RNS Number:2287Z
Provalis PLC
01 June 2004
FOR IMMEDIATE RELEASE 1 JUNE 2004
Provalis plc
G5 Diabetes Diagnostic Test Nears Completion of Clinical Trials
In-House US Sales Force to be Established as Part of a New Commercialisation
Strategy For G5
Provalis plc (LSE: PRO; NASDAQ: PVLS), the Medical Diagnostics and
Pharmaceuticals Group, is pleased to report two landmark developments for its
Medical Diagnostic business.
G5 Clinical Trials
G5, Provalis' fully automated, one-step, point of care diagnostic platform is
nearing completion of clinical trials in which it has been used for measuring
HbA1c levels in diabetic patients. In summary:-
* These extensive trials are being carried out at 6 centres in the US and
Europe and are assessing hundreds of patients using multiple instruments;
* The trials are progressing to schedule and Provalis is confident of filing
all necessary US regulatory submissions by the end of June 2004 with
launch in the US and Europe during Autumn 2004;
* Feedback from physicians involved in the trials confirm G5 meets the market
needs of ease of use, accuracy, robustness and economic pricing.
New Commercialisation Strategy for G5
Provalis has previously commercialised its medical diagnostic products by
appointing world-wide distributors, which in turn appointed sub-distributors on
a country-by-country basis. This has proved unsatisfactory in several respects,
particularly Provalis retaining sufficient margin and having no direct control
of, or feedback from, the sales process, and accordingly:-
* Provalis is now establishing its own US sales and marketing operation, with
a direct sales force, to promote, market and sell G5 in the US under
Provalis branding;
* The US operation will manage the sale of G5 through the main
sub-distributors in the US, which themselves will promote and market the
product using their own, much larger, sales forces;
* Provalis has recruited Bert Valada as Vice President and General Manager of
its US operation. Mr Valada has over 20 years sales experience in the
specialist US point of care diagnostic market, including senior positions
with companies such as Abbott Diagnostics and Behring Diagnostics;
* He will be based at Provalis' US head office in Orange County, Florida, and
be supported initially by 3 regional Vice Presidents of Sales, one covering
each of the West Coast, Mid-West and East Coast regions;
* Outside the US, Provalis will appoint local distributors on a country by
country basis, with G5 again being sold under the Provalis brand but making
full use of the distributors' in-country experience.
This strategy allows Provalis to:-
* Fully exploit the market experience obtained from 4 years of
commercialising Glycosal, Provalis' first generation diabetes test;
* Focus and control the promotion and marketing of G5, particularly to busy
diabetes clinics;
* Shorten the supply chain and thereby receive more accurate forecasts of
future demand;
* Obtain more direct market feedback and so respond better to customer
demands and needs;
* Build recognition of the Provalis brand in the point of care diagnostic
market; and
* Retain much more of the margin from sales of G5 than would be the case if
one or more major distributors were appointed.
Phil Gould, Chief Executive Officer of Provalis, said "We are very pleased that
the development and regulatory programme for G5 is progressing so well. We
anticipate launch of the product in the USA and Europe, on schedule, during the
Autumn. We have been reviewing our commercialisation strategy for G5 for some
months now and, despite significant interest from a number of major US
diagnostic companies, we have decided that the long term interests of our
shareholders are best served by the establishment of our own US sales office".
