SOURCE: CLX Medical, Inc.
CLX Medical, Inc. CEO Discusses Opportunity Presented by the Planned Acquisition of ThyroTest®
Zonda, Inc. Website
CLX Medical, Inc. Website
MURRIETA, CA--(Marketwire - September 25, 2008) - CLX Medical, Inc. (OTCBB: CLXN) CEO Vera Leonard today commented on the opportunities presented by the acquisition of ThyroTest®, a rapid thyroid stimulating hormone (TSH) screening device used for the detection of hypothyroidism in adults, a common thyroid disease.
CLX Medical, which is focused on the marketing and distribution of unique medical diagnostic testing products, has entered into a definitive agreement to acquire ThyroTest® and is seeking to close the acquisition as soon as possible.
ThyroTest® is FDA cleared and has also achieved CLIA waived status, so the test can be administered in the more than 100,000 CLIA waived doctors' offices in the U.S., as well as in any non-waived laboratory.
Regarding the acquisition of ThyroTest®, Ms. Leonard stated, "The ThyroTest® product offers a unique opportunity. Its success will be realized through establishing the concept of in-office testing for hypothyroidism. Getting practicing physicians to incorporate a new test into their office routine requires intense, focused effort. Often, large companies, particularly those that operate in multiple markets, manage multiple sales forces and must move quickly to make strategic acquisitions, find that the return-on-investment from building a new opportunity from the ground up is not as attractive as that offered by an accretive acquisition. A single product, even one with the potential of ThyroTest®, can get lost in this environment.
"Having impact on the way a doctor manages a disease state requires exquisite focus. We believe that as a small company CLX Medical can, and will, give ThyroTest® the focused support it needs in order to capture this largely unrecognized and untapped market opportunity.
"We will not be distracted in our pursuit of establishing ThyroTest® as the dominant player in what we expect to be a $1 billion-plus worldwide screening market. We believe that once the product is established and the diagnostic world recognizes the opportunity, we will see other companies launch similar products. That is where being first-to-market comes in as a key strategy. Once other players enter the market, the market grows and the product at the top of it grows exponentially larger and faster than the newcomers. In other words, the pie gets bigger and the first-to-market company continues to enjoy a bigger piece of the bigger pie.
"I hope this brief discussion regarding the potential of ThyroTest® will help CLX Medical shareholders understand why we are so optimistic about the product's potential and why we are so focused on closing this acquisition so our marketing and distribution strategy can be implemented."
ThyroTest® is a qualitative rapid diagnostic test that allows physicians to screen adult patients for hypothyroidism in approximately ten minutes with a whole blood sample.
Hypothyroidism develops when the thyroid gland does not produce enough thyroid hormone to properly regulate the body's metabolism. A lack of thyroid hormone affects many body systems. The incidence of hypothyroidism tends to increase with age, with older people, especially women, at highest risk. Common symptoms include weight gain, fatigue, mood swings, weakness, dry and coarse skin and hair, hair loss, depression, decreased libido, trouble swallowing, increased cholesterol, heavy or irregular periods or trouble getting pregnant.
Approximately 120 million thyroid-related lab tests are performed in the United States each year. At an estimated average cost of $40 per test, the U.S. market is currently valued at nearly $5 billion. Approximately 45 million of those tests are conducted in order to diagnose thyroid dysfunction. CLX believes that ThyroTest® is an appropriate, cost-effective first-step for those 45 million diagnostic TSH tests. This current U.S. market opportunity is amplified by the CLIA waived status, which makes the opportunity to meet American Thyroid Association recommendations for screening every individual at age 35 and every five years thereafter a reality.
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About CLX Medical, Inc.
CLX Medical, Inc. (CLX MEDICAL INC.) holds a 51% equity interest in Zonda, Inc. (Zonda Incorporated - Official Web Site), which has developed several rapid point of care tests for medical and non-medical markets, including a rapid test for chlamydia. CLX has also entered into a definitive agreement to acquire ThyroTest®, a rapid thyroid stimulating hormone (TSH) screening device used for the detection of hypothyroidism in adults, a common thyroid disease. CLX Medical is focused on the successful worldwide distribution of these and any additional products it may acquire or license.
All statements included in this release, including statements regarding potential future plans and objectives of CLX Medical, Inc. are forward-looking statements. Such statements are necessarily subject to risks and uncertainties, some of which are significant in scope and nature beyond CLX Medical's control. There can be no assurance that such statements will prove accurate. Actual results and future events could differ materially from those anticipated in such statements depending on many factors. Historical results are not necessarily indicative of future performance.
