Pre-close update

RNS Number : 0100V

Deltex Medical Group PLC

08 January 2013

 



Deltex Medical Group plc

Pre-close update on the year ended 31 December 2012 and update on Premier Inc collaboration

8 January 2013 - Deltex Medical Group plc, the global leader in oesophageal Doppler monitoring ("ODM"), today announces an update on its trading performance for the year ended 31 December 2012.

Highlights

·    Group sales of £6.8 million (2011 £6.3 million): despite delayed launch of NHS implementation drive

·    Initial targets for NHS implementation drive for ODM/fluid management released late in December 2012 with potential to boost growth rates in 2013 and beyond

·    UK surgical probe revenue growth of 24% v 16% in 2011; overall UK revenues ahead 9%

·    European probe revenues up 18%

·    USA, after a flat first half, increased probe revenues by 19% in the second half with 30% in the final quarter

·    Phase 1 Premier enhanced recovery collaboration producing improved outcomes and reduced healthcare costs. Next steps: further two year collaboration to accelerate creation of a mass US market for ODM

·    Cash position of £0.7 million at 31 December 2012

Deltex Medical enters 2013 with around two-thirds of its revenues generated from sales of its disposable surgical probes, which accounted for just 10% of total revenues in 2002 and 35% in 2007. The run-rate of surgical probe sales to hospitals are growing well in all key markets, including the UK, USA, France, Spain, Scandinavia, Peru and Canada. Increasing numbers of doctors in these and other markets are using the Company's products more regularly to deliver better outcomes to their patients. The Company believes that opportunities to increase substantially its growth rates are emerging, as key markets move towards the system-wide implementation phase.

The UK is the largest and most developed market for Deltex Medical's products. The Company entered 2012 having achieved two major milestones during 2011. The first, a broad recommendation for CardioQ-ODM's use in major surgery by the National Institute for Health and Clinical Excellence (NICE), has had a noticeable impact with UK surgical probe revenue growth at 24% for the year, half as fast again as the 16% achieved in 2011. The second, ODM being selected as one of six high impact innovations to be implemented fully by the NHS in England, was originally expected to impact 2012 as the NHS had committed to launch a national drive to implement ODM or similar fluid management monitoring technology by early March 2012. However, the key details of the implementation plan were only published on 21 December 2012, effectively deferring any incremental sales boost to that achieved into 2013. The targets set for the first year are at just under 10% of those patients covered by the NICE recommendation. CardioQ-ODM was used on around 3.5% of the 837,000 English NHS patients covered by the NICE recommendation in 2012. Over the course of 2012 we increased the UK surgical installed base of monitors by 18% from 520 to 615.

In the USA, we saw a continued building of momentum throughout the second half as hospital activity levels recovered from a period of intense pressure in the middle part of 2011. Probe revenues in the second half were 19% ahead of 2011, with the fourth quarter 30% ahead of prior year. While clinician acceptance of the critical importance of intra-operative fluid management in the USA remains some way behind that in the UK and Europe, there are clear signs of this starting to change, with fluid management being discussed ever more frequently at anaesthesia congresses and in clinical journals. A small number of hospitals are making significant progress with wide-scale implementation of ODM.

In February 2012, Deltex Medical announced that it had entered into a research collaboration with Premier Inc. The first phase of this is substantially complete and involved retrospective analysis of the impact of introducing enhanced recovery and CardioQ-ODM in colorectal surgery in a major US teaching hospital. Details will be published in a series of abstracts in 2013, however the headline results include significant and substantial reductions in both total length of hospital stay and length of Intensive Care Unit stay, and a reduction by more than half of readmissions at each of 30, 90 and 180 days after surgery. Savings to the hospital, which exclude clinician costs, were over $5,000 per patient. Consequently, Premier and Deltex Medical have agreed to undertake a second phase of collaborative research. This will involve implementing CardioQ-ODM and other enhanced recovery steps in colorectal surgery in a small number of Premier's hospital members, supported both by Premier's clinical change management experts and Premier's data management group. The objectives are to develop both a substantial body of real-life evidence of the clinical and cost effectiveness of enhanced recovery with CardioQ-ODM and clear guidance to hospitals on how to implement effectively the necessary changes. The final stage of this phase of the collaboration will involve communicating the value of enhanced recovery with CardioQ-ODM and related implementation methodology to the wider Premier Healthcare Alliance which comprises over 2,700 US hospitals. Current estimates are that this roll-out phase would start in the first half of 2015 or earlier.