END
For further information:-
Dr Phil Gould, Chief Executive Officer, Provalis plc, Tel: 01244 833463
Mr Peter Bream, Finance Director, Provalis plc, Tel: 01244 833552
Mr Lee Greenbury, Company Secretary, Provalis plc, Tel: 01244 833402
Lisa Baderoon, Buchanan Communications, Tel: 020 7466 5000
lisab@buchanan.uk.com
Provalis' Internet Website ; http://www.provalis.com
"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of
1995: Statements in this announcement that relate to future plans, expectations,
events, performances and the like are forward-looking statements as defined in
the US Private Securities Litigation Reform Act of 1995. Actual results of
events could differ materially from those described in the forward-looking
statements due to a variety of factors. Such factors include, among others: the
viability of the Group's products, which are at various stages of development;
the generation of sufficient operating cash flow by the Group's pharmaceutical
and medical diagnostic businesses to finance the ongoing development of these
businesses as well as the Group's research and development activities; the
success of the Group's research and development strategy and activities;
uncertainties related to future clinical trial results and the associated
regulatory process; the execution and success of collaborative agreements with
third parties; availability and level of reimbursement for the Group's products
from government health administration authorities or other third-party payors;
the rate of net cash utilisation within the Group and, hence, the Group's
possible need for additional capital in the short, medium and/or long term; the
Group's intellectual property position and the success of patent applications
for its products and technologies; the Group's dependence on key personnel;
general business and economic conditions; the impact of future laws, regulations
and policies; stock market trends in the Group's sector; and other factors
beyond the Group's control that may cause the Group's available capital
resources to be used more quickly than expected. These and other factors that
could affect the Company's future results are more fully described in its
filings with the US Securities and Exchange Commission, in particular the latest
20-F filing, copies of which are available from the Company Secretary at the
Company's registered address.
Notes to Editors
Provalis' G5 Diabetes Diagnostic Test
G5 is a fully automated diagnostic platform that currently tests for glycated
haemoglobin ("HbA1c") with the facility for performing other diagnostic tests
which are in the process of being developed. G5 has been designed with the need
of busy diabetes clinics and General Practitioner surgeries in the USA in mind.
It achieves test results as good as those obtained from instruments based in
full laboratories. Results are available in 7 minutes allowing busy clinics to
get results in "real time". It also allows tracking of individual patient
results.
Regulatory approvals will be sought from the US FDA for 510K, CLIA waiver, and
prescription home use.
Provalis is experienced in HbA1c testing in the point of care market and has to
date produced and supplied the semi-automated test Glycosal(R), through 2
semi-exclusive global distributors to over 45 countries around the world. Some
10,000 instruments and more than 2 million individual test cartridges have been
distributed.
Provalis' Dedicated US Sales Team
The G5 Diabetes Diagnostic Test, unlike the current Glycosal test, will be sold
in the US through Provalis' own direct sales force. This direct customer contact
will allow for more accurate forecasting and planning and importantly allow
Provalis to shorten the supply chain, focus the sale of the test into high
volume doctors offices and dedicated diabetes clinics, and enable Provalis to
retain more of the margin on sales.
Spearheading this US initiative is Bert Valada who has been appointed Vice
President and General Manager of Provalis Diagnostics USA and who will be based
in our Florida Office. Mr Valada has over 20 years sales experience with Abbott
Diagnostics, Behring Diagnostics and most recently specialist point of care
suppliers selling into Doctors offices in the USA. He will initially be
supported by a 3-man sales team, which is in the process of being recruited, but
this will be expanded as the demands of the operation require.
G5 will be launched in the US through the many sub-distribution companies in the
US, by the end of 2004. This launch will be supported by Provalis' advertising
campaign, which will primarily be directed at existing and potential HbA1c
diagnostic users.
Commercialisation Outside The USA
In the rest of the world, G5 will be promoted and marketed by a series of local
distributors, supported by some of Provalis' own direct sales initiatives. These
distributors will be chosen on the basis of their in-country experience of
selling diagnostic products, and will be managed by Provalis.
HbA1c (Glycated Haemoglobin)
HbA1c, or A1c as it is also known, is formed when glucose binds to the
haemoglobin in red blood cells, so becoming "glycated", during the blood cells
typical 90-day lifespan. The quantitative measurement of HbA1c is well
established as a way of determining a diabetic patient's long term control
profile. Unlike daily glucose monitoring, which only provides a "snapshot" of a
patient's glucose level at the time of testing, the measurement of HbA1c
provides an average level over the previous 90 days, so giving a better
indication of the long-term progress of the diabetic's disease and therapy
management.
Bert Valada
Bert Valada, a US national, joins Provalis as Vice President and General Manager
of Provalis Diagnostics USA from PointDX a US based company engaged in point of
care marketing and sales of radiology equipment. Mr Valada was a regional
manager of sales and marketing for Abbott Diagnostics and a Vice President for
Behring Diagnostics Inc., before beginning to specialise in the sale of
diagnostic products to the US point of care market.
