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NxStage Announces Strategic Business
Alliance with Asahi Kasei Kuraray Medical
• Alliance Establishes Partnership with Leading Renal Products
Company in Asia
• Collaboration Expected to Yield Gross Margin Improvement and
Accelerate Path to Profitability
• Financing Provided in Connection with Alliance Significantly
Improves Balance Sheet and Cash Flow
LAWRENCE, Mass., May 18 , 2009-NxStage Medical, Inc. (Nasdaq:
NXTM), a leading manufacturer of innovative dialysis products,
today announced its plans to form a strategic business alliance
with Asahi Kasei Kuraray Medical, ("Asahi"), a leading medical
supply company headquartered in Japan. The signed agreements
between the partners are multi-faceted, but most importantly
leverage NxStage's production expertise in its existing dialyzer
manufacturing facility in Germany and Asahi's high performance
polysulfone hollow-fiber membranes. In addition, Asahi will
provide NxStage with $40 million of debt financing to pay off
its entire debt obligation owed under its GE credit facility.
The alliance combines the complementary strengths of the two
partners in innovative and competitive technology, product
development, and market presence. This transaction is expected
to enable both companies to accelerate their global growth
strategy through mutual synergy.
Elements of the Alliance:
Dialyzer Assembly
NxStage will assemble and label its dialyzers for Asahi under
the Asahi name brand at NxStage's facilities in Germany. Asahi
will sell the dialyzers exclusively in Asia and non-exclusively
in rest of world; however, NxStage is retaining all its rights
in North America. When Asahi desires additional capacity from
NxStage, Asahi shall fund the construction of a new facility to
provide both parties with additional dialyzer production
capacity. The new facility would be owned by Asahi and operated
by NxStage. By collaborating in dialyzer assembly, both parties
expect to realize cost savings.
Licensing
NxStage will grant Asahi a royalty-free license to its
production technology to make and sell NxStage's current
dialyzer design exclusively in Asia and non-exclusively in rest
of world; however, NxStage is retaining all its rights in North
America. NxStage will also license certain rights for Streamline
blood tubing set technology to Asahi under similar conditions.
Any improvements obtained through the combination of the
dialyzer manufacturing or bloodline technologies of the two
companies are to be mutually cross-licensed on similar terms.
Hollow-Fiber Membrane Supply
Asahi will supply its high performance polysulfone hollow-fiber
membrane to NxStage for NxStage branded products in North
America. Consistent with our obligations, NxStage will continue
to purchase fiber from its current supplier for NxStage System
One filters.
Financial Backing
Asahi will provide NxStage with $40 million of debt financing on
competitive terms, including an 8% interest rate (NxStage's
current rate under the GE facility is 11%), with 50% of the
interest deferred to maturity. The four year loan includes no
financial covenants and the debt may be prepaid by NxStage
without penalty at anytime. However, if the loan goes to
maturity, Asahi will have the option, subject to certain
limitations, to be repaid in shares of NxStage common stock. The
debt includes a balloon principal repayment and will be secured
by NxStage assets other than cash, accounts receivables,
inventory or field equipment. The debt agreement also provides
NxStage the ability to borrow up to $40 million from other
lenders. Part of the proceeds will be used to pay off NxStage's
$28 million owed under its GE credit facility plus prepayment
and other transaction fees. Remaining proceeds will be used for
operating purposes.
Other Collaboration
Joint business development will be pursued in areas as mutually
agreed upon between the two companies. Possible areas include
the development of therapeutic apheresis systems using NxStage's
technology, collaboration on raw materials sourcing, and
possible joint hemodialysis systems development programs.
NxStage also granted Asahi a right of first negotiation for
exclusive distribution rights of the NxStage System One in Asia.
"Our relationship with one of the largest renal product
companies in Asia is an important step for NxStage as we extend
our commercial operations globally," stated Jeffrey H. Burbank,
Chief Executive Officer of NxStage Medical. "I believe this
transaction will accelerate our path to profitability. We are
enthusiastic that this relationship with Asahi will deliver
significant value to our shareholders, strengthen our balance
sheet, and create growth opportunities in 2010 and beyond."