In Canada, we have made considerable progress with implementation of CardioQ-ODM within the Interior Health hospital system. Data from the ensuing colorectal enhanced recovery programme presented at the Institute for Healthcare Improvement conference in Florida in December showed eight day reductions in length of stay and average cost savings per patient of C$7,700 per patient (including clinician resources). Interior Health state that "based on these results, additional pathways are being developed and implemented for urologic, hepatobiliary, vascular, orthopedic and gynecologic surgical procedures; the colorectal pathway…is being extended to four additional sites within Interior Health".A key focus in Canada for 2013 will be to disseminate widely these results across the country.

Nigel Keen, Deltex Medical's Chairman, commented:

"Deltex Medical enters 2013 with traction and sales growing in key markets. In the UK all identified prerequisites are now in place to start the process of system-wide adoption of our products by the NHS in England and we are moving towards equivalent creation of market opportunities in a number of other countries. The next phase of our collaboration with Premier Inc creates an exciting opportunity to accelerate the creation of a substantial market for our products in the USA. The robust and growing international evidence base in support of ODM positions us well to build and sustain a substantial market leading position."

For further information, please contact:-

Deltex Medical Group plc                                    01243 774 837

Nigel Keen, Chairman                                         [e-mail]

Ewan Phillips, Chief Executive                            [e-mail]

Paul Mitchell, Finance Director                            [e-mail]

Nominated Adviser & Broker

Arden Partners plc                                             020 7614 5900

Chris Hardie                                                      [e-mail]

Jamie Cameron                                                  [e-mail]

Kreab Gavin Anderson                                        020 7074 1800

Robert Speed                                                    [e-mail]

Notes for Editors

Deltex Medical manufactures and markets the CardioQ-ODMÔ system. CardioQ-ODM changes the way doctors care for surgical patients allowing them to recover faster and leave hospital sooner and in better health than they otherwise would do. The performance of the system has been validated through independently conducted, randomised controlled clinical trials and is being translated into routine clinical practice in leading hospitals around the world.

CardioQ-ODM comprises a monitor and a single patient disposable probe. The probe is placed into the oesophagus through either the mouth or nose and the tip positioned facing the adjacent descending aorta. A low frequency ultrasound signal, generated by the monitor, is bounced off the blood travelling down the aorta and the Doppler principle is used to determine the velocity of the blood flow, expressed in distance per cardiac cycle - 'Stroke Distance'. The monitor also calculates the amount of time that blood is flowing down the aorta as a proportion of a cardiac cycle - 'Flow Time'.

The monitor uses a validated proprietary nomogram to extrapolate volumetric data (Stroke Volume, Cardiac Output etc) from the directly measured flow velocity. The nomogram utilises the patient's age weight and height, effectively to estimate the size of the aorta in which the velocity of the flow is being measured. Crucially this means that any reported relative change in Stroke Volume is absolutely identical to the relative change in the directly measured flow velocity variable of Stroke Distance. CardioQ-ODM immediately and reliably identifies even very small changes in the blood flow velocity allowing doctors to intevene earlier and on smaller changes than with any other approach.

Intra-operative individualised Doppler guided fluid management entails insertion and focusing of the probe to obtain a baseline reading, giving a small (200 to 250 ml) fluid challenge directly into the vascular system and seeing if Stroke Volume (or Stroke Distance) increases by more than 10%. If the increase is more than 10%, repeat fluid boluses are administered until such time as the increase is less than 10%: after this no further fluid is given unless Stroke Volume falls by more than 10% - the process is designed to achieve and maintain the individual patient's optimal Stroke Volume. CardioQ-ODM is also used during surgery to guide administration of vaso-active agents such as inotropes.

The CardioQ-ODM helps patients by enabling doctors to reduce the complications that arise from a medical condition that is common to almost all patients having surgery and many others in intensive care or arriving in the accident and emergency department. This condition is known as hypovolaemia - a reduction in circulating blood volume - and in surgical patients arises as a direct consequence of the combined effects of pre-operative starvation, the anaesthetic agents and the blood and fluid losses associated with the surgical procedure itself. Hypovolaemia means that the body struggles to get sufficient blood to the tissues and vital organs which are consequently starved of essential oxygen. This can cause medical complications including peripheral and major organ failure, which if not dealt with quickly can lead to severe compromise or even death.

There are already over 2,500 CardioQ-ODMs currently in use in hospitals worldwide and distribution arrangements are in place in over 30 countries. In addition, there are currently more than 250 clinical publications on the use of the CardioQ-ODM which have repeatedly:-

·    Validated the results of CardioQ-ODM against known standards for measuring cardiac output

·    Proved that CardioQ-ODM works in a wide range of surgical procedures

·    Proved that CardioQ-ODM delivers 50% or more reductions in post-operative complications and 25% or more reductions in length of hospital stay: better care at lower cost.

The SupraQÔis an entirely non-invasive device which uses an ultrasound probe held 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-ODM in a similar format and is used for taking snapshots or monitoring over short periods.

 

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