St. Jude buries the hatchet with Durata supplier

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St. Jude settled a legal spat with AorTech, which provides insulation for Durata leads--courtesy of St. Jude

The past few months have been none too kind for St. Jude Medical ($STJ), but Christmas is a little merrier now that it has settled its legal squabble with AorTech, the company that makes Durata's much-hyped insulation.

Back in October, AorTech threatened to pull out of its agreement to supply Optim polymer insulation, the secret sauce St. Jude says is the major difference between Durata and the since-recalled Riata leads. St. Jude scored an injunction in November that prevented AorTech from bailing, but that's all water under the bridge now.

Under the new agreement, St. Jude will fork over a total of $3.9 million through March to retain exclusive rights to the insulation, and neither company is admitting any liability in the previous dustup.

The AorTech issue was one of many alarming developments for the Minnesota devicemaker this winter, and while settling it up means one less problem, the skies have hardly cleared for Durata. Most recently, a Medtronic-sponsored study found that Optim may not be all it's cracked up to be, saying the polymer could break up in the body within 6 years. St. Jude is defending itself vehemently, taking issue with the study's science and touting a 5-year survival rate of 98.7% for the leads.

Before that, St. Jude endured an FDA scolding over its manufacturing plant in California, but the devicemaker didn't initially disclose that the facility makes Durata leads, leaving shareholders feeling duped and calling their attorneys. Now St. Jude faces escalating shareholder lawsuits claiming it willfully withheld information from investors. To top it all off, some analysts are predicting Durata will get yanked off the market in the next year.

Now it's up to the devicemaker to prove everyone wrong with good data and good news, and quashing the AorTech suit is a step in the right direction.

- read the statement

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