. The RE 049 Patent duly and legally issued to AMS Research as assignee on
February 12, 2008, based on Application Serial No. 11/412,250, filed on April 26, 2006. The RE 049 Patent is entitled "Precooled Cryogenic Ablation System." The RE 049 Patent is a divisional application of reissue Application No. 10/446,390, and a reissue of U.S. Patent No. 6,237,355 ("the 355 Patent"). 4.7. The named inventor assigned all right, title and interest in the 355 Patent and
Application Serial No. 10/446,390 to Cryogen. A certified copy of the assignment documents, as duly filed with the U.S. Patent and Trademark Office, is attached as Exhibit 15. 4.8. Cryogen assigned all right, title and interest in the Asserted Patents to American
Medical Systems Gynecology, Inc. A certified copy of the assignment document, as duly filed with the U.S. Patent and Trademark Office, is attached as Exhibit 16. 4.9. American Medical Systems Gynecology, Inc., in turn, assigned all right, title and
interest in the Asserted Patents to AMS Research. A certified copy of the assignment document, as duly filed with the U.S. Patent and Trademark Office, is attached as Exhibit 8. 4.10. On August 31, 2000, Cryogen granted an exclusive, worldwide license to certain
patent rights, including the 694 Patent, 610 Patent, and the applications that led to the RE 049 Patent, to CryoCor in a certain field of use. (Confidential Exhibit 7.) Subsequent to an acquisition of Cryogen, AMS Research obtained all right, title and interest in the Asserted Patents. (Ex. 8, Assignments for the 694 Patent, 610 Patent and RE 049 Patent from American
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Medical Systems Gynecology, Inc. to AMS Research Corporation.) AMS Research stands as the licensor of the exclusive, worldwide field of use license to CryoCor. 4.11. Complaint are: · · a certified copy of each Asserted Patent at Ex. 1 (610 Patent); Ex. 2 (RE 049 Patent); and Ex. 3 (694 Patent); a copy and three additional copies of the prosecution history of each Asserted Patent, which is separately and concurrently submitted as Appendix C (694 Patent (uncertified copy)); Appendix E (610 Patent (certified)); Appendix G (RE 049 Patent (certified)); four copies of each patent and technical reference document mentioned in each Asserted Patent's prosecution history, which is separately and concurrently filed as Appendix D (694 Patent); Appendix F (610 Patent); Appendix G (RE 049 Patent); three copies of the Confidential Exhibit 7, the 08/31/2000 License Agreement between CryoCor and Cryogen, which is separately and concurrently submitted as Appendix A; and three copies of the Exhibit 17, the 06/28/2007 Public, redacted Development and License Agreement among CryoCor, Boston Scientific Corporation and Boston Scientific Scimed, Inc., which is separately and concurrently submitted as Appendix B. The 694 Patent Non-Technical Description of the 694 Patent1 a. The 694 Patent is directed to an apparatus and method for automatic Pursuant to 19 C.F.R. §§ 210.12 (a)(9)(i), (ii) and 210.12(c), accompanying this
·
·
·
B. 4.12.
operation of a refrigeration system for use in cryosurgery. The refrigeration system provides refrigeration power to a catheter for tissue ablation or mapping. The claimed apparatus can monitor flow rates, pressures, and/or temperatures to achieve and maintain optimum system performance. Further, these parameters can be used to more safely control the operation of the system. The primary refrigeration system can be an open or
1
This non-technical description does not construe the specification or any claim of the 694 Patent and is not intended to do so. 10
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closed loop system and a secondary refrigeration system, which precools the primary refrigerant, is typically a closed loop. The system can control operation to a desired operational state, perform safety checks, and/or achieve safe shutdown. Such control is useful in the patient treatment setting. b. The 694 patent has 19 claims. Claims 1, 12 and 13 are independent
claims, claims 2-11 depend directly or indirectly from claim 1, and claims 14-19 depend directly or indirectly from claim 13. At this time, at least claims 1, 2, 13 and 14 are believed to be infringed by the intended use of CryoCath's CryoCath Products, or components thereof, which are manufactured by CryoCath in Canada and then imported, offered for sale, sold, and used in the United States. c. Representative claim 13 is directed to a method for controlling a
cryosurgical instrument, comprising: providing a refrigerant supply, a cryosurgery catheter including an expansion element, a temperature sensor, a pressure sensor, a flow sensor, a precool loop, and a control system connected to said sensors; flowing said refrigerant via a high pressure duct into said cryosurgery catheter; precooling said refrigerant in said precool loop; expanding said refrigerant in said catheter with said expansion element; sensing the temperature of said catheter with said temperature sensor; sensing the pressure of said expanded refrigerant with said pressure sensor; sensing the flow rate of said refrigerant with said flow sensor; and controlling said refrigerant with said control system, to maintain a selected catheter temperature, in response to signals from said temperature sensor, said pressure sensor, and said flow sensor.
