Align Technology, Inc. (ALGN) has settled all pending litigations and begun a new strategic collaboration with Ormco Corporation, a subsidiary of Danaher Corporation (DHR). Shares of Align reacted positively to this news with the price increasing roughly 28% to close at $13.00 on August 17. It has traded above the $13 level almost the entire time since.
Per the settlement, Ormco has agreed to release all its past claims related to the 444 patent and will not sue Align in future regarding same. Align will provide Ormco roughly $13 million in cash and will issue 7.6 million shares of its common stock to Ormco’s parent company, Danaher. The stock issuance will result in Danaher having approximately 10% ownership of Align post-issuance.
The settlement is a relief for Align as it removes the years-long overhang on its operations. The company was incurring high legal costs during this period. Furthermore, Align and Ormco have agreed upon an exclusive collaboration to develop and market an orthodontic product that adds the Invisalign system to Ormco’s Insignia orthodontic brackets and arch wires system to treat complex cases. The agreement will last for the next seven years.
Ormco Corporation has been a direct competitor of Align’s. Align Technology is engaged in the design, manufacture, and marketing of Invisalign, a proprietary system for treating malocclusion, or crooked teeth. Invisalign is approved for the treatment of all types of crooked teeth in patients with mature dentition or fully erupted molars.
Besides Ormco, the company faces tough competition from Dentsply International Inc. (XRAY).
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