Questions and Answers
Question: What are the main advantages of G5 over Glycosal?
Provalis: G5 is a fully automated diagnostics platform. Unlike Glycosal, G5 is
more suitable for busy clinics and doctors' practices. It is also a versatile
and inexpensive diagnostics platform, and whilst it will initially run just
HbA1c tests, it is capable of running an extensive menu of other tests, which
Provalis is currently developing for introduction in the future.
********************
Question: How do you know that there is demand for G5 - hasn't this been the
problem with Glycosal?
Provalis: We have placed over 10,000 Glycosal instruments within the last three
years. Glycosal has been very successful and it has paved our way into the US "
point of care" (POC) diagnostics market. About 200 new instruments are
installed every month which underpins that demand for low cost POC testing.
Glycosal is probably the leading low cost POC glycated haemoglobin product in
the USA. With over 16 million diabetics in the USA and over 170,000 primary care
physicians and many more healthcare professionals, there should be more than
adequate sales opportunities for the product.
G5 builds upon that leadership; it is exactly the product our customers have
been saying they want. It helps them do something they want to do namely switch
from using outside diagnostic laboratories to in-house point-of-care solutions
in a format that is easy to use, accurate, robust, and with economical pricing.
The demand is there and we have the product to meet that demand.
********************
Question: What has Glycosal taught you about the market for diabetes
diagnostics?
Provalis: Provalis' strength thus far has been largely in product development,
gaining US regulatory approval - we already have three FDA approvals for our
other products - and manufacturing and supply. Over the last three years with
Glycosal we have also learned a great deal about the market, particularly in the
USA where we have conducted a large number of field and site visits and used an
experienced USA diagnostics consultancy to help develop our plans.
The market for point of care diabetes testing for HbA1c has moved on to demand a
fully automated test preferably with other tests available. We know G5 meets
that market need at a low capital cost for the doctor and a low cost per test so
giving a good profit incentive for the physician to test at the point of care
and a substantial improvement in Provalis' margins.
The key lesson learned is that our ultimate users, the diabetes clinics and busy
GP surgeries, want HbA1c testing but will not tolerate down-time, delays or
excuses. We believe this initiative will help realise this.
********************
Question: How would you describe the competitive landscape for G5?
Provalis: Certainly the POC market in the US is attracting a lot of interest,
particularly to monitor diseases like diabetes and cardiovascular risks and
complications. Provalis has a stronger offering in this area, with G5 providing
an easy to use 'automatic' operation, a test menu, and a low cost entry point
for the physician with technical performance as good as a lab. Also, we can
build on the leadership with our original diabetes testing product Glycosal in
the POC market. Other products are certainly emerging, but we see them as being
less versatile, having regulatory constraints or being more costly than G5.
********************
Question: Will the introduction of G5 cannibalise Glycosal?
Provalis: There is bound to be some degree of cannibalisation - G5 does things
that Glycosal doesn't, but the real growth isn't one of substitution. G5 will
appeal to clinics that Glycosal was not able to access. Introduction of the
product will mean more clinics can switch to point-of-care diagnostics. There
will be easy pickings for sure but our target market remains the busy specialist
clinics and doctor's surgeries that are still using external laboratories. We
think G5 is the product that can convince them to switch, particularly with the
strong profit incentive for the physician."
Our existing global distributors for Glycosal will continue to market that
product and to service their existing user accounts.
********************
Question: You've decided to sell G5 in the USA through your own sales force
rather than use third party distributor agreements. Why have you decided on this
change?
Provalis: Provalis has established a direct sales operation for G5 in the USA
using a specialist sales force.
The main reason for the change is that we believe we can retain higher margins
for the business by doing it ourselves, can develop the Provalis diagnostics
brand in the US and have direct customer contact. This last point is important -
having direct contact aids our forecasting and planning processes and
importantly guarantees G5 users see short supply chains - these are busy clinics
- there can be no down-time. This is a fast moving market and we need to listen
more to what our customers want, and other tests that they need on the G5
platform. Our own sales force is the best way of keeping that dialogue open.
