Following a two-month battle, an Atlanta biomedical tech company has abandoned its unsolicited bid to buy Medafor Inc., a Brooklyn Center-based firm that markets a unique blood-clotting powder. But it's unclear whether the bitter brouhaha is truly over.
CryoLife Inc., now Medafor's largest shareholder and distributor, said Wednesday afternoon that it has withdrawn its $2-a-share proposal for Medafor. But CryoLife CEO Steven Anderson said in a statement that he "will pursue all actions necessary to preserve the value of our investment." CryoLife could still call a special meeting of Medafor shareholders or file a lawsuit to further plead its case.
"We continue to believe that Medafor is mismanaged and in poor financial condition," Anderson said, noting Medafor "holds only $1 million in cash" on its balance sheet.
Privately held Medafor's cash position is "wholly insufficient to sustain the company's growth and defend its intellectual property."
CryoLife also called into question Medafor's recent technology and supplier agreement with a Swedish firm called Magle Life Sciences "which seemingly gives away almost 8 percent of Medafor in addition to an undisclosed amount of much-needed cash."
On Tuesday, Medafor released a copy of a letter CEO Gary Shope sent to shareholders disputing CryoLife's characterization that it is in financial distress. Last year, the company's financial performance showed "continued revenue growth, a significant increase in operating profitability and steady positive cash generation," he said.
Total revenue was $13.8 million in 2009, a 40 percent increase over 2008, according to unaudited results. Medafor said sales were strong globally, with the only decline in net revenue coming from markets serviced by CryoLife.
Medafor said its cash-based operating profit was $2.4 million in 2009, a 350 percent increase over the previous year, but that figure was compromised by $1.2 million in legal expenses deployed to defend itself against a CryoLife lawsuit.
The status of the distribution agreement -- where CryoLife sells Medafor's product in certain areas and markets globally -- is unclear. Medafor said it terminated the agreement earlier this month because CryoLife breached the terms. But CryoLife said in a statement Wednesday it is evaluating its options regarding the agreement.
"If Medafor were to terminate the agreement on illegitimate grounds, CryoLife could have a new legal claim against it for millions of dollars," the company said.
Janet Moore • 612-673-7752