Resonance Health awarded WA FerriScan supply contract

Resonance Health Analysis Services (RHAS), a subsidiary of Perth-based Resonance Health (ASX:RHT), has been awarded a health supply contract from the government of Western Australia's department of health, for its FerriScan diagnostic test.

FerriScan is a non-invasive test that measures the iron content of the liver, and can be used to detect and treat iron overload disorders including thalassaemia and hereditary haemochromatosis using specifically configured MRI machines. Scan data is analysed at a centralised RHAS image processing centre using proprietary software.

The contract is for the supply of the FerriScan technology to all capable public hospital MRI centres in WA, with the MRI centre at Fremantle Hospital to be the first to offer the technology.

Costs associated with the provision of the FerriScan service will be reimbursed in full under the contract, with RHAS receiving its standard commercial fee for the provision of the FerriScan service.

"Reimbursement is the biggest challenge we face -- to get this type of reimbursement sets a precedent for other states and also starts building the evidence base required for broader reimbursement offshore," said Resonance Health managing director Dr James Williams.

Resonance Health advisory board member and professor of gastroenterology at Fremantle Hospital John Olynyk said two patients per week for the first year will have access to the FerriScan technology.

"FerriScan is safer than liver biopsy and this new agreement means that 90 per cent of patients will no longer need a liver biopsy for the indication of iron overload," he said.

"Thirteen per cent of adults in Australia will have elevated blood iron tests. There are currently more than 1000 West Australians under clinical management for their iron overload conditions, with thousands more at risk and requiring evaluation.

The contract will be reviewed after 12 months.

Capital raising

Resonance has raised AUD$1 million through the placement of nearly 8.7 million shares with Australian institutional and sophisticated investors.

The placement, managed by Tolhurst Noall, was made at an issue price of AUD$0.115 per share.

At the time of writing, Resonance's shares were steady at $0.135.

"The market's pretty hard out there at the moment for healthcare stocks still. So the fact we've raised that money and we've got new institutions and investors on board is very positive," said Williams.

Share purchase plan

Resonance is also adopting a share purchase plan (SPP), with Australian shareholders registered on September 29 each being offered up to $5000 worth of ordinary shares at $0.13 per share, the same price as the placement.

"Really it's just to top up our operating cash, give the shareholders a chance to participate at the same level that the institutions came in at," said Williams. "I would hope for a very good uptake from the shareholders. I think it's priced very attractively for everyone."

Williams said that while it is hard to predict what the response to the SPP will be, Resonance has a large register with over 2000 shareholders.

The funds raised will be used to accelerate the international roll-out of Resonance's FerriScan test .