Spectranetics (SPNC) explicitly states its royalty payments to SRDX in its 10-K’s. SPNC uses SRDX’s lubricious coating on its catheters. In the 10-K that came out today, SPNC said that they paid SRDX approximately $600,000 in royalties during FY2007. This compares to $372,000 paid in FY2006. Thus, there was a 61% increase in royalties to SRDX in FY2007.
SPNC has been growing revenues at about a 30% rate for the past few years, and will probably continue this growth in the top line. Much of this growth comes from the increased use of their disposable catheters. Their bottom line has not grown at the same rate (see #msg-26985048), but this is not a major concern to SRDX, since it is the top line that counts with respect to royalties.
During FY2007 SRDX’s revenue in the Hydrophilic and Other segment was about $26.5M after growing at a 19% from FY2006. Thus, SPNC’s contribution represents about 2% of the total; however, it’s 60% growth rate will make it a larger percentage contributor as time goes by.
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