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The Interview with Q & A and Vera Leonard, CEO of CLX Medical:
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Interview
Q&A with Ms. Vera Leonard,
Chief Executive Officer of CLX Medical, Inc.
Conducted: August 13, 2008
The following Q&A with Ms. Vera Leonard, CEO of CLX Medical, Inc., pertains to
the planned acquisition of ThyroTest®, a rapid thyroid stimulating hormone (TSH)
screening device used for the detection of hypothyroidism in adults, a common thyroid
disease. FDA clearance and CLIA waived status have already been achieved for the
ThyroTest® product.
Q. CLX Medical just announced its planned acquisition of ThyroTest. Why
did you target this device to be the next product that CLX would bring under
management?
A. One of the things we look for in targeting an acquisition is a product that addresses
a large market opportunity. The next item on the check list is whether or not that market is currently being served.
When we uncover an opportunity that meets both of those criteria we move to the next step; how close is the product
to being marketable, that is, what regulatory hurdles does it still have in front of it? The ThyroTest product is a rare
fi nd in that it addresses a huge, underserved market and already has all the regulatory hurdles behind it by having the
FDA clearance and CLIA waived status. In our opinion the product is available because it was never given a focused
sales and marketing effort. The existing market, the potential for growth and the level of performance ThyroTest
offers make a compelling case for this acquisition.
Q. How common are hypothyroidism and the symptoms that might indicate the condition?
A. That’s a good question, and I think what you are really asking is: what is the market potential for a test that can
help diagnose hypothyroidism? I’ll answer it two ways. First, hypothyroidism is much more common that most
people realize. Because the risk increases with age, the symptoms are often dismissed as just “getting older.” There
are currently about 13 million individuals in the US that are currently diagnosed as hypothyroid. Estimates are that
there are at least another 13 million that are undiagnosed. Those are important statistics but they do not describe the
market for ThyroTest.
In large part, the market for ThyroTest is defi ned by its symptoms. Those symptoms include, gaining weight
inappropriately, inability to lose weight with diet & exercise, feeling cold when others feel hot, feeling fatigued or
lethargic, irregular menstrual cycles, infertility, depression, mood swings, and increaed forgetfullness.
Because the number of symptoms is so vast and thyroid disorders can negatively impact so many human body organs,
ThyroTest can make a real difference in several therapeutic areas creating a signifi cant sales opportunity. Just looking
at the symptoms I have mentioned; (and by the way, these are not all of the symptoms), you see that the product
has usefulness to Obstetricians & Gynecologists, Infertility Specialists, Psychiatrists, Internists, Endocrinologists,
Cardiologists, as well as Family Practitioners. This is the opportunity presented by helping a doctor identify the
cause of a patient’s existing symptoms.
Hypothyroidism is generally associated with aging; therefore the number of individuals suffering from hypothyroidism
is expected to grow with the aging of the population. Experts estimate the US market growth to be in the range of
5-10% per year for the foreseeable future.
In addition, the American Thyroid Association recommends that every person be screened for hypothyroidism at age
35 and every fi ve years thereafter. That’s a huge market by anybody’s count.
1
Q. What is the strategy for U.S. and worldwide distribution for ThyroTest?
A. In the U.S., working with our key consulting group, American Health Partners, we will launch the product
through select national and regional medical-surgical distributors. That product launch will be accompanied by ads
in appropriate medical and industry journals, trade show attendance and targeted advertising campaigns.
Immediately upon close of the acquisition we will apply for a CE certifi cate that will allow us to market the
product through our existing group of European distributors as we work with our Master Distributor to identify and
engage additional distributors. Of course, already having FDA clearance and CLIA waiver will make acquiring CE
certifi cation much easier and, we hope, much faster.
We will add other countries to our distribution strategy once we have a solid base of business operating in the U.S.
and Europe.
Q. What advantages are there to having the CLIA Waived status for the ThyroTest product?
A. Having CLIA waiver is huge! In order for doctors to screen individuals for hypothyroidism, or to conduct an inoffi
ce work-up of patients presenting with symptoms he or she must have a product that meets four criteria. It must
be reliable, it must be cost effective, it must be able to give a rapid result, and it must be available. Irrespective of
any of its other qualities, unless the device has CLIA waived status it is not available for use in most doctors’ offi ces.
In that case, the doctor’s only option is to send the specimen out to a non-waived lab for testing. This is an expensive
option for the patient so most doctors only use it when overt symptoms are present.
If the only option available to the doctor is a lab test, the cost of testing prohibits being able to screen for hypothyroidism.
