Luther Medical Products Signs Catheter Pact

TUSTIN — Luther Medical Products Inc. on Wednesday announced it has signed a five-year agreement with a Minnesota pharmaceutical products company to distribute catheters manufactured by Luther.

The catheters will most likely be distributed in conjunction with a medical pump designed by Pharmacia Deltec Inc. of St. Paul, Minn., said Luther chief executive W. Tate Scott.

The pact will guarantee Tustin-based Luther Medical revenue of a minimum of $780,000 in the first year of the agreement upon its delivery of 50,000 catheters to Pharmacia Deltec, Scott said. Revenue from the agreement is expected to double by the third year, giving the company a $1.5-million boost in annual sales, he said.

The company will receive an additional $1 million in distribution fees, paid over the course of the five-year agreement, Scott said. Luther has agreed to develop a new catheter for distribution during that time.

In return, Pharmacia Deltec will receive a $1-million note, which may be converted to Luther common stock at $7.50 per share.

“It’s really a sweet deal for both companies,” Scott said.

Negotiations for the distribution agreement began in late summer, Scott said. Among other aspects of the agreement, William Biller, vice president of finance and administration for Pharmacia, will be joining the Luther board of directors.

The distribution agreement involves worldwide sales rights, excluding those in Japan, to Luther’s Peripheral Inserted Central Catheter, a micro-catheter for newborns, and the company’s intravenous pump catheter.

The pump catheter will be marketed with Pharmacia Deltec’s Port-A-Cath, an intravenous catheter system, and its Computerized Ambulatory Drug Delivery infusion pump.

Luther stock, traded on the over-the-counter market, closed at $9 Wednesday, up 12 1/2 cents.