Wright Medical Group Inc
) moved higher despite the termination of the contract with
Novartis Vaccines and Diagnostics
) announced on Dec 27. The agreement, amended and restated will
be terminated effective Dec1, 2015. Shares of the company reached
new high of $30.95 in mid-day trading on Jan 2, finally closing
The termination is believed to have no immediate financial
impact, as the contract will continue till Dec1, 2015. Moreover,
the recently concluded acquisition of French orthopedic
extremities company Biotech International also contributed to the
rise in the share price.
Wright Medical confirmed the receipt of a written notice from
Novartis confirming termination of the deal.
Per the agreement, BioMimetic had been purchasing its entire
requirement of purified bulk recombinant human platelet-derived
growth factor from Novartis, which is a component of the Augment
Though the contract stands terminated, BioMimetic will continue
to receive supply against its requirement of rhPDGF-BB until the
termination date. Following the termination of the agreement,
BioMimetic can also seek the help of Novartis to locate a new
supplier. Novartis has even agreed to support technology transfer
by providing to a new manufacturer all its technology along with
the necessary documentation needed to produce bulk rhPDGF-BB.
Wright Medical has started the process of identification and
evaluation to get a new supplier for the product. It has also
assured that its existing inventory combined with the final
purchases from Novartis, will keep its rhPDGF-inventory well
stocked until a new vendor is found.
Novartis is believed to have terminated the contract to focus
more on diagnostics, and give less priority to vaccines research
and development. Recently, it reduced work force in vaccines
research, global legal, information technology, human resources,
finance and procurement.
Currently, the stock carries a Zacks Rank #4 (Sell). Investors
interested in the industry can look into stocks like
Cardiovascular Systems Inc.
Hill-Rom Holdings, Inc.
), each carrying a Zack Rank #2 (Buy).
CARDIOVASCLR SY (CSII): Free Stock Analysis
HILL-ROM HLDGS (HRC): Free Stock Analysis
NOVARTIS AG-ADR (NVS): Free Stock Analysis
WRIGHT MEDICAL (WMGI): Free Stock Analysis
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