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C. 4.13.
The 610 Patent Non-Technical Description of the 610 Patent2 a. The 610 Patent is directed to a flexible cryosurgical catheter. The catheter
allows the application of cold temperatures at locations within the human body via minimally invasive techniques. More specifically, the catheter is passable through the larger blood vessels and cavities of the heart. The catheter has a deflectable segment adjacent to its distal end (patient end) which can be deflected by remotely located means. For example, a pull wire in the catheter is connected to the deflectable segment. A deflection mechanism in the catheter handle allows for pulling on the pull wire to establish a desired curvature in the deflectable segment. The ability to establish a desired curvature can be beneficial in the treatment of cardiac arrhythmia to apply cryosurgical temperatures at selected locations in the patient's heart, to create localized areas of necrotic tissue. The flexible catheter can have a heat transfer element, among other features, at or near its distal end. The heat transfer element can be cooled to a cryosurgical temperature through pressure change of the refrigerant within the catheter. The cooled catheter is placed in contact with a selected tissue to treat the tissue. The target tissue is frozen, thereby destroying the abnormal tissue, with the healthy tissue around the treated tissue left uninjured. b. The 610 patent has 8 claims. Claims 1-5 are independent claims and
claims 6-7 depend directly or indirectly from claim 5. At this time, at least claims 3, 5, 6 and 7 are believed to be infringed by CryoCath's CryoCath Products, or components thereof, that are manufactured by CryoCath in Canada and then imported, offered for sale, sold, and used in the United States.
2
This non-technical description does not construe the specification or any claim of the 610 Patent and is not intended to do so. 12
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c.
Representative claim 5 is directed to a cryosurgical apparatus, comprising:
a cryosurgical refrigeration unit; a control handle connected in fluid flow communication with said refrigeration unit; a torque transmitting flexible tubular catheter connected in fluid flow communication with said control handle, said control handle being adapted to impart axial torque to rotate said catheter; a deflectable tubular segment at a distal end of said catheter, said deflectable segment having a higher degree of flexibility than said catheter; a spine element within said deflectable segment, said spine element being constructed to define a preferred plane of deflection; a heat transfer element on a distal end of said deflectable segment; a refrigerant supply conduit within said catheter, said supply conduit being adapted to supply refrigerant from said refrigeration unit to said heat transfer element; a tip deflection mechanism in said control handle; a pull wire connecting said tip deflection mechanism to said heat transfer element, said tip deflection mechanism being adapted to impart tension to said pull wire to establish curvature of said deflectable segment of said catheter; and a sensor located near said distal end of said catheter. D. 4.14. The RE 049 Patent Non-Technical Description of the RE 049 Patent3 a. The RE 049 Patent is directed to a method and apparatus for the
performance of cryosurgery, such as in cardiac ablation to correct arrhythmias. The RE 049 Patent teaches, among other things, precooling of a primary refrigerant to liquefy the primary refrigerant. The precooling can be accomplished with a secondary refrigeration cycle using a second refrigerant. This approach can maximize the available cooling power of the primary refrigerant, and achieve the lower treatment temperatures. The
