Jim Tobin Addresses Medinol Litigation

Apr 11, 2001, 01:00 ET from Boston Scientific Corporation

    NATICK, Mass., April 11 /PRNewswire/ --
 Boston Scientific Corporation (NYSE:   BSX) announced that Jim Tobin, President
 and CEO, delivered the following remarks to the Company's Annual Meeting of
 Securities Analysts held today:
 
     "First of all, I am proud to be a part of BSC.  Anyone who knows me knows
 that if I weren't, I'd have been gone a long time ago.  Second, I was thrilled
 to be brought into this Company by Pete Nicholas, and I am proud to be working
 with him now.  As Pete said, the Company's management is united.  Pete and I,
 along with the rest of the management team, are in complete agreement on
 Medinol strategy.
     "The bottom line about this lawsuit is that the party in the wrong is
 Medinol.
 
      *  "It was Medinol that could not or would not fill our purchase orders
         back in 1996 and 1997 and caused us to go into backorder with many of
         our customers.
 
      *  "It was Medinol that consistently refused to provide us with enough
          stents to develop balloon systems and launch new products with the
          speed we needed to stay ahead of our competition.  This includes,
          most recently, the NIRFlex(TM) stent.
 
      *  "It was Medinol that at least a dozen separate times threatened to cut
         off its supply of stents unless we paid exorbitant premiums or met
         some other unjustified demand.
 
      *  "It was Medinol that notified us in April 1997 that it had in fact
         stopped shipping us stents.
 
      *  "It was Medinol that later in the same year tried to damage Boston
         Scientific by misrepresenting to several key physicians that it had
         severed all ties with us.
 
      *  "It was Medinol that drafted some of the very language in FDA
         submissions that they now claim is fraudulent.  That language, which
         has to do with whether Medinol is a component supplier or a finished
         device manufacturer, was truthful then and it's truthful now.
 
      *  "It is Medinol that has failed to ship us a single NIRFlex(TM) stent
          in almost a year despite their knowing that unless we got the stents
          we couldn't develop a delivery system and couldn't launch the
          product.
 
      *  "And it is Medinol that is attempting to manipulate the securities
         market with false statements to the media and some of you in the
         analyst community, and with a baseless lawsuit.
 
