16th Jan 2007 07:01
Deltex Medical Group PLC16 January 2007 Deltex Medical Group plc Pre-close update on the year ended 31 December 2006 16 January 2007 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 2006. Throughout 2006 the Company made significant progress towards its goal ofestablishing the use of its CardioQ system as a standard of care in themonitoring and management of people undergoing major surgery. As a result, thedirectors anticipate that sales for the year will be in excess of £3.5 million. Clinical trials In August 2006 the British Journal of Surgery published the results of a majornew randomised controlled clinical trial of the CardioQ during surgery. Thestudy on bowel surgery patients at the Freeman hospital in Newcastle-Upon-Tynewas funded by the Royal College of Surgeons and was the seventh published highquality CardioQ outcome study. It demonstrated that in those patients whosecirculating blood volume was optimised using the CardioQ, serious post-operativecomplications, emergency post-operative admissions to critical care units andemergency readmissions to hospital were entirely or almost entirely eliminated.The study found that CardioQ patients were also fit to go home three daysearlier than non-CardioQ patients. Routine use of the CardioQ during surgery is now a core part of the Freemanhospital's 'enhanced recovery' or 'fast-track' programme for major bowelsurgery: this programme delivers amongst the lowest mortality rates, the lowestreadmission rates and the shortest lengths of stay not just in the UK but in thewhole of the developed world. Fast track surgery Fast-track surgery, i.e patient health optimisation before, during and aftersurgery, is gathering growing momentum amongst surgeons throughout the UK andContinental Europe and establishing early acceptance in the USA. Initiallyfocused on colo-rectal surgery, it is being adopted in other areas includingorthopaedic, vascular, urological and gastro-intestinal surgery. Deltex Medicalis successfully positioning the CardioQ as key to any evidence-based fast-trackapproach to surgery. The growing clinical interest in fast-track surgery coincides with increasingpolitical and macro-economic pressures on the majority of developed healthcaresystems, including the UK NHS, to reduce lengths of hospital stays, reduce theamount of care delivered in hospitals and provide it instead as close aspossible to the patient's home. Meta-analysis A first independent meta-analysis (systematic scientific review which considersrelated evidence as a whole) of the randomised controlled clinical outcometrials of oesophageal Doppler monitoring ('ODM') was presented in September2006. It concluded that ODM reduces post-operative complications and lengths ofhospital stay. In practice such a positive meta-analysis means that it is highlyunlikely that any amount of new evidence could change the conclusion. Modernhealthcare systems use meta-analysis as a key tool in making decisions aboutfunding new medical technologies. In the USA it is used by the Centers forMedicare and Medicaid Services (CMS) in determining whether doctors should bereimbursed for using particular technologies: in the UK it is used by both theNational Institute for Health and Clinical Excellence (NICE) and the newlyformed Centre for Evidence Based Purchasing (CEP) to support recommendationsmade to the NHS. Meta-analysis is also used to inform clinical standard settingby professional associations and bodies. All the favourable outcome studies on ODM used the CardioQ or its predecessors.Furthermore, the directors are not aware of any study either published orpending publication which shows any technology other than ODM to have been usedsuccessfully to direct fluid administration during surgery to improve patientoutcomes 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 as accuratelyas ODM. UK market In the UK, demand for Deltex Medical's devices continued to grow rapidly as didthe number of clinical settings in which the CardioQ system has been shown to beboth cost effective and clinically beneficial to the patients doctors aretreating. There was a marked increase in the numbers of surgeons lending activesupport to anaesthetists in order to prioritise implementation of the CardioQ asa standard of care for their patients. Consequently in 2006 CardioQ monitorsales volumes and revenues increased for the first time in three years. The unmet clinical demand for additional CardioQ monitors has continued to growacross the UK NHS. To accelerate CardioQ implementation, the Company hasintroduced a wider choice of standard commercial packages it offers NHS Trusts.This includes placing monitors in Trusts while charging a mark-up on probeprices. .Negotiations to formalise this type of arrangement for 20 installedCardioQ monitors are ongoing with two major London teaching hospitals where theCardioQ is being used in the pilot phases of the implementation of fast-tracksurgical programmes. The momentum behind probe sales in the UK has continued. December was thetwenty-seventh consecutive month when probe sales were ahead of those in thecorresponding month the year before. Sales continue to rise in both criticalcare and operating theatre applications and it is increasingly clear that, asexpected, the growth curve is steeper for operating theatre usage. Although the UK government is yet to complete any formal technology assessmentof oesophageal Doppler monitoring and the CardioQ, early in 2006 NICE announcedthat it considered the technology to be 'standard clinical practice'. During 2006 the Company sold a total of fourteen SupraQ monitors all in the UK:ten to maternity units, two to Accident & Emergency units and two to the XtremeEverest expedition, being organised by doctors from University College London.The monitors will be used in research aimed at demonstrating potential clinicalapplications of this entirely non-invasive sister device to the CardioQ. International markets Probe sales growth in the USA has been underpinned by sustainable growth in thesmall number of hospitals with whom we work most closely. In the final quarterof the year we installed an initial five CardioQ monitors on a probe mark-upbasis into operating rooms at our largest single account; previously usage hadbeen restricted to intensive care and emergency room. The hospital has indicatedits desire to add a further five monitors into operating rooms as soon as itbecomes appropriate to do so based on clinical demand In December the Company sold eight CardioQ monitors to a major Michigan hospitalfor use during bowel surgery. The colo-rectal surgery team is led by one of theUSA's leading bowel surgeons who is also one of the key driving forces behindmoves to introduce fast-track surgery into the USA. Following initial sales to the US Army in 2005, negotiations are underway tosupply a small number of CardioQs for evaluation in active Mobile Army SurgicalHospitals (MASH). In the first half of the year the Company restructured its trading relationshipswith key distributors in Europe, Latin America and the Far East with the primaryobjective of moving them on to regular monthly probe orders. This resulted inlower probe sales in the first half of the year when compared to thecorresponding period of 2005. Subsequently minimum monthly order levels havealready been increased by both our French and Korean distributors. In France, a randomised controlled trial using the CardioQ on patientsundergoing emergency surgery for repair of broken hips is under way. This majorstudy is taking place in 18 hospitals and is generating significantopportunities for expansion. Despite the promising underlying increase inactivity, the Company's reported sales to France are expected to be £0.2 millionlower than in 2005 due to destocking by the distributor prior to renegotiationof the distribution agreement. Financial Cash consumption in the second half of the year and the underlying rate of cashburn going into 2007 were in line with the Company's plans. The underlying rateof cash burn is at the lowest rate in the Company's history, despite increasedspend on marketing and new product development. Nigel Keen, Deltex Medical's Chairman, commented: "Deltex Medical continued to make significant progress during 2006 towardsestablishing CardioQ as a global standard of care. We have established a trackrecord of growth in the UK and are now beginning to develop momentum in the USand other international markets which we believe will give us sustainable salesgrowth as the Company heads towards profitability." 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 020 7554 1400 Deborah Walter [email protected] Speed [email protected] Charles Stanley Securities 020 7149 6457Philip Davies [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 haemodynamicallyoptimise critically ill patients and those undergoing routine moderate to majorsurgery through the controlled administration of fluid and drugs. Haemodynamicoptimisation has been scientifically proven to improve the speed and quality ofpatient recovery and reduce hospital stay. There are already over 1,250 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