3
This non-technical description does not construe the specification or any claim of the RE 049 Patent and is not intended to do so. 13
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appropriate use of a secondary evaporative refrigeration system allows the system to precool and liquefy the primary high pressure refrigerant, before passage of the primary refrigerant through a primary expansion element. This refrigeration approach enables the generation of a sufficiently low temperature, and can maximize the available cooling power at the cold tip of a cryosurgical probe or catheter. This ultimately leads to improved tissue destruction as a physician is able to selectively cool discrete portions of biological tissue to very low temperatures in the performance of cryosurgery, without substantially cooling adjacent tissues of the organ. b. The RE 049 Patent has 3 claims. Claims 1 and 2 are independent claims,
and claim 3 depends from claim 2. At this time, at least claims 2 and 3 are believed to be infringed by the CryoCath Products, or components thereof, that are manufactured by CryoCath in Canada and then imported, offered for sale, sold, and used in the United States. c. Representative claim 2 is directed to a cryosurgical instrument for ablation
of cardiac tissue, comprising: a source of a gaseous primary refrigerant, wherein said primary refrigerant is a single gas and has a critical temperature; a source of a liquid secondary refrigerant, said secondary refrigerant having a critical temperature higher than said critical temperature of said primary refrigerant; a secondary expansion element connected to receive said liquid second refrigerant, said secondary expansion element being constructed to vaporize and expand said secondary refrigerant to a temperature below said critical temperature of said primary refrigerant; a primary-to-secondary heat exchanger having a primary refrigerant flow path connected to receive said gaseous primary refrigerant, and a secondary refrigerant flow path connected to receive said vaporized and expanded secondary refrigerant from said secondary expansion element,
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said heat exchanger being constructed to cool and liquefy said primary refrigerant; a primary expansion element connected to receive said liquid primary refrigerant from said heat exchanger, said primary expansion element being constructed to vaporize and expand said primary refrigerant to a selected cryogenic temperature; and a cryoablation heat transfer element connected to receive said vaporized and expanded primary refrigerant. E. 4.15. Foreign Counterparts of the Respective Asserted Patents The following is a list of current foreign patents and foreign applications that are
presently understood to correspond to the Asserted Patents: · 694 Patent: Australia (AU2001282918B2); Canada (CA 2418893C); Canada 2516656); Canada (CA 2517747C); European Patent (EP1307155); WIPO (PCT WO 2002011638); 610 Patent: Australia (AU 2002323328B2); Canada (CA 2457150A1); European Patent (EP 1418857A4); Japan (JP 2004538083); WIPO (PCT WO 2003015651); and RE 40,049 (reissue of the 355 Patent): Austria (AT 297535); Australia (AU 754357B); Canada (CA 2378054C); Germany (DE60020705T2); European Patent (EP 1192396B1); Spain (ES 2242623T3); Japan (JP20035033123T); and WIPO (PCT WO 2001001049). Attached as Exhibits 18, 19 and 20 are charts listing each foreign patent and
·
·
4.16.
