23rd Jan 2008 07:01
Deltex Medical Group PLC23 January 2008 Deltex Medical Group plc Pre-close update on the year ended 31 December 2007 23 January 2008 Deltex Medical Group plc ('Deltex Medical' or the 'Company'),the UK's leading haemodynamic monitoring company, today announces an update onits development and trading performance for the year ended 31 December 2007. Throughout 2007 the Company made significant progress in all of its key marketstowards its goal of establishing the use of its CardioQ(TM) oesophageal Dopplermonitor (ODM) system as a standard of care in the monitoring and management ofpeople undergoing major surgery. Group probe sales in each quarter throughoutboth 2007 and 2006 were ahead of the corresponding quarter in the precedingyear. The directors anticipate that sales for the year will be in excess of£4.1 million. Nigel Keen, Deltex Medical's Chairman, commented: "Deltex Medical continued to make significant progress during 2007 towardsestablishing the CardioQ as a global standard of care. We now have increasingmomentum in the US and other key international markets as well as in the UK." MARKETS United States of America The higher level of sales experienced in the first half of the year continuedthrough the second half and the monthly probe sales run-rate by the end of theyear was more than half as big again as at the start of the year. Our smallfield team in the US is focused on a small number of accounts with the goal ofdeveloping a scalable business model. The Company has set up a small number of evaluation and research projects usingthe CardioQ in leading US hospitals. Once the clinical element of these projectsis finished, the Company expects to be in a position to expand these hospitalsinto leading accounts. Both the modest growth in the US in 2006 and the faster growth delivered in2007, which was after the adverse impact of exchange rates, have been achievedprior to any additional impetus generated from physician reimbursement andindicate the growing interest in improving intra-operative vascular fluidmanagement in the USA. United Kingdom Sales of CardioQ monitors in 2007 were ahead of 2006 despite unusually low salesin March as the NHS responded to political pressure to produce a surplus byrestricting expenditure prior to its year-end. A record number of CardioQmonitors were sold during the year specifically for use in operating theatres. In the second half of the year, surgical probe volumes overtook intensive careprobe volumes for the first time and the growth rate in surgical probe businessincreased: the Directors believe that our surgical probe business is now thefastest growing new broad application medical technology in the NHS. Recordprobes sales in the final quarter of 2007 were supported by the Company'shighest ever monthly UK probe sales in December, when UK probe sales exceeded£200,000 for the first time ever. Probe sales so far in the UK in January 2008have been encouraging. The launch in September 2007 of the new range of I2 probes means the Company nowhas a product which allows monitoring to continue after patients wake up aftersurgery, who are awake in critical care units or who are having surgery underregional rather than general anaesthetic. Prior to the redesigned probe, volumesin some intensive care units had been under pressure from the growing trend inthe UK towards allowing patients to be awake and spontaneously breathing whilein intensive care. Progress in the UK continues to be slowed by the considerable barriers toadoption of new medical technologies in the NHS. There has, however, been agrowing recognition in both the Department of Health and amongst the topmanagement of the NHS that UK patients suffer unduly compared to patients inother countries through being denied access to new medical technologies. Deltex Medical has successfully established the CardioQ, through its provenability to both improve outcomes and reduce costs, towards the top of the UKinnovation agenda. In September 2007 the newly formed NHS National TechnologyAdoption Hub announced that the CardioQ is one of three technologies included inits first wave of projects to help accelerate the uptake of new technology bythe NHS. The Hub's objective is to work, via its project managers, with threeselected Trusts to produce guidance to the rest of the NHS on how mosteffectively to implement and derive benefit from the CardioQ. This is a new andevolving process and, despite initial intentions to complete the procurementelement of the projects before 31 December 2007, none of the three Trusts has infact yet purchased any additional CardioQ monitors or probes: to this extent, UKsales were behind expectations for the year. The Company sold three SupraQ monitors in 2007, all in the UK, compared to 14 in2006. Although interest in the SupraQ remains strong, the Company does notcurrently intend to build any more of the current version of SupraQ and isconcentrating on developing its next generation SupraQ device which offerssignificant improvements in ease of use. International markets Sales in our international markets were significantly ahead of those in 2007 asthe benefits of our programme to restructure our key distribution arrangementscontinued. Growth has been sustained in each of our key internationalterritories with overall underlying growth of around 30% year on year. Therun-rate of probes sold across those territories on monthly ordering schedulesincreased over the year from 550 to 800 probes per month. Through our new direct sales operation in Spain we have been working with