Medical Firm Plans to Sell Patents

Luther Medical Products Inc., in an effort to raise cash and prove its worth, has agreed tentatively to sell five of its 28 catheter patents for $5.5 million.

The sale of the patents, which cover production of its so-called stickless needles, is expected to be completed in the next week or two, a spokesman said. The Tustin company would not identify the buyer.

Stickless needles are designed to ensure that health care providers are not pricked accidentally.

Proceeds from the sale will be used to pay transaction costs and about $1 million in debt.

The buyer will acquire the patents subject to a licensing agreement with Critikon, a Johnson & Johnson subsidiary. Critikon is selling about 22.7 million stickless needles a year, generating about $450,000 in revenue for Luther.

As a research and development company, Luther has not been able to show shareholders that its patents have great value because that value cannot be put on a balance sheet, said David Rollo, Luther’s president.

The company’s new strategy is to consider the sale of its patents to raise cash to develop additional products and to show Wall Street that the company has great potential value.