Norwood to partner Wool Institute on flystrike prevention

By Melissa Trudinger
Thursday, 18 November, 2004

Norwood Abbey (ASX:NAL) and Australian Wool Innovation (AWI) have agreed to collaborate on the development of a non-surgical mulesing technology to prevent sheep flystrike using Norwood's needle-free injection technology.

The device under development will use a needle-free injector device to deliver collagenase to the sheep's breech area, causing the wool to fall out and inhibiting regrowth. "The use of a needle-free device is as much for the worker's safety as collagenase is a dangerous enzyme," said Richard Walmsley, CEO of Norwood Abbey's devices division.

Led by long-time Norwood collaborator and new board member Prof Ian Hunter from MIT, who is developing Norwood's needle-free technology, the two groups are working to develop a prototype device that can be used to perform Phase III-style field trials early in the new year.

The two groups have already completed several studies to determine the requirements of the device and to show feasibility. According to AWI CEO Len Stephens, the device could be ready for commercialisation within three years. AWI has committed to phasing out surgical mulesing by 2010.

The mulesing program is only one of several veterinary projects in development at Norwood utilising the needle-free delivery technology -- the company is also evaluating opportunities for applications in the swine, avian and fish industries.

Structural changes

At Norwood's AGM on Wednesday, executive chairman Peter Hansen outlined some of the structural changes made to the company as a result of the spin out of Norwood Immunology into a separate entity and the acquisition of the epiLASIK technology from Novartis division CIBA Vision.

Among the changes are three new US-based board members -- Prof Ian Hunter from MIT, who has been working with the company on the needle free delivery systems and micro needles projects; Elizabeth Wyatt, formerly VP of corporate licensing for Merck & Co; and Richard Zahn, formerly president of Schering Laboratories and corporate VP of Schering Plough.

The three have been brought into the company in part to satisfy requirements for next year's anticipated Nasdaq small caps listing, and bring broad experience in the biopharmaceutical and healthcare industries particularly in licensing, commercialisation, acquisitions, business development and medical device research and development.

The epiLASIK acquisition has already begun to pay off for the company, which has been approved for use in the US, Europe and Korea. The next generation device for laser vision correction, the device causes less damage to eye tissue than the original LASIK procedure, and was invented by the same ophthalmologist Dr Ioannis Pallikaris. The company has commenced sales and marketing of the device in the US, Europe and Asia and expects the business to rapidly grow, Hansen said.

In fact, the device has already resulted in revenues for the company, contributing to the 2003-04 revenue figure of AUD$1.58 million -- impressive for a project only purchased at the end of April, according to Hansen.

Hansen said the other Norwood product on the market, the Epiture Easytouch laser assisted drug delivery device, used to administer pain medication in a paediatric setting, has been slower than expected to start generating revenues. "Sales have been lower than previously expected, but we've had very positive feedback," he said. "Nevertheless... it's been a tough road."

Part of the problem, according to Hansen, is the slow pace at which many US hospitals move to implement new technologies, which means it takes between six months and a year to move from the initial demonstration to a purchase, often encompassing a lengthy in-house evaluation period. On the positive side, Hansen said, the device is being used more frequently than anticipated by customers who have purchased it, resulting in higher sales of the disposable component of the system.

Hansen said the difficulties breaking into the market has meant that the company has re-evaluated its marketing strategy and plans to concentrate on specific geographical regions in the US in the future.

Revenues from the two products for next year are expected to reach around $14 million, Hansen said, and anticipates being cash-flow positive and profitable by the end of 2006.

Having successfully listed on AIM earlier this year Norwood Immunology (AIM: NIM) has managed to retain its value in the difficult European market, Hansen said. The company has been working with partner TAP to develop the protocols for its forthcoming US clinical studies, which are now expected to commence early in 2005.

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