AGM_QT4.15@ AGM: (L-R) Hoon Ching Sing (independent director), Dr Eitan Konstantino (CEO), Mark Allen Wan (non-executive chairman).
Photo: Company
In its IPO Offer Document, QT Vascular had stated that a specialty balloon angioplasty company, AngioScore, had, on 29th June 2012, initiated patent infringement proceedings against its subsidiaries and its CEO, Dr Eitan Konstantino, in the federal trial court of the Northern District of California, USA (the “Patent Claim”). On 29th April 2015, QT Vascular issued an update on the litigation including the Patent Claim and the state law claims.

The announcement stated that the Patent Claim is currently scheduled for trial in September 2015. AngioScore’s claim is that QT Vascular’s Chocolate PTA infringes the ‘119 Patent, a patent that claims a very specific design for an angioplasty balloon catheter and a non-deployable stent. (Reference: Offer Document, pages 217-218). 

agm_logoTime & date:
12 pm, 30 April 2015. 
3A International Business Park, #09-10/11/12 ICON @ IBP Tower B.

The following content is extracted from QT Vascular's post on the SGX website

For good corporate governance and disclosure practices, Dr Eitan Konstantino, CEO, led the question-&-answer session together with the Board and the CFO during the AGM held on 30th April 2015, to its shareholders present. 

Question 1: “What is the cost incurred to-date on the litigation (with AngioScore Inc.) (“Litigation”) and how much more will be incurred?”

Answer: The majority of legal costs are generally incurred for gathering of evidence and conducting depositions, both of which have been incurred and recorded in the financial year ended 31 December 2014 and the first quarter ended 31 March 2015.

Going forward, there will be further costs incurred but we believe they will be less than those incurred in 2014 and the first quarter of 2015.

Question 2: “Reference was made to Note 27 - Contingencies of the 2014 Annual Report where “the Board of Directors believes that there is no merit to AngioScore Inc.’s (“AngioScore”) claim(s), and it is unlikely that the claim(s) will prevail”. The announcement dated 29th April 2015 on Update to Litigation states that “There is no assurance that the Claims will not … adversely affect(ing) the Company’s business”.

"Why the different views? Can the group lose its patents?”

Answer: Following the announcement on 29th April 2015, the market was concerned about the new date set by the court for the patent trial and the group’s ability to continue and practice its patents.

Dr Eitan, CEO reaffirms that the Board’s position on the information regarding the patent claim as stated in the Offer Document dated 16th April 2014 still remains valid.

The following developments have increased the Board’s confidence in its patent position: On 25th June 2014, the Court issued an “Order Construing Claims in Dispute; Granting in Part and Denying in Part Defendants’ Motion for Summary Judgment of Non-Infringement”. The summary judgment is in favour of the Company’s subsidiaries, TriReme Medical, LLC and Quattro Vascular Pte. Ltd. and the Company's CEO, Dr Eitan Konstantino (collectively, the “Defendants”) on the following grounds:

(a) The court determined that Chocolate PTA does not literally infringe the ‘119 Patent; and

(b) The court narrowed AngioScore’s ability to rely on the doctrine of equivalents to show an infringement.

On 31st October 2014, AngioScore moved the Court for leave to amend its infringement contentions. In its motion, AngioScore sought to amend its theories of infringement and add the Chocolate PTCA to the case. On 6th January 2015, the Court denied AngioScore’s motion.

For the following reasons, the Board continues to believe, as stated in the Offer Document, that the patent claim will not have a material effect on the financial position or profitability of the Company:

(a) By virtue of the 25th June 2014 Order, the Defendants have obtained partial summary judgment that the Chocolate PTA does not satisfy one limitation of the claims of the ‘119 Patent literally and AngioScore is barred from showing that two other limitations are satisfied under the doctrine of equivalents;

(b) the Chocolate PTA does not practice at least two (2) distinct limitations of the ‘119 Patent;

(c) the Defendants will have the opportunity to demonstrate that the claims of the ‘119 Patent are invalid; and

(d) even in the unlikely event that AngioScore were to prevail on its claim at trial, the probability that AngioScore could obtain a permanent injunction against the Chocolate PTA is minimal because AngioScore does not practice the ‘119 Patent.

As such, the Company continues to believe that its worst case liability would involve payment of a reasonable royalty on such products made, used or sold in the USA which is not expected to have a material effect on the financial position and profitability of the Group. Furthermore, we have designed a version of Chocolate PTA which we believe will materially reduce the risks related to the patent claim by AngioScore on Chocolate PTA if needed. QT Vascular wishes to further clarify that the patent claim by AngioScore on Chocolate PTA does not implicate the intellectual property, including patent applications, of the Company’s subsidiaries, and the Company’s subsidiaries are not at risk of losing their intellectual property, including patent applications, as a consequence of the patent claim by AngioScore on Chocolate PTA. The Company will continue to update shareholders of the Company as and when there are any material updates to the aforementioned litigation.

Question 3: “Is there any bearing on the Court’s view with two inventors instead of one inventor?”

Answer: The US Patent Law determines that each co-inventor of a patent has full ownership to the entire invention. Chocolate was invented by two inventors (Eitan Konstantino and Tanhum Feld) and each of the two inventors has full (100%) ownership over the invention. In our case, both the inventors have assigned their rights over to the Group. As such, the Group owns the rights.

Question 4: “What is the Board’s outlook on the Company’s profitability for the next two years?”

Answer: It is not the Company’s practice to provide forecast to the market. In the next two years, the Company will continue to increase sales and focus on the development of the Chocolate Touch drug-coated balloon. The Board believes those investments will serve the Company and its shareholders well. The Board had provided some non-financial guidance on the Company’s milestones to the market through SGXNET announcements early this year.

Question 5: “Is the Company’s cash resources sufficient for the Company to last the next two years?”

Answer: The Board has reasons to believe that it has sufficient cash with access to capital to continue to operate and keep the Company moving forward.

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