patent application that are presently understood to correspond to each Asserted Patent, and the status thereof. On information and belief, no other foreign patents correspond to the Asserted Patents and no other foreign patent applications corresponding to the Asserted Patents are pending, rejected, or abandoned. V. UNFAIR ACTS CRYOCATH IS INFRINGING THE ASSERTED PATENTS 5.1. On information and belief, Respondent CryoCath has been and still is infringing,
contributing to infringement, and/or inducing infringement of each of the Asserted Patents in the United States. CryoCath's infringing activities in the United States include at least using,
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offering to sell, selling, importing and/or having imported one or more of its CryoCath Products. CryoCath has violated, and continues to violate, U.S. patent laws. CryoCath is not licensed under the Asserted Patents. 5.2. On information and belief, CryoCath manufactures its CryoCath Products in
Canada and imports, or sells for importation, its CryoCath Products into the United States. The CryoCath Products and their intended use include all the elements of at least claims 1, 2, 13 and 14 of the 694 patent, claims 3, 5, 6 and 7 of the 610 Patent, and claims 2 and 3 of the RE 049 Patent. As a result, at least these claims of the Asserted Patents are infringed in violation of Section 337(a)(1)(B)(i). 5.3. On information and belief, CryoCath has received clearance from the United
States Food and Drug Administration (the "FDA") to market its CryoCath Products in the United States. (Ex. 21, 12/06/2007 Webpage printout from the U.S. Food and Drug Administration Website for 7F Freezor Cardiac Cryoablation Catheter and CCT.2 CryoConsole System P20045 at http://www.fda.gov/cdrh/PDF2/P020045.html.) 5.4. CryoCath states in one of its most recent quarterly reports: "Today, the majority
of our revenue is derived in the United States, with a significant portion coming from recurring, single-use product sales." (Ex. 9, CryoCath Technologies, Inc.'s Third Quarter 2007 Report, at 5 (emphasis added).) Attached to this Complaint as Exhibit 22 is a copy of a CryoCath web page accessible via the Internet in the United States identifying CryoCath Products for the U.S. market. (Ex. 22, Webpage, "Ordering Information [in the USA].") 5.5. On information and belief, CryoCath provides training in the use of its CryoCath
Products for customers and potential customers in the United States. By using the CryoCath Products as instructed, CryoCath's customers and potential customers in the United States practice or will practice a method that infringes at least claims 13 and 14 of the 694 Patent.
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5.6.
Among other things, CryoCath maintains an instructional video clip on its website
showing a cryoablation procedure with its CryoCath Products. (Ex. 23, 01/31/2008 Website printout of "Akron Children's Hospital Replay of Pediatric Cardiac Cryoablation" procedure at http://www.or-live.com/akronchildrens/1562/ [CryoCath's website provides links to this Akron website].) On information and belief, CryoCath also created an in-service video for its CryoCath Products at the Cleveland Clinic, 9500 Euclid Avenue, Cleveland, OH 44106 USA. This video is maintained by the Heart Rhythm Society Website. (Ex. 24, 01/31/2008 Website printout of "Virtual Hands-On: CryoCath Technologies Cryoablation" at http://www.hrsonline.org/Education/SelfStudy/VHO/cryocath_technologies_cryoablation.cfm.) 5.7. The CryoCath website also identifies at least six physicians in the United States
who are available as medical advisors for the CryoCath Products "in the U.S.A." These physicians are located at various cites throughout the United States, namely Des Moines, Iowa; Colorado Springs, Colorado; Richmond, Virginia; Hyannis, Massachusetts; Tampa, Florida; and Green Bay, Wisconsin. An email address for each physician is also provided through CryoCath's website. (Ex. 41, 02/27/08 Webpage printout of Cryocath Technologies Inc.'s website of how to "Contact a Medical Advisor" at http://www.cryocath.com/en/2.patients/2.8medical.advisor.asp.) 5.8. As set forth herein, CryoCath's CryoCath Products and their intended uses
include all of the elements of at least claims 1, 2, 13, and 14 of the 694 patent, claims 3, 5, 6 and 7 of the 610 Patent, and claims 2 and 3 of the RE 049 Patent. Pursuant to 19 C.F.R. § 210.12(a)(9)(vii), claim charts applying each of these exemplary claims to CryoCath's CryoCath Products and methods are attached as Exhibit 25 (694 Patent), Exhibit 26 (610 Patent) and Exhibit 27 (RE 049 Patent). In the event that any of the remaining, unasserted claims are
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infringed by CryoCath, a motion will be timely made to add these claims to the scope of the investigation. 5.9. CryoCath's technical, instructional, and promotional literature describes the use
of its CryoCath Products and components thereof by a method that would infringe at least claims 13 and 14 of the 694 Patent. Exhibits 21, 28, and 29 are copies of the FDA Documents for the CryoCath CryoCath Products, CryoCath Operator's Manual, and Notes for Videos located in the Electrophysiological Knowledge Center. The technical, instructional, and promotional literature constitute evidence of active steps taken by CryoCath to induce and enable its customers to practice at least claims 13 and 14 of the 694 Patent. 5.10. CryoCath's CryoCath Products are not staple articles of commerce. CryoCath
specifically designed and markets its CryoCath Products for treating cardiac conditions with cryoablation. The CryoCath Products have no substantial non-infringing uses. VI. IMPORTATION AND SALE 6.1. On information and belief, CryoCath manufactures its CryoCath Products in
Canada and imports the products into the United States, or imports components of the CryoCath Products into the United States and assembles or has others assemble the CryoCath Products in the United States. (See Ex. 9, CryoCath Technologies, Inc.'s Third Quarter 2007 Report, at 46.) For example, CryoCath's product labeling for its CryoCath Xtra catheter, obtained in the United States, indicates that it is "Made in Canada." (Ex. 30, Confidential Declaration of Gregory J. Tibbitts, at ¶ 15.)