thehead of the Spanish Society of Surgeons to establish use of the CardioQ as astandard of care in colorectal surgery. This pilot project involves seven keyhospitals undertaking an audit of patient outcomes under a care protocol basedon the University College London Hospital and St Thomas's Hospital's ESTREPprogramme. The audit is expected to be complete in the third quarter of 2008 andthe results presented to the national colorectal surgery meeting in Spain latein the year. If the results of the audit mirror those seen elsewhere, thesurgeons leading the project have informed the Company that they expect to seethe protocol established as standard practice across Spain. An order for over £50,000 of probes from our distributor in Peru, which wouldnormally have been delivered in December, will be fulfilled in early 2008 assoon as the new I2 probe series is ready for release in Latin America. Increasing recognition as a standard of care US Government health technology assessment Health technology assessment (HTA) is at the heart of modern policy fordetermining standards of care in developed healthcare systems. A typical HTAinvestigates whether a health technology works, for whom it works and at whatcost: it will also look at how the use of the technology compares to anyalternatives. The first HTA to report on ODM was published by the US Government's Agency forHealthcare Research and Quality (AHRQ) in February 2007. It concluded that theevidence was "strong" that ODM-guided fluid management during surgery reducesmajor complications, reduces total complications and reduces hospital stay. TheAHRQ definition of strong evidence is that "it is highly unlikely that newevidence will lead to a change in this conclusion". National US reimbursement coverage AHRQ's HTA was commissioned by the US Centers for Medicare and Medicaid Services(CMS) and allowed CMS to conclude in May 2007 that "the published literaturedemonstrates sufficient evidence that haemodynamic monitoring with oesophagealDoppler does result in improved health outcomes". As a result CMS decided toreimburse doctors across the USA who use ODM for their time and expertise. CMS'sunusually broad coverage decision covers use for "monitoring of cardiac outputfor ventilated patients in the ICU (Intensive Care Unit) and operative patientswith a need for intra-operative fluid optimisation". It is well-established practice that other healthcare payers in the USA followCMS's lead on physician reimbursement for individual technologies. Assuming thisis the case with ODM, the Company's most conservative estimate of the number ofpotential US patients is 5,000,000 per year, with scope for this estimate tomore than double as further surgical procedures are demonstrated to benefit fromcare guided by the use of ODM. The CardioQ is the only ODM system being sold in the USA today. ODM is the firstand only technology to enable intra-operative fluid optimisation and CMS'sdecision separates the CardioQ's application as a dynamic guide of therapyduring surgery from its other applications in critical care medicine. Inintensive care the CardioQ is most frequently used as a traditional cardiacoutput monitor and such use is also now covered by CMS. The Company and its advisers are working closely with doctors at selected keyaccounts to support the process of submission of initial clinician reimbursementclaims to local CMS agents and to negotiate and agree appropriate payment levelswith CMS. This process, which might typically be expected to take three to sixmonths started in September 2007 with a user on the West Coast of the UnitedStates and is now underway with users in other CMS agency regions. Meta-analysis The technique of meta-analysis (a systematic scientific review which considersrelated evidence as a whole) underpins many of the conclusions of HTAs. It isalso used heavily by doctors within clinical circles to determine technologiesand interventions which should be established as standards of care. The first independent meta-analysis of the randomised controlled clinicaloutcome trials of ODM was undertaken by an eminent group of UK doctors and itsresults were first presented in September 2006. It concluded that ODM reducespost-operative complications and reduces length of hospital stay by an averageof nearly three days. The results of this review were presented at a number ofimportant clinical meetings over 2007 and the Directors understand that theauthors intend to submit it to a leading medical journal for publication in2008. As we announce today, a second meta-analysis undertaken by doctors in NewZealand has concluded that ODM "use for monitoring and optimisation offlow-related haemodynamic variables improves short-term outcome in patientsundergoing major abdominal surgery". This meta-analysis has just been publishedin the journal Anaesthesia and is therefore the first meta-analysis to bepublished in a leading peer-reviewed journal. The directors are not aware of any randomised controlled study either publishedor pending publication which shows any technology other than ODM to have beenused successfully to direct fluid administration during surgery to improvepatient outcomes and reduce hospital lengths of stay. Alternative approaches tohaemodynamic monitoring use derived rather than direct measurements of bloodflow and are unable to report changes in flow either as quickly or assensitively as ODM. London hospitals During 2007 use of the CardioQ has been established as part of the writtenstandard treatment protocols for a number of surgical procedures at two ofLondon's