Continuous Open Airway Therapy company SomnoMed Limited (ASX:SOM) has agreed to acquire the remaining 50% interest in SMH Biomaterial AG for €540,000 (A$758,883) in cash and shares from co-shareholder Konrad Hofmann.
SMH Biomaterial produces the company’s Flex lining material and the device cleaning material SomTabs which was launched last year.
The Flex material is exclusively produced for SomnoDent® devices. It has superior proprieties when it comes to durability, discolouration and the development of unpleasant odours usually associated with dental devices with other common lining materials used on a regular basis.
SMH Biomaterial is also at an advanced stage of developing next generation materials, which are currently being tested and are expected to be introduced to the market by early 2016.
“The Flex lining material has and will give SomnoDent® devices a competitive advantage over other devices,” executive chairman Dr. Peter Neustadt said.
“Proprietary materials are one of the key areas which differentiate oral appliances, especially when it comes to patient comfort, which is directly linked to compliance, and durability, which is an important factor when it comes to insurance reimbursement and comparative health economics.
“The acquisition and integration of 100% of SMH Biomaterial AG will allow us to produce and to continue developing unique materials which are contributing to our position as the supplier of the highest quality oral appliances for the treatment of obstructive sleep apnea on a worldwide basis.”
The purchase price for the 50% holding in SMH Biomaterial AG will be paid €340,000 in cash and €200,000 in SOM shares, to be issued at the weighted average market price of the shares during the three months prior to completion.
Completion is expected to take place on 1st July 2015.
Recent Activity
SomnoMed expects to sell over 14,000 units of its obstructive sleep apnoea devices in the current quarter, new record for sales.
This follows the growth of direct sales in the U.S. and a solid acceptance of its new products. Good growth is also being recorded in European markets, especially in new and emerging markets.
Total volume in the financial year ending 30th June 2015 is expected to exceed 50,000 units despite lower Q3 sales while revenue will grow by over 25% to $32.5 million.
Analysis
The ownership of the proprietary material is a key differentiator in oral devices and appliances, adding to the "moat" around the SomnoDent® device.
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