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License Agreements
9 Months Ended
Sep. 30, 2012
License Agreements [Abstract]  
License Agreements

Note 12. License Agreements

As a result of Baxter International Inc.’s sale of its transfusion therapies division in 2007 to Fenwal, the Company has certain agreements with Fenwal which require the Company to pay royalties on future INTERCEPT Blood System product sales at royalty rates that vary by product: 10% of product sales for the platelet system, 3% of product sales for the plasma system, 5% of product sales for the red blood cell system, and 6.5% on sales of illuminators. During the three months ended September 30, 2012, and 2011, the Company made royalty payments to Fenwal of $0.7 million and $0.6 million, respectively, and $2.1 million and $1.6 million, during the nine months ended September 30, 2012, and 2011, respectively. At both September 30, 2012, and December 31, 2011, the Company owed Fenwal $0.7 million for royalties.

In December 2008, the Company extended its agreement with Fenwal to manufacture finished INTERCEPT disposable kits for the platelet and plasma systems through December 31, 2013. Under the amended manufacturing and supply agreement, the Company pays Fenwal a set price per kit, which is established annually, plus a fixed surcharge per kit. In addition, volume driven manufacturing overhead is to be paid or refunded if actual manufacturing volumes are lower or higher than the estimated production volumes. The Company made payments to Fenwal of $1.4 million and $2.1 million relating to the manufacturing of the Company products during the three months ended September 30, 2012, and 2011, respectively, and $8.9 million and $8.5 million, during the nine months ended September 30, 2012, and 2011, respectively. At September 30, 2012, and December 31, 2011, the Company owed Fenwal $5.1 million and $3.4 million, respectively, for INTERCEPT disposable kits manufactured. In connection with the warranty claims incurred by the Company and remediation of those claims during the three months ended September 30, 2012 (see Note 1 in the Notes to Condensed Consolidated Financial Statements under “Guarantee and Indemnification Arrangements” for more detail), the Company filed a warranty claim against Fenwal. Fenwal has accepted the warranty claim and will supply the Company with replacement product or credit notes. As a result, the Company recorded a current asset of $1.7 million on its condensed consolidated balance sheets as of September 30, 2012 representing the full amount of the warranty claim against Fenwal.