     "These actions, among others, have damaged our relationship with our
 customers and have caused significant financial losses to this Company, as
 well as a decline in our shareholder value.  We'll have much more to say about
 all of this when we file our own lawsuit shortly.
     "Now, let me take a minute to comment on what they have said in their
 lawsuit.  It is based on half-truths, exaggerations and outright fabrications
 about the independent stent manufacturing line at our facility in Ireland.
 The fact is that Boston Scientific began development of a stent manufacturing
 line independent of Medinol for a very simple reason.  Our contract with
 Medinol specifically provides for an independent line.  Medinol was required
 by the contract to design and build the line and get us up to speed so that we
 could operate it ourselves.  Medinol wouldn't do it, so we tried to do it
 ourselves.
     "It's pretty interesting to me that in the hundreds of pages of documents
 that Medinol attaches to its lawsuit, the one document that is nowhere to be
 found is the contract itself.
     "When the contract was negotiated in 1995, Medinol was a start-up company
 and there were real risks that it might not meet our supply needs.  So to
 protect Boston Scientific, Medinol agreed to build a stent manufacturing line
 for us at our Ireland facility.  It was supposed to be completely independent
 of Medinol, and it was supposed to be run by our own people.  But Medinol
 later reneged because they didn't like the idea of Boston Scientific having
 the capacity to build stents on its own.  They dragged their feet and
 ultimately refused to build an independent line.
     "At the same time, whenever Medinol didn't get what they wanted, they
 would threaten to cut off the supply of stents.  As I said before, Medinol
 notified us in April 1997, on April 17 to be exact, that they had actually
 stopped shipping.
     "Boston Scientific has always taken seriously its obligations to its
 customers, to the patients who rely on its products, to its shareholders and
 to its employees.  It was unacceptable to be held hostage to this sort of
 erratic and threatening behavior.  Boston Scientific had to respond, and it
 responded by developing the independent line itself, without telling Medinol,
 to avoid being cut off again.  Nothing illegal.  Nothing fraudulent.  Nothing
 violating the contract.  Simply trying to make the best of a bad situation
 created by Medinol itself.
     "One more thing about the independent line.  The fact is that Boston
 Scientific never actually completed the line and never sold a single stent
 made on it.  Medinol did not lose a single stent sale or a single dollar in
 revenue, and they know that.  We never intended to ship, and we never actually
 shipped, anything but approved stents to our customers worldwide, and we never
 will.  Medinol's lawsuit complains that we produced and marketed non-Medinol
 manufactured stents, like the Radius(TM) stent.  There is also a claim about
 the Express(TM) stent, which we are developing internally because Medinol
 refused to give us enough NIRFlex(TM) stents.  The truth is that our contract
 specifically allows us to make other stents, as long as we pay them a
 percentage.  We'd be irresponsible not to do so given Medinol's unpredictable
 behavior and the uncertainty of reaching agreement on an acquisition.
     "You may be wondering about the supply of stents now that Medinol has
 filed its lawsuit.  They are obligated by the contract to continue supply,
 they have consistently been supplying standard NIR(R) and Conformer(TM) stents
 these past few years, and we have no indication that will change while the
 lawsuit is pending.
     "The lawsuit accuses the Company of submitting documents to the FDA that
 misrepresented the status of Medinol.  Those accusations are totally false; we
 have always been straight with the FDA.  Medinol is the supplier of a
 component of our stent systems.  That is the way we described them to the FDA,
 and that description is completely accurate.  Medinol has known this from the
 very beginning.  Not only that, they actually drafted language for our FDA
 submissions that describes Medinol as the component supplier.
     "Compared to Pete and some of the other members of management, I am a
 relative novice when it comes to dealing with Medinol.  But I have learned
 quickly that there is little that Medinol does without an ulterior motive.
 The ulterior motive here is pretty obvious, and it is to get us to pay a
 higher price for Medinol.  Last summer, we made an opening offer we thought
 was reasonable.  They countered with a number that was in the stratosphere.
 We stayed at our figure.  They threatened to sue.  We said, 'Do what you have
 to do.'  They came down significantly, but not nearly enough.  We stayed at
 our figure.  They threatened to sue.  We said, 'Do what you have to do.'  By
 year-end they had come down to a figure that was in the ballpark, but still
 too high.  They threatened to sue.  We said, 'Do what you have to do.'  By
 March it actually looked like we were headed toward an agreement.  We then
 asked them to sign a term sheet.  They got seller's remorse and balked.  Then
 they demanded to renegotiate.  We said, 'No.'  They finally sued.
     "This is all about leverage, plain and simple.  It was about leverage when
 Medinol didn't want to give us our independent manufacturing line, and it's
 about leverage now when they are looking for more money.  But let's keep our
 eye on the ball.  Despite the litigation and despite the reckless and baseless
 nature of Medinol's attacks, we remain open to acquiring Medinol at a fair
 price.  But we will not be bullied, and we will not let Medinol hold our
 business hostage to their demands.
     "Medinol is attacking the honor and integrity of this Company and its
 senior management.  I want to make it clear that I have the highest confidence
 in the business ethics of the people I work with.
     "One final comment.  I want to address reports that I was passing
 information to Medinol on our independent manufacturing line.  Any information
 that came from me or at my direction was given with Pete Nicholas' full
 knowledge and agreement."
 
     Boston Scientific is a worldwide developer, manufacturer and marketer of
 medical devices.  The Company's products are used in a broad range of
 interventional medical specialties.
 
     This press release contains forward-looking statements.  The Company
 wishes to caution the reader of this press release that actual results may
 differ from those discussed in the forward-looking statements and may be
 adversely affected by, among other things, uncertainties associated with
 litigation and product supply, and other factors described in the Company's
 filings with the Securities and Exchange Commission.
 