Finally, while our distributors have many products to promote we will have only
one - we simply want to make sure that G5 gets the priority it deserves.
********************
Question: Who's going to Head this Specialist Sales Force?
Provalis: Provalis has recruited a new Vice President and General Manager for
its Diagnostics business in the USA - Bert Valada - who comes to us from with a
wealth of experience in sales in the US diagnostics industry at Abbott and
Behring as well as small companies in physician sales. Bert is presently
recruiting our regional sales specialists and establishing relationships with
distribution partners to service physician office accounts in preparation for
product launch.
********************
Question: Why are you not going for the more conventional approach of using one
of the big distributors? - Why do you think you can sell more G5 in the US than
either a multi national or your current partners?
Provalis: With the big distributor model, which we used for a number of years
with Glycosal, Provalis has acted as an Original Equipment Manufacturer (OEM)
and supplier. We have struggled with product recognition, a squeezing of
margins and difficulties with maintaining the sales focus of the third party
distributor whose salesmen have a number of other products to sell. In
addition, we have recently suffered from extended supply chains caused by the US
model of extensive multiple sub-distribution which has given us poor visibility
of demand, poor sales forecasting and resulting difficulties in operational
planning and corporate reporting. We also believe G5 is the right product on
which to build this initiative and the time is right to launch the Provalis
diagnostics brand in the USA, establish our own presence in diabetes testing and
be free to launch another series of tests that do not conflict with the
established sales or future plans of another distribution partner.
********************
Question: Why do you think you can make this work?
Provalis: We have now had 4 years of close commercial interaction with the US
point of Care (POC) market, understand more of the US market dynamics, the
operation of contracted sub-distribution and have extensively reviewed with a
leading commercial consultancy how best to use this knowledge with a ground
breaking product like G5 to enter the US market. We've decided on a direct
sales specialist approach using sub-contracted distribution to physicians'
offices.
********************
Question: Can Provalis justify this investment?
Provalis: The main cost of building this sales infrastructure is obviously
people, promotion and product training. What we get back is a greatly increased
margin, market positioning and direct customer access for new products.
As you would expect, we have fully costed this initiative and have prepared
detailed financial forecasts. Obviously, we cannot publicly disclose these, but
what we can say is that although this will be a significant investment for the
Company, the significantly higher margin we receive on sales is expected to give
increased returns over those we would have received had we sold G5 through one
or two major distributors, which was our previous method of operation. We
therefore believe this investment is fully justified.
********************
Question: What do you plan to do outside the USA?
Provalis: We intend to sell G5, as a branded Provalis product, through a
network of locally based distributors, each managed by Provalis. This will allow
us more control over the registration, launch and promotional plans in each
country and give us more direct market feedback on sales. By working with
distributors having specific, on the ground, knowledge of their country or
region, we can tailor product offerings, distributor and customer training and
promotional activities to the needs of that market.
********************
Question: When is G5 going to be launched?
Provalis: For the USA the product first has to achieve FDA approval, which we
are confident of applying for in the 2Q of 2004. We would then launch G5 as
soon as possible after FDA approval is granted. We remain on track for a US
launch in the autumn (fall) of 2004.
In Europe the product has to receive CE marking prior to launch. We expect this
in the late Summer, with the first sales generated also during the autumn of
2004.
********************
Question: What are the other tests for G5, and when are they going to be
launched?
Provalis: We have an interest in monitoring chronic disease with the G5 POC
product. Our first test is for HbA1c in the area of diabetes and the follow on
tests will be in the area of cardio vascular disease. The test earmarked for
spring 2005 introduction will be high sensitivity C-reactive protein (hsCRP),
which detects levels of inflammation in coronary arteries. A growing body of
evidence suggests that inflammation plays a key role in the biological processes
than can lead to the rupture of fatty deposits in blood vessels; this then
hinders the flow of blood to the heart, and is a leading cause of heart attacks.
Provalis is also developing a number of other tests.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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