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6.2.
Accompanying this Complaint as Confidential Exhibit 30 is the confidential
declaration of Mr. Gregory Tibbitts, CryoCor's Chief Financial Officer, who observed that the CryoCath CryoCath Products and components thereof were displayed and offered for sale at the Boston Atrial Fibrillation Symposium on January 17-19, 2008. (Ex. 30, Confidential Declaration of Gregory J. Tibbitts, at ¶ 14.) 6.3. Attached to this Complaint are CryoCath's PMA and Form 510(k) Summaries as
filed with the FDA (Exhibit 31), which indicate that CryoCath is located in Canada, manufactures its products there, and intends that its products be used in the United States. 6.4. CryoCath states: "our direct sales force, comprised of both sales representative
and clinical specialists, have made great strides in penetrating our key markets. To date, these focal catheters [Freezor, Freezor Xtra and Freezor MAX] have been installed in over 325 centers in both Europe and the United States." (Ex. 32, CryoCath Technologies, Inc.'s 2007 Progress
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Report at 13 (emphasis added).) CryoCath illustrates its activity in the United States at page 14 of its 2007 Annual Report.
6.5.
CryoCath "operates in only one segment which is the sector related to the
development, manufacture and sale of therapeutic cryoablation technologies and products." (Id.) CryoCath identifies the United States as a "destination" of its products and the location of consoles at customers' premises. (Ex. 9, CryoCath Technologies, Inc.'s Third Quarter 2007 Report at 46.)
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6.6.
On information and belief, the accused CryoCath Products may be classified
under at least the following Harmonized Tariff Schedule of the United States ("HTS") item numbers: 9018.39.00 and 9032.89.60. These HTS numbers are intended for illustration only and are not intended to be restrictive in scope of the products accused in this investigation. VII. LICENSES 7.1. On about August 31, 2000, Cryogen granted an exclusive, worldwide license to
the 694 Patent, the 610 Patent, and the applications that led to the RE 049 Patent to CryoCor in certain fields of use. On about December 30, 2002, AMS Holdings acquired Cryogen by merger. (Ex. 6, American Medical Systems Holdings, Inc.'s Third Quarter 2003 10-Q.) AMS Research now has all right, title and interest in certain patents and applications, including the Asserted Patents at issue in this investigation. AMS Research stands as the licensor of the exclusive, worldwide field of use license to CryoCor. 7.2. On June 28, 2007, CryoCor entered into a Development and License Agreement
with Boston Scientific Corporation and Boston Scientific Scimed, Inc. (collectively "Boston") that provided Boston with, among other things, a sublicense to patents licensed (with a right to sublicense) by CryoCor, which include at least the RE 049 Patent. (Ex. 17, 06/28/2007 License Agreement.) 7.3. Pursuant to 19 C.F.R. § 210.12(c), copies of all license agreements accompany
this Complaint as Exhibits 7 and 17. 7.4. Except for the licenses described above, neither CryoCor nor any of its licensors
or predecessors has licensed the 694 Patent, the 610 Patent, or the RE 049 Patent to anyone within the field of use granted to CryoCor.
