- US regulatory approval for high-level disinfectant
- Puts company in ‘unique’ competitive position
- Opportunity could be worth 117p to 315p per share
Infection prevention specialist Tristel (TSTL:AIM) has secured US regulatory approval to sell its proprietary chlorine dioxide technology as a high level disinfectant in non-invasive ultrasound scans, sending the shares up 15% to 416.8p.
The company estimates there are over 215 million ultrasound scans carried out in the US each year. Around a fifth of scans require high level disinfection and the remainder require low or intermediate level disinfection.
In late 2022 the company introduced its intermediate level disinfectant Tristel DUO to the market which is approved by the USA EPA (Environmental Protection Agency).
Today’s approval from the US FDA (Food and Drug Administration) means Tristel now has two products approved in the US to meet disinfection needs for all ultrasound scans, which it claims puts the company in a ‘unique’ competitive position.
A SIGNIFICANT INFLECTION POINT
CEO Paul Swinney commentated: ‘This FDA approval enables our full-blown entry into the United States ultrasound market and is a significant inflection point for the Company. We will now be present in the single largest ultrasound market in the world.
‘This milestone achievement will allow us to significantly increase our global revenue along with our profit potential as we put Tristel’s and Parker’s resources behind Tristel ULT and DUO in the USA.
Although the US is a new market for Tristel the company has been preparing its entry for almost a decade and is ‘very familiar’ with the competitive landscape which it said is identical to the 40-plus countries sin which the company operates.
WHAT ARE THE FINANCIAL IMPLICATIONS?
The company plans to provide investors with further details of its commercialisation strategy through a series of presentations over the next few weeks.
Tristel has already established a manufacturing base through a partnership agreement with Parker Laboratories which is the largest supplier of ultrasound transmission gels in the USA.
Director of research at FinnCap Mark Brewer increased his 2024 pre-tax profit forecasts by 12% to £7.6 million implying 23% year on year growth.
Brewer estimates the net present value of future royalty streams in the US to be around £82 million or 173p per share within a range of 117p to 315p.
Net present value is a commonly used method which discounts (reduces) estimated future cash flows.
Brewer commented: ‘This is a significant and arguably long-awaited, value-enhancing milestone for the company.’
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