most important teaching hospitals: University College London Hospitaland St Thomas's Hospital. The CardioQ has played a central role in the successto date of the ESTREP enhanced recovery programme jointly developed betweensurgeons at the two sites. After six months ESTREP had already deliveredreductions in average lengths of hospital stay of nearly a half for colorectalsurgery. Both sites are in the process of rolling the ESTREP programme out intoother surgical disciplines. The Company has made significant progress towards establishing the CardioQ as astandard of care for specific groups of patient in most of the other majorhospitals in London. In July 2007 the Planned Care Clinical Working Groupestablished as part of the Darzi Healthcare for London Review recommendedincreased use of ODM. Lord Darzi has subsequently been appointed a governmenthealth minister and is undertaking a national NHS Next Stage review based on hiswork in the London review. Surgical enhanced recovery programmes Surgical enhanced recovery or 'fast track' programmes optimise patients' healthbefore, during and after surgery. They are being adopted across the UK andContinental Europe, particularly in colo-rectal surgery. Deltex Medical has beensuccessful in establishing the CardioQ as a fundamental component of asubstantial majority of the successful active enhanced recovery programmes inthe UK and in many of the highest profile programmes in Continental Europe. There are growing signs in the UK and Europe of the spread of enhanced recoveryprogrammes into several additional disciplines including orthopaedic, vascular,urological and gynaecological surgery. Enhanced recovery concepts are gainingearly acceptance in the USA. The growing clinical interest in enhanced recovery coincides with increasingpolitical and macro-economic pressures in the developed world to reduce lengthsof hospital stays, reduce the amount of care delivered in hospitals and provideit instead as close as possible to the patient's home. FINANCIAL Cash consumption in the second half of the year and the underlying rate of cashburn going into 2008 were in line with the Company's plans. In the second halfof the year the Company has invested in various projects to ensure its productsand facilities are suitable for the next stage of its expansion. The Company hasextended the clean room where it manufactures probes in order to double capacityand made significant progress in re-engineering the range of probes to be moresuited to mass and automated production. A modernised and upgraded model of theCardioQ is undergoing final testing and is expected to be launched in the firsthalf of 2008. For further information, please contact:- Deltex Medical Group plc 01243 774 837Nigel Keen, Chairman [email protected] Hill, Chief Executive [email protected] Phillips, Finance Director [email protected] Gavin Anderson & Company 0207 554 1400Deborah Walter [email protected] Speed [email protected] Charles Stanley Securities (Nominated Adviser) 020 7149 6000Philip Davies [email protected] Cook [email protected] Notes for Editors Deltex Medical manufactures and markets the CardioQ monitor, which usesdisposable ultra-sound probes inserted into the oesophagus to determine theamount of blood being pumped around the body - 'circulating blood volume'.Reduced circulating blood volume is known as hypovolaemia, which leads toinsufficient oxygen being delivered to the organs. This causes medicalcomplications including peripheral and major organ failure which can lead todeath. Hypovolaemia, which is akin to severe dehydration, affects virtuallyevery patient having surgery because of the combined effects of pre-operativestarvation, the impact of the anaesthetic agents and trauma from the surgeryitself. Using fluids and drugs, guided by the CardioQ, to optimise the amount ofcirculating blood significantly reduces post-operative complications allowingpatients to make a faster, more complete recovery and return home earlier. The CardioQ incorporates the Company's proprietary software and a smalldiameter, easy-to-use, minimally invasive, disposable oesophageal probe that isused for transmitting and receiving an ultra-sound signal. By using thistechnology, the CardioQ provides clinicians with the ability to optimisecritically ill patients and those undergoing routine moderate to major surgerythrough the controlled administration of fluid and drugs. Haemodynamicoptimisation has been proven to improve the speed and quality of patientrecovery and reduce hospital stay. There are already around 1,500 CardioQs currently in use in hospitals worldwideand distribution arrangements are in place in over 30 countries. In addition,there are currently more than 90 clinical publications on the use of the CardioQwhich have repeatedly:- •Validated the results of the Monitor against known standards for measuring cardiac output, demonstrating that the technology works •Proved that the CardioQ works in a wide range of surgical procedures •Demonstrated that the Company's technology provides significant health and economic benefits by helping to reduce post-operative complications and length of hospital stays by an average of 30 to 40 per cent for a wide range of patients. The SupraQ is an entirely non-invasive device which uses an ultrasound probeheld at the base of the patient's neck to track the flow of blood in the aorta;it presents the same data as the CardioQ in a similar format and is used fortaking snapshots or monitoring over short periods. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Deltex Medical