Echo Therapeutics, Inc.
) continued to rise after the company reached a collaboration
agreement with Hong Kong-based Medical Technologies Innovation
Asia (MTIA), Ltd., through which, its Symphony continuous glucose
monitoring (CGM) system will be developed, manufactured,
marketed, and distributed in China, Hong Kong, Macau and Taiwan.
Since the announcement on Dec 10, shares rose 6.8% after the
market closed yesterday.
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The collaboration agreement includes a license arrangement and
equity investment in ECTE. Under the licensing, MTIA will bear
the development, manufacturing and marketing costs for bringing
Symphony CGM System in the Chinese market. MTIA has established
sales channels in more than 1,000 hospitals across the China
Under the equity investment arrangement, MTIA will purchase
1,818,182 shares of Echo Therapeutics' common stock, par value
one cent per share, at $2.75 per share, reflecting a 1.5% premium
to closing price on Dec 9, 2013.
Given the prospects of the deal, ECTE's major shareholder,
Platinum Montaur has decided to invest in 69,569 shares of its
common stock for $2.75 per share. These equity investments will
result in total equity investment of $10 million in Echo
Last month, ECTE released positive results of its study on
wireless Symphony CGM. The study revealed that Symphony is
capable of monitoring glucose levels as it did on 32 patients in
critical care units at four hospitals.
The Continuous Glucose-Error Grid Analysis showed that readings
in Symphony CGM were 97.9% accurate and 1.8% were benign errors,
with a combined A+B value of 99.7%. The glucose values
range was 49 to 324 mg/dL.
The global market for glucose monitoring systems is measured at
roughly $10 billion. The glucose monitoring devices include blood
glucose meters and test strips which provide single blood glucose
Based in Philadelphia, Pa., Echo Therapeutics is a medical device
company aimed at developing enhanced skin permeation technology
Prelude SkinPrep System, and non-invasive, wireless, and glucose
monitoring system. ECTE stated that it will apply for market
approval of Symphony CGM system in the European Union in the
fourth quarter of this year.
Echo Therapeutics posted a narrower loss of 49 cents per share
for the third quarter of the year compared with $1.07 in the
comparable quarter of 2012 as well as the Zacks Consensus
Estimate of 56 cents. The decrease in loss was attributable to
lower shares outstanding at the end of the quarter. Net loss, in
fact, increased 22.8% to $5.2 million from $4.3 million a year
Revenues in the quarter slid 27.1% to $22.6 thousand,
significantly lower than the operating expenses of $4.95 million.
This resulted in operating loss of $4.9 million compared with
$3.6 million in the third quarter of 2012.
The company's research and development expenses rose 28.8% to
$2.8 million from $2.1 million in the third quarter of 2012. The
increase was attributable to higher development, regulatory and
clinical expenses, as well as manufacturing preparation costs.
Currently, ECTE retains a Zacks Rank #2 (Buy). Other stocks that
are also worth a look in the medical instruments industry include
Natus Medical Inc.
). All of them carry a Zacks Rank #1 (Strong Buy).