Optiscan receives $5m order from Pentax

Optiscan (ASX: OIL) has received an order in excess of AUD$5 million from collaborator Pentax to supply miniaturised microscope components for a flexible endo-microscope, as the Japanese company gears up to launch the new product on the market in May.

While the exact number of units -- which comprises miniaturised microscope scanner inserts and laser confocal control box sub-systems to be incorporated into the finished flexible endoscope -- is confidential, the order exceeds Optiscan's initial estimates of 40-80 units for the first year of production, said CEO Matthew Barnett.

"It shows that Pentax is committed to this technology and is a measure of their confidence for its success in the market," he said.

The two companies have been working together for three years to develop the flexible endoscope using Optiscan's miniaturised microscope technology and Pentax's miniaturised camera technology.

"It's been a long and very focused process, and in a typical Japanese approach, very rigorous," said Barnett.

Last April the companies announced outstanding clinical results from trials of the device, demonstrating sensitive and specific diagnosis of early cancers and precancerous conditions comparable to that obtained by conventional biopsy and histology. The results were later published in the prestigious journal Gastroenterology.

This was followed in October by both CE Mark approval and FDA approval, opening the doors for Pentax to launch the device at this year's Digestive Diseases Week Congress, to be held in the US in May. The global market for flexible endoscopy is around US$900 million, and Pentax is currently the number two player in the market, which is dominated by Olympus, Pentax and Fuji.

In the meantime, Pentax will be working hard to move the device from its R&D department into full production. Barnett said the revenues from this first order would occur mainly in the 2005-2006 financial year, although revenues from a previous order made in October 2003 would be reflected in the upcoming half year results, expected to be announced in the next couple of weeks.

And discussions are ongoing with a number of potential partners for further licensing of the technology in other fields, including rigid endoscopy.

The share market responded positively to the news, with heavy volumes of trading reaching a high of $0.41 over yesterday's closing price of $0.36. At the time of writing, Optiscan shares were trading 5.56 per cent higher at $0.38.