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VIII. DOMESTIC INDUSTRY 8.1. As required by 19 U.S.C. § 1337(a)(2), a domestic industry, as defined by 19
U.S.C. § 1337(a)(3), exists in the United States with respect to the Asserted Patents. CryoCor manufactures cryosurgical systems that practice at least one claim of each Asserted Patent, for which there has been a significant investment in plant and equipment, significant employment of labor or capital, and/or substantial investment in the exploitation of the Asserted Patents. 8.2. Claim charts illustrating that exemplary claim 13 of the 694 Patent, claim 5 of the
610 Patent, and claim 2 of the RE 049 Patent read on the CryoCor products, or method of using those products, accompany this Complaint as Exhibits 33, 34, and 35, respectively. Other products manufactured and sold by Complainants in the United States may also be covered by the Asserted Patents. 8.3. There is and has been significant investment in inventory materials and equipment
in the United States with respect to the Asserted Patents. (Ex. 30, Confidential Declaration of Gregory J. Tibbitts, at ¶¶ 9-10.) Attached to this Complaint as Confidential Exhibit 30 is information about such investment in the inventory materials and equipment. 8.4. There is and has been significant employment of labor or capital in the United
States with respect to the Asserted Patents. (Id. at ¶¶ 8, 11-15.) Accompanying this Complaint as Confidential Exhibit 30 is information about employment of labor and capital in connection with CryoCor's products that are within the scope of the Asserted Patents. 8.5. CryoCor has about 56 employees involved with the patented subject matter,
which includes five engineering and technical employees working in research and development activities for our cryoablation console, five engineering and technical employees working in research and development activities for our cryoablation catheter, four non-technical employees
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working in manufacturing of our cryoablation console, and five non-technical employees working in manufacturing of our cryoablation catheters. (Id. at ¶ 8.) 8.6. There is and has been substantial investment in the exploitation with respect to the
Asserted Patents. (Id. at ¶¶ 11-13.) Accompanying this Complaint as Confidential Exhibit 30 is detailed information about the substantial investment in exploitation in connection with CryoCor's products that are within the scope of the Asserted Patents. 8.7. CryoCor licensed the Asserted Patents from Cryogen for substantial
consideration. (Ex. 7, Confidential 08/31/2000 License Agreement.) AMS paid $36.2 million plus $4.7 million of acquisition-related costs to acquire Cryogen and gain access to Cryogen's products and technology. (Ex. 6, American Medical Systems Holdings, Inc.'s Third Quarter 2003 10-Q.) In addition to the initial consideration, AMS Holdings also agreed to make an additional payment of up to $110 million, depending on product sales. (Id.) 8.8. Additionally, CryoCor has incurred significant expenses to obtain market
approval from the United States Food and Drug Administration. (Ex. 30, Confidential Declaration of Gregory J. Tibbitts, at ¶ 13.) In August 2007, CryoCor received approval for the treatment of AFL with the CryoCor Cardiac Cryoablation System. (Ex. 36, 08/01/2007 U.S. Department of Health and Human Services letter to CryoCor, Inc., P050024 - CryoCor Cryoablation System.) 8.9. CryoCor is and has been incurring expenses in connection with the marketing and
selling of CryoCor's products covered by the Asserted Patents in the United States, where CryoCor has received FDA approval. (Ex. 4, CryoCor, Inc.'s Third Quarter 2007 10-Q.) CryoCor is in the process of building its sales and marketing capabilities, and has recently hired a Vice President of Sales and Marketing, who will be leading these efforts. (Id.)
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IX.