"NxStage has proven its ability to produce high-performing,
low-cost dialyzers in the competitive renal products market,"
stated Yasuyuki Yoshida, Chief Executive Officer and President
of Asahi Kasei Kuraray Medical. "We are aligning ourselves with
a diversified leader in US renal care with superb products and
an impressive track record. We believe this alliance leverages
Asahi Kasei Kuraray Medical's leadership position, providing us
a strong and growing partner for our world class fiber
technology." The agreements with Asahi are conditioned upon
NxStage obtaining a payoff letter and associated documentation
from the lenders under its GE credit facility.
Conference Call and Webcast Information
NxStage management will hold a conference call to discuss this
new alliance today, Monday, May 18, 2009 at 5:00 p.m. Eastern
Time. To listen to the conference call, please dial 800-901-5259
(domestic) or 617-786-4514 (international). The passcode is
54617836. The call will also be webcast LIVE and can be accessed
via the investor relations section of NxStage's website at
www.nxstage.com/ir.cfm.
A replay of the conference call will be available 3 hours after
the start of the call through June 1, 2009. To access the replay
dial 888-286-8010 (domestic) or 617-801-6888 (international) and
enter passcode 31022930. An online archive of the conference
call can be accessed via the investor relations section of
NxStage's website at
www.nxstage.com/ir.cfm.
About Asahi Kasei Kuraray Medical
Asahi Kasei Kuraray Medical is dedicated to the advancement of
world-leading technology in the fields of hemodialysis,
therapeutic apheresis, transfusion therapy, and virus removal
for biotherapeutic products. Asahi Kasei Kuraray Medical works
to introduce innovative therapies for intractable diseases by
extending the frontiers of medical devices and system, combining
its core technology in functional materials for membrane
filtration and selective adsorption with advanced pharmacology,
chemistry, and mechanical engineering. The group is structured
with Asahi Kasei Corporation as a holding company, and core
operating companies as wholly owned subsidiaries to perform
business in each of the separate industry fields. Asahi Kasei
Kuraray Medical and Asahi Kasei Medical are the core operating
companies for medical and biotech device operations.
About NxStage Medical
NxStage Medical, Inc. (Nasdaq: NXTM) is a medical device
company, headquartered in Lawrence, Massachusetts, USA, that
develops, manufactures and markets innovative products for the
treatment of End Stage Renal Disease (ESRD) and acute kidney
failure. To see how NxStage is changing renal care for patients
click here.
Forward-Looking Statements
This release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements contained in this release that are not clearly
historical in nature are forward-looking, and the words
"anticipate," "believe," "expect," "estimate," "plan," and
similar expressions are generally intended to identify
forward-looking statements. Examples of these forward-looking
statements include statements as to the anticipated acceleration
of profitability, improvements in gross margins, improvements in
balance sheet, improvements in cash flow, anticipated growth
opportunities, and other expected benefits of the Asahi
strategic alliance as well as the anticipated closing of this
alliance. All forward-looking statements involve risks,
uncertainties and contingencies, many of which are beyond
NxStage's control, which may cause actual results, performance,
or achievements to differ materially from anticipated results,
performance or achievements, including market acceptance and
demand for NxStage's dialyzers and ability to achieve cost
reductions and other anticipated benefits of the alliance, and
certain other factors that may affect future operating results
and which are detailed in NxStage's filings with the Securities
and Exchange Commission, including the Quarterly Report on Form
10-Q for the quarter ended March 31, 2009. In addition, the
statements in this press release represent NxStage's
expectations and beliefs as of the date of this press release.
NxStage anticipates that subsequent events and developments may
cause these expectations and beliefs to change. However, while
NxStage may elect to update these forward-looking statements at
some point in the future, it specifically disclaims any
obligation to do so, whether as a result of new information,
future events, or otherwise. These forward-looking statements
should not be relied upon as representing NxStage's expectations
or beliefs as of any date subsequent to the date of this press
release.
Contacts
Kristen K. Sheppard, Esq.
VP, Investor Relations
ksheppard @nxstage.com
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