Full Press Release Details
| Contact: | Mark Murphy, Chief Executive Officer | |
| (949) 769-3200 |
ELECTS TO FOREGO COMMERCIAL PRODUCTION OF PRODUCT
Fee to be paid to Pro-Dex
PRO-DEX, INC. (NasdaqCM: PDEX) (the "Company")
today announced that one of its customers has elected to not bring to
market a product developed by Pro-Dex under a Development Agreement with such
customer and, instead, will pay a $250,000 fee pursuant to its agreement with
previously announced by the Company in past earnings conference calls, Pro-Dex
has developed a new battery-powered shaver system for a major player in the
spine segment of the orthopedic market. This development work was
completed in early 2009 for which Pro-Dex was paid approximately $200,000.
Since then, the customer has been addressing regulatory requirements related to,
and assessing the changing market environment for, such product. First
year revenue to Pro-Dex from this new product had been estimated by Pro-Dex at
$1.5 to $3.0 million and contingent on FDA approval of the system.
has now been informed by the customer that, given the combined impact of
1) the lack of medical reimbursement for the clinical procedures in which this
product is used, 2) the high cost of customer-developed consumable components
involved in the procedure, and 3) the cost and restrictions related to the
disposal of those consumable components, they are electing to abandon the
commercialization of the new battery-powered product, opting instead to rely on
the corded version of the device previously manufactured by Pro-Dex for
Customer currently has approximately 200 of the earlier corded systems installed
worldwide and has informed Pro-Dex that it intends to update those systems
through the purchase of adapters manufactured by Pro-Dex. The customer has
also informed Pro-Dex that it intends to enter into a Service and Supply
Agreement with Pro-Dex to support the existing corded systems already in the
field, to purchase the adapters required to update those existing systems, and
to define the terms under which new corded systems may be purchased from
Pro-Dex. The negotiation of this new Agreement is expected to take place
in the next month and the specific terms are not yet known.
on this event, Mark Murphy, Pro-Dex's President and CEO said, "We are of course
disappointed by our customer's decision. We put significant effort into
making this an extraordinary product and our customer agrees that we achieved
that. However, we understand the challenges they face in bringing this
product to market and will support them in making the right decisions for their
business. They have assured us that Pro-Dex's performance on the project
was exceptional and was not related to their decision to forego this product's
production. They further indicated that they would certainly use Pro-Dex
again for future development projects, given their positive experience with our
termination of the Development Agreement, the customer is paying Pro-Dex a
$250,000 fee and have indicated they intend to make such a payment in the next
month. Accordingly, Pro-Dex anticipates that the payment will be
recognized as revenue in its fiscal 3rd
quarter. Further, while the customer owns the resulting technology from
Pro-Dex's development service, by not entering into a formal Supply Agreement
with Pro-Dex to purchase the product containing that resulting technology, the
customer foregoes the future right to commercialize any product containing the
resulting technology, unless that product is made by Pro-Dex. Pro-Dex
continues to own all of the base technology contained in the
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operations in Irvine, California, Beaverton, Oregon and Carson City, Nevada,
specializes in bringing speed to market in the development and
manufacture of technology-based solutions that incorporate miniature rotary
drive systems, embedded motion control and fractional horsepower DC motors,
serving the medical, dental, semi-conductor, scientific research and aerospace
markets. Pro-Dex's products are found in hospitals, dental offices, medical
engineering labs, commercial and military aircraft, scientific research
facilities and high tech manufacturing operations around the world.
information, visit the Company's website at www.pro-dex.com.
herein concerning the Company's plans, growth and strategies may include
'forward-looking statements' within the context of the federal securities laws.
Statements regarding the Company's future events, developments and future
performance, as well as management's expectations, beliefs, plans, estimates or
projections relating to the future, are forward-looking statements within the
meaning of these laws. The Company's actual results may differ materially from
those suggested as a result of various factors. Interested parties should refer
to the disclosure concerning the operational and business concerns of the
Company set forth in the Company's filings with the Securities and Exchange