(CN) – Former shareholders for a medical imaging innovator will support their push for $27 million in post-merger milestone payments in a federal court hearing.
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Medical device developer and manufacturer, Volcano Corporation, acquired CardioSpectra through a merger and agreed to pay $25.2 million, plus four additional milestone payments totaling $38 million, according to a group of former CardioSpectra shareholders.
The milestones concerned regulator approval of the optical coherence tomography system for high-resolution imaging of coronary arteries developed by CardioSpectra and cash sales of related products, the plaintiffs claim.
Volcano made the first milestone payment of $11 million but stopped there, the shareholders say, while meeting certain sales goals but failing to obtain further regulatory approval.
The shareholders sued Volcano for breach of written contract, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty. The plaintiffs filed their complaint in federal court on Mar. 27, 2012.
U.S. District Judge Yvonne Gonzalez Rogers dismissed the complaint on Friday. However, the judge emphasized that the dismissal was tentative and that, unless the parties consented to the ruling, they could proceed with oral argument.
The parties submitted their joint statement identifying issues for argument on Monday. While Volcano accepted the judge’s order, the shareholders identified three issues for oral argument.
Gonzalez Rogers gave the former shareholders until August 20 to file a second amended complaint. The hearing is set to take place today.