 

SOURCE Boston Scientific Corporation
    NATICK, Mass., April 11 /PRNewswire/ --
 Boston Scientific Corporation (NYSE:   BSX) announced that Jim Tobin, President
 and CEO, delivered the following remarks to the Company's Annual Meeting of
 Securities Analysts held today:
 
     "First of all, I am proud to be a part of BSC.  Anyone who knows me knows
 that if I weren't, I'd have been gone a long time ago.  Second, I was thrilled
 to be brought into this Company by Pete Nicholas, and I am proud to be working
 with him now.  As Pete said, the Company's management is united.  Pete and I,
 along with the rest of the management team, are in complete agreement on
 Medinol strategy.
     "The bottom line about this lawsuit is that the party in the wrong is
 Medinol.
 
      *  "It was Medinol that could not or would not fill our purchase orders
         back in 1996 and 1997 and caused us to go into backorder with many of
         our customers.
 
      *  "It was Medinol that consistently refused to provide us with enough
          stents to develop balloon systems and launch new products with the
          speed we needed to stay ahead of our competition.  This includes,
          most recently, the NIRFlex(TM) stent.
 
      *  "It was Medinol that at least a dozen separate times threatened to cut
         off its supply of stents unless we paid exorbitant premiums or met
         some other unjustified demand.
 
      *  "It was Medinol that notified us in April 1997 that it had in fact
         stopped shipping us stents.
 
      *  "It was Medinol that later in the same year tried to damage Boston
         Scientific by misrepresenting to several key physicians that it had
         severed all ties with us.
 
      *  "It was Medinol that drafted some of the very language in FDA
         submissions that they now claim is fraudulent.  That language, which
         has to do with whether Medinol is a component supplier or a finished
         device manufacturer, was truthful then and it's truthful now.
 
      *  "It is Medinol that has failed to ship us a single NIRFlex(TM) stent
          in almost a year despite their knowing that unless we got the stents
          we couldn't develop a delivery system and couldn't launch the
          product.
 
      *  "And it is Medinol that is attempting to manipulate the securities
         market with false statements to the media and some of you in the
         analyst community, and with a baseless lawsuit.
 
