MEDIGARD INJECTS INTO THE US

Written on the 10 June 2010

MEDIGARD INJECTS INTO THE US

LISTED medical technology company Medigard (MGZ) has cracked the US market after signing a manufacturing and distribution deal for its innovative blood collection device (BCD).

The deal with distributor Outcome Solutions and an undisclosed manufacturer, is expected to create revenue streams within 18 months and could potentially be worth AUD$48 million annually within five years.

The initial agreement is to supply a minimum 10 per cent of 700 million BCD’s consumed by the US market per year. Four other Medigard products will also be put into production under the agreement.

CEO Peter Emery says the company chose the US over Asian export markets to ensure the quality of the products is maintained.

“Through selecting the right manufacturer, we will be able to deliver a price competitive product that is also of the highest quality, which will be of key importance to our success in the US market,” he says.

“These two key agreements we have been working towards for some time and are the culmination of months of negotiation, personal visits and the necessity of building key relationships.

“Both of our partners are commercially savvy and experienced operators and we look forward to working with them not only on the BCD, but also in development and production of our pipeline of products starting next with our 3mL syringe.”

Medigard got the medical sector excited last year when it announced the BCD and its retractable syringe, but share prices dropped 35 per cent since December 2009 when the company struggled to move from product development to commercialisation.

The Main Beach-based company suspended trading on Tuesday before announcing the agreement to the stock exchange last night.

Both agreements offer a three-way arrangement, with the manufacturer supplying the BCD direct to the distributor and Medigard receiving a royalty payment in the form of a licensing fee as its income of up to AUD 18c per device.

The company will now undertake a capital raising campaign to support the agreements and its expansion into the US.

“We expect to make an announcement in regard to an additional capital raising in the coming weeks. This is an exciting phase for Medigard and it provides the company with a clear path to getting the products on to the market,” says Emery.

MGZ shares last traded at 12c.


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