Additionally, when a doctor sends a test out to the lab, the doctor is not paid for the test, the lab is. So having a CLIA
waived test generates revenue for the practice where sending it out does not, as well as keeping the cost of testing
low enough that doctors can conduct screening in the offi ce.
Based on our most recent information there are 107,000 doctor offi ces with CLIA waived licenses.
Q. CLX Medical recently announced that it had targeted LETI Laboratories to serve as European master
distributor for its subsidiary products. Will this company distribute ThyroTest in Europe?
A. Yes. We expect to work with LETI for ex-US distribution of all our products. There are several benefi ts to this
plan. It streamlines our inventory management logistics tremendously. It simplifi es our worldwide receivables
process and will allow us to more easily forecast demand for our contract manufacturers as we gain more insight
into ordering patterns throughout Europe. Importantly we are building a relationship with a strong, knowledgeable
partner who can help us develop and manage our ex-U.S. business. The individuals we work with within LETI are
experts in diagnostic products from a scientifi c as well as a marketing perspective. They understand the European and
worldwide markets and are excited about the unique products we are bringing them. Still, successful relationships
come down to the people involved. Are our values compatible, are we equally committed to mutual benefi t? We
believe we have found that right kind of relationship with LETI.
Q&A with Ms. Vera Leonard,
Chief Executive Offi cer of CLX Medical, Inc.
(continued)
2
LETI Laboratories is a well established company and highly regarded in the diagnostics industry. In addition to
their operations in Europe; they have operations in Latin America, South Africa and other areas that will likely be of
interest to us as we expand our marketing efforts.
Q. What does the competitive landscape look like for ThyroTest?
A. While there are other rapid products that test for thyroid function, we believe that ThyroTest offers signifi cant
opportunity to establish a dominant position in this market. Beyond product performance, which, of course is very
important, competitive advantage can also be established through a strong marketing and distribution strategy. Inoffi
ce screening for hypothyroidism is a young market, fairly early in its development. We certainly expect to see
others enter the market as its value becomes more widely recognized.
Our strategy is to establish ThyroTest as the
market leader and maintain its position as the product of choice in a rapidly growing worldwide market.
Q. How do you expect to fi nance the acquisition of ThyroTest and marketing for the product postacquisition?
A. We have negotiated a good purchase price and process with ThyroTec, the company that owns ThyroTest. We
are currently preparing a convertible preferred private placement offer through which qualifi ed investors can benefi t
especially well from this acquisition. The private placement memorandum will be available for distribution in the
next few days. Through this vehicle we expect to raise enough fi nancing to complete the acquisition and fund at least
12 months of operating costs going forward.
Q. It has been a year since you joined Zonda and 8 months since joining CLX. How would you characterize
this fi rst year?
A. The fi rst words that come to mind are challenge, potential and patience. The patience part has been one of the
biggest challenges. As you may remember, shortly after I joined Zonda in August 2007, we were notifi ed that some
of our European distributors were using product labeling that had not been added to the technical fi le required for
sales in the European Union. So my fi rst offi cial act was to halt sales and take action to avoid a mandatory product
recall. The process required pulling in all the labeling and artwork in use throughout the European market, acquiring
professional translations of all the product information, getting it through the approval process, and one-by-one,
allowing distributors to resume sales of HandiLab products. Of course this took a few months to accomplish but
it gave me an opportunity to meet with each of our distributors and quickly understand where opportunities for
improving our European distribution strategy lay.
It also helped me formulate a plan to become owners of our own European Union certifi cation rather than relying
on our contract manufacturer for that regulatory clearance. This is where “patience” comes in. We realized that
while the products have a pretty good track record, and demand was increasing, we needed to go back and get some
foundational issues in place. Specifi cally, we needed to establish a quality system that meets ISO standards. This
would be required in order to achieve FDA clearance for any of our products as well as to become the certifi ed CE
holder for European sales. We researched regulatory consultant services and contracted with Safi s Solutions in
Indianapolis, IN to help us with all our regulatory processes including the establishment of a quality system.
Q&A with Ms. Vera Leonard,
Chief Executive Offi cer of CLX Medical, Inc.
(continued)
3
I am pleased to say that we have completed all the Standard Operating Procedures (SOPs), and internal systems
required. What remains is to conduct a mock audit, address any defi ciencies the mock audit uncovers, and then
schedule an offi cial audit by an accredited Notifi ed Body that will grant the CE certifi cates. This has been, and
still is, a huge project but one we believe is critical for regulatory clearances as well as market position as a quality
company.
Our next big decision came when we had an opportunity to improve the readability of the HandiLab products
through an adjustment to the volume of reagents used in the device. We were getting feedback that sometimes the
volume of reagent in the reading chamber would wash out the end-result color making the result diffi cult to interpret.