RELATED LITIGATION 9.1. CryoCor, AMS Research Corporation and CryoCath are parties to a patent
infringement action, CryoCor, Inc., et al. v. CryoCath Technologies, Inc., Civil Action, No. 080031-GMS, in the United States District Court for the District of Delaware. This case was filed on January 16, 2008, and presently involves the 610 Patent and the 694 Patent. The parties have stipulated to add the RE 049 Patent. The 02/27/2008 status of the case is summarized in the Docket Report available on the District Court's Electronic Case Filing (ECF) System, attached as Exhibit 37. 9.2. CryoCath and CryoCor are parties to a separately captioned patent infringement
action, CryoCath Technologies, Inc. v. CryoCor, Inc., Civil Action No. 07-631-GMS, in the United States District Court for the District of Delaware. This case was filed on October 17, 2007, and involves patents owned by CryoCath. The 02/27/2008 status of the case is summarized in the Docket Report available on the District Court's Electronic Case Filing (ECF) System, attached as Exhibit 38. 9.3. In Canada, CryoCor, AMS Research Corporation and CryoCath are parties to a
patent infringement action, CryoCor, Inc., et al. v. CryoCath Technologies, Inc., Civil Action, No. T-66-08, in Federal Court. This case was filed on January 15, 2008, by CryoCor and AMS Research Corp. and presently involves Canadian Patent Nos. 2,378,054, 2,516,656, and 2,517,747, one or more of which is related to the Asserted Patents. Pursuant to an agreement between the parties, the Defendant on February 22, 2008 served the Plaintiffs with a demand for particulars. The Plaintiffs are to provide a response by no later than March 7, 2008, following which the Defendant is to file its Defence, or any motion for particulars or other relief with respect to the Statement of Claim, by no later than March 21, 2008.
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9.4.
On information and belief, other than the litigation described above, there has
been no foreign or domestic court or agency litigation involving the 694 Patent, the 610 Patent, or the RE 049 Patent. X. REQUESTED RELIEF By reason of the foregoing, Complainants request that the Commission: 10.1. Institute an immediate investigation pursuant to Section 337 of the Tariff Act of
1930, as amended, 19 U.S.C. § 1337, into the unlawful importation into the United States, the sale for importation into the United States, and/or the use, sale or offer for sale within the United States after importation of certain CryoCath catheters, consoles, and other apparatus for cryosurgery and components thereof, that directly infringe or induce or contribute to the infringement of one or more claims of the Asserted Patents; 10.2. 10.3. Determine that there has been a violation of Section 337 of the Tariff Act of 1930; Issue a permanent exclusion order pursuant to Section 337(d) of the Tariff Act of
1930, as amended, excluding the entry into the United States of all of CryoCath's CryoCath Products and components thereof that directly infringe or induce or contribute to the infringement of one or more claims of the Asserted Patents and that are manufactured, imported, or sold by or on behalf of CryoCath, its affiliates, subsidiaries, successors, or assigns; 10.4. Issue a permanent cease and desist order pursuant to Section 337(j) of the Tariff
Act of 1930, as amended, prohibiting CryoCath, its affiliates, subsidiaries, successors, and assigns from marketing, demonstrating, distributing, offering for sale, selling, supporting, or transferring (including the movement or shipment of inventory in the United States) any of CryoCath's CryoCath Products and components thereof that directly infringe or induce or contribute to the infringement of one or more claims of the Asserted Patents; and
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just and proper, 10.5. Issuesuchadditional and furtherrelief as the Commission deems based the factsdetermined the investigation within the Commission's on by and authority. Respectfullysubmitted,
Date: Februarv .2008 27 LelandG. Hansen Wil Rao McANnREws,Hnln & MnlloY, LrD. 500 West MadisonStreet, 34'hFloor Chicago,Illinois 60661 (312)77s-8000 (312)775-8100 facsimile Email: [email protected] Email: wrao@mcandrews-ip. com Attorneys for AMS ResearchCorp. Kevin O'Brien Kevin Sullivan Bnrnn & McKENZTE LLP 8l 5 Connecticut Avenue,NW Washington,DC 20006-407 8 (202) 4s2-t 000 (202) 452-7074- facsimile Email: kevin. o' brien@bakernet. m. com HowardN. Wisnia James Conley P. B.q,xnn McKENZTELLP & 12544High Bluff Drive, Third Floor SanDiego,California92130-305 I
(8s8)s23-6200
(858) 259-8290 facsimile Email: howard. n.wisnia@bakernet. com Attorneys for CryoCor, Inc.
