Angiotech Pharmaceuticals, Inc. announced that it has entered into an agreement and plan of merger to acquire all of the outstanding shares of STS Biopolymers, Inc. for cash consideration of approximately US $23 million. STS is a privately owned company located in Henrietta, New York, specializing in the development and manufacture of state-of-the-art biocompatible coatings for medical devices. The transaction is expected to close by the end of December 2003 and is subject to the approval of STS's shareholders as well as other customary closing conditions. The acquisition will be accounted for using the purchase method of accounting.

With the announcement, Angiotech welcomes to its team an experienced group of STS scientists and managers with skills in biocompatible coatings that complement Angiotech's expertise in product development for next-generation drug-coated medical devices and surgical implants. STS's coatings are in commercial use on a wide range of medical devices including vascular, neurointerventional catheters, dilators, cannulae, gastroenteral feeding tubes, urinary catheters, blood filters, infusion catheters, and guidewires.

"I am impressed by STS's diversity of commercially approved products and their development expertise," said William L. Hunter, president and CEO of Angiotech. "Of special interest, these coatings lend themselves to drug-loading, enabling us to develop new next-generation drug loaded products."

"This is a major forward step in the growth of STS Biopolymers," said Richard Richmond, CEO of STS Biopolymers. "We are excited about the advances Angiotech with STS Biopolymers will bring to the medical field."

STS has been developing and manufacturing biocompatible coatings for medical devices since 1991. They also license a series of hydrophilic lubricious (SLIP-COAT), drug delivery (MEDI-COAT) and medical imaging (ECHO-COAT) coatings to a wide variety of medical device partners. The first product, a line of ultrasound biopsy and aspiration needles, was introduced worldwide in 1999.

SLIP-COAT is a lubricious coating that uses the body's fluids to reduce friction by more than 90 per cent. The technology comprises a patented, non-reactive hydrophilic/hydrophobic polymer matrix, which can be varied to optimize performance characteristics such as lubricity, flexibility and hydration.

MEDI-COAT is a family of biocompatible coatings comprising a patented hybrid polymer system designed for localized delivery of bioactive agents from medical device surfaces. MEDI-COAT technology consists of drugs entrapped in patented mixtures of hydrophilic and hydrophobic polymers, which are designed for controlled elution of the drug from the coated surface. Examples of classes of drugs suitable for coatings that could be used with MEDI-COAT include anti-infective drugs, anti-thrombogenics, anti-proliferative drugs and scar-forming drugs. In addition, a patented BOND-COAT primer system allows adhesion of various agents to metal substrates with the flexibility to meet the potential requirements of many metal medical devices, such as cochlear implants, implanted cardioverter defribrillators (ICDs), orthopedic hardware, screws, plates, spinal cages, and lead wires to name a few.

ECHO-COAT is a biocompatible surface treatment used in ultrasound imaging technology allowing medical devices to shine brightly in ultrasound images and giving practitioners unparalleled visual feedback during interventional procedures. Regular needles are not easily seen under ultrasound guidance, as the relationship of the needle must be kept parallel to the transducer (perpendicular to the ultrasound beam). This positioning cannot always be obtained. ECHO-COAT coating has the ability to trap microscopic air bubbles, which creates thousands of highly efficient ultrasound reflectors on the surface of the ultrasound needle. With the result of this greater echogenicity, or visibility, procedures never before considered practical by ultrasound guidance are now possible.

STS currently has 46 employees, including 36 at the company's headquarters in Henrietta, NY, and 10 at STS's Dutch subsidiary, MCTec B.V.