Medtech company Respiri (ASX: RSH) has continued its long path towards commercialisation of its asthma diagnostics device ‘wheezo’, having entered into a global manufacturing agreement with Entech Electronics for 12,000 devices.
The agreement will see Entech manufacture the devices from their facilities in Shenzen, China. The order placed is for significantly more devices than the 2,000 ordered in July by Cipla – an Indian-based pharmaceuticals company.
“We are delighted to partner with Entech Electronics as they are well placed to support our global product volume requirements at cost positions that support Respiri’s business model,” said Respiri CEO, Marjan Mikel.
A first order for 12,000 devices has been placed by Respiri which Entech expects to commence delivery from February 2021. Through the Shenzen production facilities, Respiri anticipates being able to quickly scale production of wheezo devices should global demand meet their forecasts.
The appointment of Entech is expected to reduce Respiri’s cost of production by approximately 85%. Wheezo production was in limbo for several years before Mikel was appointed CEO in November 2019, prior to a legal matter that was settled with former CEO Mario Gattino in June 2020.
Since Mikel’s appointment, the first 500 wheezo devices were delivered in March 2020 along with a business re-focus towards subscription revenue to be generated from wheezo devices which measure wheeze levels in a user’s airways and potential onset of asthma conditions that require further medical attention.
Although the devices will be manufactured in Shenzen, Entech Electronics are an Australian company which is headquartered in South Australia and has an extensive tech production portfolio that includes aerospace and defence products.
“Our operation in Shenzhen has commenced investment in assembly and test equipment that will allow us to scale quickly and react to Respiri’s forecast growing global demand and accommodate monthly volume requirements well in excess of 10,000 devices,” said Entech Electronics CEO, Wayne Hoffman.
For FY20, Respiri reported a 113% increase in revenue to $2.2m with a net loss of $4.6m attributed to expensing of all research and development costs.
The Company is considering a monthly subscription fee of $5 – $10 for each wheezo device.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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