Volcano Corp. (VOLC:US), a maker of diagnostic equipment to test for clogged arteries, surged the most in almost a year after a jury sided with the company in a patent litigation case brought by St. Jude Medical Inc. (STJ:US)
Volcano rose 7 percent to $28.74 at the close in New York, its biggest one-day increase since Nov. 30. The jury ruled in favor of Volcano with respect to four patents, the San Diego- based company said in a regulatory filing Oct. 19 after the close of U.S. markets.
The victory in federal court in Wilmington, Delaware, rejected a claim that a pressure guide wire infringed four St. Jude patents, Volcano said in the Oct. 19 filing. The product is threaded into the circulatory system to assess blocked arteries. The trial had threatened a line of products that accounted for a quarter of Volcano’s sales last year, said Raj Denhoy, a Jefferies & Co. analyst in New York.
“The significance of Friday’s ruling for Volcano cannot be understated,” he said today in a note to clients. “It substantially mitigates the risk of damages on historical sales and royalties on future sales (or an outright injunction.)”
A trial (VOLC:US) in a related case was due to start today, in which Volcano accused St. Paul, Minnesota-based St. Jude of infringing on its patents.
That litigation is “virtually all upside,” for Volcano now, offering potential royalties of as much as $65 million, David Roman, a Goldman Sachs Group Inc. analyst in New York, said today in a separate note. He said he expects St. Jude to appeal last week’s verdict.
Volcano had $343.6 million in sales (VOLC:US) last year, according to data compiled by Bloomberg.
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