We worked with various adjustments to the reagent volume and were able to identify one that gave consistent results
without interfering with the clarity of the end-result. We immediately ordered three lots of the devices and started
looking for a virology lab to confi rm the performance at the new level and perfect the protocol we would use for FDA
clinicals that we want to start as soon as possible.
Well, you know the issue we encountered in that process. What you may not know is that the concept of the
HandiLab Chlamydia technology is unique in that it does not test for the presence of the chlamydia organism; it tests
for the presence of an enzyme that the human body produces only in the presence of the chlamydia organism. This
makes the lab approach to validation very different from any standard validation procedure. Rather than ordering
several strains of chlamydia and testing them on the device, the lab must order the organisms, grow them on human
tissue cells and then test for the presence of the target enzyme. A validation process like this depends on quite a few
variables. You must use the right strain of organisms, they must be viable enough to grow dependably on human
tissue cells and they must grow to an adequate concentration in order to produce enough target enzyme to be detected
by the device. The more variables a process has, the less likely it will succeed the fi rst time. We are working closely
with the lab through management of each of the variables so that we can confi rm the performance of the new-fi ll
device and perfect the protocol we will use in the FDA clinicals.
So, as a quick review, in this fi rst year we have:
• Cleaned up all product labeling and translations worldwide to comply with European Union requirements
• Begun the process to acquire a CE certifi cation under our name so we can better manage our ex-US distribution
and regulatory compliance
• Established a quality system required for all regulatory clearances
• Completed a product improvement that will enhance ease-of-use and address identifi ed customer needs
• Identifi ed and hired a fi rst-quality regulatory consultant fi rm to guide us through all these crucial processes
• Initiated validation studies to confi rm the performance of the new device design and prepare for FDA clinicals
• Identifi ed and negotiated an agreement and detailed process with a Clinical Research Organization to conduct
and manage the FDA clinicals on the HandiLab Chlamydia product
• Issued a Request for Proposal to selected European distributors to establish a Master Distributor for our ex-US
business
• Selected and negotiated the terms of a Master Distributor agreement with LETI Laboratories in Barcelona
Spain
• Identifi ed the ThyroTest device as a potential product for acquisition
• Negotiated an acquisition plan
• Conducted due diligence on ThyroTest including an in-depth evaluation in the clinical laboratory – results are
looking great! We will provide the data soon.
Q&A with Ms. Vera Leonard,
Chief Executive Offi cer of CLX Medical, Inc.
(continued)
4
The next steps to complete over the coming weeks include:
• Releasing the preferred placement memorandum
• Raising the fi nancing for the acquisition and operating expenses
• Finalizing the chlamydia validation studies
• Releasing the results of the ThyroTest evaluation
• Completing the ThyroTest acquisition and preparing for the product launch
• Finalizing the Master Distribution Agreement and prepare for re-launch of products to European distributors
• Successful completion of the quality system audits
Some of the projects we expect to accomplish after the fi rst of the year include:
• Apply for CE certifi cation for both Chlamydia and ThyroTest products
• Begin FDA clinical trials for HandiLab Chlamydia
• And last – but defi nitely not least – generate revenue!!
Our stockholders have been incredibly patient and supportive of us. We intend to repay that trust with strong
products, good business practices and an excellent return on investment. As all of this is achieved, we are committed
to keeping shareholders informed on our progress.
###
Q&A with Ms. Vera Leonard,
Chief Executive Offi cer of CLX Medical, Inc.
(continued)
5
CLX Medical, Inc. Releases September 2008 Newsletter With Review of Definitive Agreement to Acquire the ThyroTest(R) Rapid Screening Device
2008-09-29 11:00 ET - News Release
MURRIETA, CA -- (MARKET WIRE) -- 09/29/08
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CLX Medical, Inc. (OTCBB: CLXN), which is focused on the marketing and distribution of unique medical diagnostic testing products, today issued the September 2008 edition of the company's investor newsletter, which reviews the recent definitive agreement to acquire ThyroTest®, a rapid thyroid stimulating hormone (TSH) screening device used for the detection of hypothyroidism in adults, a common thyroid disease.
A PDF version of the September 2008 newsletter can be viewed on the company's corporate website at
http://www.clxmedical.com/newsletters.php.CLX Medical has entered into a definitive agreement to acquire ThyroTest® and is seeking to close the acquisition as soon as possible. The newsletter includes articles on both the definitive agreement and the Current Report on Form 8-K filed with the Securities and Exchange Commission detailing the agreement.