     "These actions, among others, have damaged our relationship with our
 customers and have caused significant financial losses to this Company, as
 well as a decline in our shareholder value.  We'll have much more to say about
 all of this when we file our own lawsuit shortly.
     "Now, let me take a minute to comment on what they have said in their
 lawsuit.  It is based on half-truths, exaggerations and outright fabrications
 about the independent stent manufacturing line at our facility in Ireland.
 The fact is that Boston Scientific began development of a stent manufacturing
 line independent of Medinol for a very simple reason.  Our contract with
 Medinol specifically provides for an independent line.  Medinol was required
 by the contract to design and build the line and get us up to speed so that we
 could operate it ourselves.  Medinol wouldn't do it, so we tried to do it
 ourselves.
     "It's pretty interesting to me that in the hundreds of pages of documents
 that Medinol attaches to its lawsuit, the one document that is nowhere to be
 found is the contract itself.
     "When the contract was negotiated in 1995, Medinol was a start-up company
 and there were real risks that it might not meet our supply needs.  So to
 protect Boston Scientific, Medinol agreed to build a stent manufacturing line
 for us at our Ireland facility.  It was supposed to be completely independent
 of Medinol, and it was supposed to be run by our own people.  But Medinol
 later reneged because they didn't like the idea of Boston Scientific having
 the capacity to build stents on its own.  They dragged their feet and
 ultimately refused to build an independent line.
     "At the same time, whenever Medinol didn't get what they wanted, they
 would threaten to cut off the supply of stents.  As I said before, Medinol
 notified us in April 1997, on April 17 to be exact, that they had actually
 stopped shipping.
     "Boston Scientific has always taken seriously its obligations to its
 customers, to the patients who rely on its products, to its shareholders and
 to its employees.  It was unacceptable to be held hostage to this sort of
 erratic and threatening behavior.  Boston Scientific had to respond, and it
 responded by developing the independent line itself, without telling Medinol,
 to avoid being cut off again.  Nothing illegal.  Nothing fraudulent.  Nothing
 violating the contract.  Simply trying to make the best of a bad situation
 created by Medinol itself.
     "One more thing about the independent line.  The fact is that Boston
 Scientific never actually completed the line and never sold a single stent
 made on it.  Medinol did not lose a single stent sale or a single dollar in
 revenue, and they know that.  We never intended to ship, and we never actually
 shipped, anything but approved stents to our customers worldwide, and we never
 will.  Medinol's lawsuit complains that we produced and marketed non-Medinol
 manufactured stents, like the Radius(TM) stent.  There is also a claim about
 the Express(TM) stent, which we are developing internally because Medinol
 refused to give us enough NIRFlex(TM) stents.  The truth is that our contract
 specifically allows us to make other stents, as long as we pay them a
 percentage.  We'd be irresponsible not to do so given Medinol's unpredictable
 behavior and the uncertainty of reaching agreement on an acquisition.
     "You may be wondering about the supply of stents now that Medinol has
 filed its lawsuit.  They are obligated by the contract to continue supply,
 they have consistently been supplying standard NIR(R) and Conformer(TM) stents
 these past few years, and we have no indication that will change while the
 lawsuit is pending.
     "The lawsuit accuses the Company of submitting documents to the FDA that
 misrepresented the status of Medinol.  Those accusations are totally false; we
 have always been straight with the FDA.  Medinol is the supplier of a
 component of our stent systems.  That is the way we described them to the FDA,
 and that description is completely accurate.  Medinol has known this from the
 very beginning.  Not only that, they actually drafted language for our FDA
 submissions that describes Medinol as the component supplier.
     "Compared to Pete and some of the other members of management, I am a
 relative novice when it comes to dealing with Medinol.  But I have learned
 quickly that there is little that Medinol does without an ulterior motive.
 The ulterior motive here is pretty obvious, and it is to get us to pay a
 higher price for Medinol.  Last summer, we made an opening offer we thought
 was reasonable.  They countered with a number that was in the stratosphere.
 We stayed at our figure.  They threatened to sue.  We said, 'Do what you have
 to do.'  They came down significantly, but not nearly enough.  We stayed at
 our figure.  They threatened to sue.  We said, 'Do what you have to do.'  By
 year-end they had come down to a figure that was in the ballpark, but still
 too high.  They threatened to sue.  We said, 'Do what you have to do.'  By
 March it actually looked like we were headed toward an agreement.  We then
 asked them to sign a term sheet.  They got seller's remorse and balked.  Then
 they demanded to renegotiate.  We said, 'No.'  They finally sued.
     "This is all about leverage, plain and simple.  It was about leverage when
 Medinol didn't want to give us our independent manufacturing line, and it's
 about leverage now when they are looking for more money.  But let's keep our
 eye on the ball.  Despite the litigation and despite the reckless and baseless
 nature of Medinol's attacks, we remain open to acquiring Medinol at a fair
 price.  But we will not be bullied, and we will not let Medinol hold our
 business hostage to their demands.
     "Medinol is attacking the honor and integrity of this Company and its
 senior management.  I want to make it clear that I have the highest confidence
 in the business ethics of the people I work with.
     "One final comment.  I want to address reports that I was passing
 information to Medinol on our independent manufacturing line.  Any information
 that came from me or at my direction was given with Pete Nicholas' full
 knowledge and agreement."
 
     Boston Scientific is a worldwide developer, manufacturer and marketer of
 medical devices.  The Company's products are used in a broad range of
 interventional medical specialties.
 
     This press release contains forward-looking statements.  The Company
 wishes to caution the reader of this press release that actual results may
 differ from those discussed in the forward-looking statements and may be
 adversely affected by, among other things, uncertainties associated with
 litigation and product supply, and other factors described in the Company's
 filings with the Securities and Exchange Commission.
 
 SOURCE  Boston Scientific Corporation