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EXHIBIT B
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June 30, 2007
Q3
third quarter report
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Letter to Shareholders
Dear Shareholders, The third quarter of 2007 was one of solid revenue growth while we also made further progress in several key strategic areas. We achieved record sales, driven by a marked uptake in growth of our core EP business. This EP growth is composed of ongoing solid growth in our core focal cryoablation business compounded by the rapid increase in the number of Arctic Front® Atrial Fibrillation (AFib) ablations in Europe. Last but not least, we successfully completed the sale of our surgical portfolio to ATS Medical, providing a financial runway to the US commercial launch of Arctic Front while creating the required focus on this blockbuster opportunity. I would like to begin by summarizing a few points on the sale of the surgical portfolio to ATS. The EP ablation market in general and the AFib market in particular, is a very large opportunity for CryoCath. We estimate the potential AFib market size to be at least $2 billion once fully addressed. Our strategy is to create a relentless focus around pursuing this opportunity and become a high growth, pure play and profitable EP company, focused on AFib. The sale of the surgical portfolio generated an initial payment of US$22 million. In addition, we will receive US$2 million upon transfer of the manufacturing activity to ATS which is expected within the next twelve months, a fixed payment of US$2 million in June 2009 as well as revenue based performance payments of up to US$4 million between 2009 and 2010. We are excited that, with this strategic transaction, we create the required focus to successfully achieve our corporate goal, have sufficient financial resources to take us into the US launch of Arctic Front and increase shareholder value. Moving to the financial results, Q3 2007 closed with record revenue of C$11.7 million or 20.5% growth versus previous year. With sales of C$8.3 million, our core EP business showed rapidly accelerating growth of 37.8% versus last year. Growth drivers are the ever increasing installed base of cryoablation consoles in the US and Europe and the expanding use of Arctic Front in Europe. The number of active Arctic Front user sites in Europe grew from approximately 6 at the end of Q2 to 20 by the end of Q3. Gross profit in Q3 2007 improved to 58.0% as compared to 50.5% in Q3 of 2006 as a result of volume growth, ongoing improvements in manufacturing and the absence of one time items that negatively impacted the quarter last year. We believe that our year-to-date gross profit of 60.7% is a more accurate reflection of the better performance of our manufacturing operation. The function of our supply chain continues to improve and our customer service levels are now consistently at healthy levels. We are comfortable that through a number of planned improvements and general volume uptake we can continue to steadily increase our gross margins to over 70% once Arctic Front is released in the US. We have also made progress in our landmark STOP AF IDE trial. At the time of this letter, we have 15 sites operational in the US plus 2 in Canada, and we have enrolled nearly 100 patients. Reactivating all investigational sites following the March/April shutdown as well as processing all paperwork for new sites took more time than originally anticipated. Obtaining US approval for Arctic Front is one of our two key business objectives. The pace of enrolment will pick up due to the larger number of enrolling sites. We are driving further enrolment acceleration through intensified communication and site support, addressing insurance coverage issues and opening more sites. We maintain our target of completing enrollment at the end of this calendar year. Our clinical outcomes in the use of Arctic Front for Paroxysmal AFib patients continue to be solid. In reports from large series of patients treated commercially over multiple centers in Europe, we see positive outcomes of up to 85%. Based on these strong results we continue to be upbeat about our second business objective which is driving rapid and profitable growth of Arctic Front in Europe. With supply constraints now eliminated, we have embarked on expanding the number of sites utilizing Arctic Front as well as increasing usage in existing sites. We have initiated our Professional Education program, the "Arctic Front Masters Program", and have entered a measured expansion phase of our European clinical and commercial support team. We are pleased to be able to report robust sales growth for our AFib business in Europe.
2
Case 1:08-cv-00031-GMS
Document 12-2
Filed 03/11/2008
Page 39 of 152
The future for CryoCath and our focused EP/AFib business is showing greater promise than ever before. We continue to strengthen our global leadership position by establishing cryoablation at an ever increasing number of sites. Over the past 12 months we have installed approximately 100 cryoconsoles and we foresee an ongoing expansion of our user base. Over the next 3 years, we anticipate having in excess of 150 productive Arctic Front sites in Europe. Driven by stronger revenue growth, increasing gross margins and diligent management of expenses, we believe we can significantly reduce cash burn over the medium term. Following our US launch expec
Free Opening Brief in Support - District Court of Delaware - Delaware
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