The newsletter also highlights the recent Form 4 filings made by the company's Board of Directors when they acquired additional shares of CLX common stock. Directors Robert McCoy, Patrick Edgerton and James Bickel each filed a Form 4 Statement of Change in Beneficial Ownership of Securities with the S.E.C. on September 12, 2008. The stock acquired by each of the Directors was granted by the company dating back as far as January 2007 as part of their respective compensation packages.
Another newsletter article reviews the three-year employment agreement that CLX Medical has entered into with Chief Executive Officer Vera Leonard. Ms. Leonard's compensation package includes a combination of a base salary, a schedule of salary increases based on a variety of factors including the company's revenue and profit performance, the granting of restricted common stock, medical coverage, and expense reimbursements.
Ms. Leonard's CEO Greeting in the newsletter is taken from her recent discussion of the opportunities presented by the acquisition of ThyroTest®, including the projected worldwide screening market for the product. ThyroTest® is FDA cleared and has also achieved CLIA waived status, so the test can be administered in the more than 100,000 CLIA waived doctors' offices in the U.S., as well as in any non-waived laboratory. ThyroTest® is a qualitative rapid diagnostic test that allows physicians to screen adult patients for hypothyroidism in approximately ten minutes with a whole blood sample.
CLX Medical, Inc. Announces Agreement for Kurt Kalm to Serve as Interim CFO
2008-09-30 13:54 ET - News Release
MURRIETA, CA -- (MARKET WIRE) -- 09/30/08
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CLX Medical, Inc. (OTCBB: CLXN), which is focused on the marketing and distribution of unique medical diagnostic testing products, today announced an agreement with Kurt Kalm, an executive with over 30 years of international financial experience, to serve as interim chief financial officer of CLX Medical effective at the close of the company's planned acquisition of ThyroTest®.
ThyroTest®, a rapid thyroid stimulating hormone (TSH) screening device used for the detection of hypothyroidism in adults, a common thyroid disease, is FDA cleared and has also achieved CLIA waived status, so the test can be administered in the more than 100,000 CLIA waived doctors' offices in the U.S., as well as in any non-waived laboratory. CLX Medical has entered into a definitive agreement to acquire ThyroTest® and is seeking to close the acquisition as soon as possible.
Mr. Kalm has served as CFO of ThyroTec, LLC, the developer of the ThyroTest® device, since 2004. A former CPA, Mr. Kalm possesses investment banking experience in both the United States and Europe, including with Dillon Read and Arnhold and S. Bleichroeder. His financial management employment includes with General Mills and Honeywell International. Mr. Kalm was an early stage investor in New River Pharmaceuticals, which was eventually acquired by Shire Pharmaceuticals for $2.6 billion.
"We are extremely pleased that Kurt Kalm has agreed to join the CLX Medical team as CFO, effective at the close of our anticipated acquisition of ThyroTest®," commented Vera Leonard, chief executive officer of CLX Medical. "His extensive experience in high level investment banking and financial management is expected to be a great asset to the company as it implements a comprehensive marketing and distribution program for the ThyroTest® device."
Mr. Kalm stated, "Having been involved with the ThyroTec since 2004, I look forward to working with the CLX Medical team to implement the company's business strategy related to the ThyroTest® device."
ThyroTest® is a qualitative rapid diagnostic test that allows physicians to screen adult patients for hypothyroidism in approximately ten minutes with a whole blood sample.
Hypothyroidism develops when the thyroid gland does not produce enough thyroid hormone to properly regulate the body's metabolism. A lack of thyroid hormone affects many body systems. The incidence of hypothyroidism tends to increase with age, with older people, especially women, at highest risk. Common symptoms include weight gain, fatigue, mood swings, weakness, dry and coarse skin and hair, hair loss, depression, decreased libido, trouble swallowing, increased cholesterol, heavy or irregular periods or trouble getting pregnant.
Approximately 120 million thyroid-related lab tests are performed in the United States each year. At an estimated average cost of $40 per test, the U.S. market is currently valued at nearly $5 billion. Approximately 45 million of those tests are conducted in order to diagnose thyroid dysfunction. CLX believes that ThyroTest® is an appropriate, cost-effective first-step for those 45 million diagnostic TSH tests. This current U.S. market opportunity is amplified by the CLIA waived status, which makes the opportunity to meet American Thyroid Association recommendations for screening every individual at age 35 and every five years thereafter a reality.
To sign up to receive information by email directly from CLX Medical, Inc. when new press releases, investor newsletters, SEC filings, or other information is disclosed, please visit
http://www.clxinvestments.com/email.php.CLXN - Stronng Buy - Very Bulish $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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