Provides access for dialysis patients; complementary to HeRO® Graft

ATLANTA. -- CryoLife, Inc., a leading medical device and tissue processing company focused on cardiac and vascular surgery, announced today that it has acquired the exclusive worldwide distribution rights for the ProCol Vascular Bioprosthesis ("ProCol") from Hancock Jaffe Laboratories, Inc.  In addition, beginning 24 months after execution of the agreement, CryoLife has the right to acquire the ProCol product line from Hancock Jaffe.

ProCol, which is approved for sale in the United States, is a natural biological graft derived from a bovine mesenteric vein that provides vascular access for end-stage renal disease ("ESRD") hemodialysis patients.  It is intended for the creation of a bridge graft for vascular access subsequent to at least one previously failed prosthetic access graft.  ProCol is complementary to CryoLife's HeRO Graft (Hemodialysis Reliable Outflow), which also serves patients with ESRD. ProCol provides vascular access for earlier-stage ESRD patients, while HeRO Graft is designed for patients with limited access options and central venous obstruction.

Key Aspects of Transaction

• CryoLife will reimburse Hancock Jaffe for up to $2.3 million of its ProCol production costs over the next four quarters, beginning with the second quarter of 2014, with no more than $650,000 payable in any quarter.
• In exchange for these payments, CryoLife will receive exclusive worldwide distribution rights for ProCol for up to five years (a three-year term with two one-year renewal terms at CryoLife's option), a purchase option on the ProCol product line, first right of refusal on certain other applications of the ProCol technology, and approximately 4,000 units of ProCol inventory.  The 4,000 units are comprised of approximately 200 units of existing commercially saleable ProCol inventory, which will be transferred to CryoLife immediately, while the remaining units of inventory will be transferred when Hancock Jaffe receives FDA approval of the PMA Supplement associated with its new manufacturing facilities.
• Profits from CryoLife's sales of ProCol after the initial approximately 4,000 units will be shared equally by the parties, after taking into account the transfer price paid to Hancock Jaffe and a distribution fee earned by CryoLife.
• After 24 months, CryoLife has the option, during the term of the distribution agreement, to acquire the ProCol product line.
  Steven G. Anderson, chairman, president, and CEO of CryoLife, said, "The ProCol Vascular Bioprosthesis is an excellent product for vascular access, with a small but loyal base of existing customers.  We believe it has significant potential to gain market share when sold through our established commercial organization, which includes 36 sales representatives selling into the cardiovascular and vascular access markets.  In addition, ProCol is complementary to the HeRO Graft, and many of its existing customers are also HeRO Graft users.  We look forward to working with Hancock Jaffe, and we are eager to launch ProCol through our team in the second half of 2014."

Norman Jaffe, co-founder of Hancock Jaffe Laboratories, said, "We are excited to enter a distribution agreement with CryoLife.  We expect both companies to benefit from the reintroduction of ProCol through CryoLife's established sales and marketing organization, which has a significant presence in the cardiovascular and vascular access markets.  The ProCol vascular bioprosthesis has been shown to provide patients with ESRD with a viable access option.  In U.S. clinical studies ProCol demonstrated improved patency compared with ePTFE grafts.  We believe CryoLife is in a strong position to drive utilization of ProCol with its existing customers as well as to expand awareness with new customers through its commercial presence and physician education events, such as their Central Venous Pathology Summit."

Marc H. Glickman, MD, FACS, chief of vascular surgery, Sentara Healthcare, said, "There is an increasing demand for vascular access options to address the growing number of end-stage renal disease hemodialysis patients.  The ProCol Vascular Bioprosthesis is an excellent option for these patients, and clinical data shows that it provides excellent patency when patients are faced with repeated failures of other grafts.  In addition, ProCol is flexible and easy to suture, making it easy to implant in difficult cases, and it can be used in a variety of configurations and access sites."

Source: CryoLife, Inc.