Milestone payments withheld from Medisys as shares dive

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The Independent Online

Medisys, the Aberdeen-based medical devices group, said yesterday that its US marketing partner was withholding a milestone payment as a result of ongoing problems with its flagship product, the Futura safety syringe.

Medisys admitted that feedback from hospitals using the syringe had revealed further problems with the product and that it was extending the trial period to gather more data.

The company has agreed with Smiths Group, its US distributor, that they will review the future of the product late next month. Medisys shares plunged 22 per cent to 15p.

The Independent reported yesterday how the string of delays to Futura has driven Smiths to despair. Keith Butler-Wheelhouse, the chief executive of Smiths, said the company had "almost given up on it".

The device, whose needle is pulled back inside the syringe with a rubber band to stop hospital staff pricking themselves, is proving difficult for hospital staff to operate. Medisys admitted that despite having met quality standards in the laboratory in July, Futura did not meet similar standards when hospital feedback was reviewed later that month and again last week.

The companies are now in dispute over a $1.95m (£1.2m) milestone payment, which the City had factored into forecasts for Medisys's current financial year, but which Smiths believes is not due until clinical testing is complete.

Medisys argues that the completion of the lab tests should trigger the payment. Its finance director, Michael Barry, said: "We invoiced them because we believed the money was due and payable, and we would have expected it to have been paid within a reasonable period."

It also emerged yesterday that another product, the Flight glucose monitoring system, is not yet on the market in the US.

Medisys has told analysts it has only recently begun shipping the product to Wal-Mart, the superstore giant that has agreed to sell Flight.

Seb Jantet at Investec Securities said: "Whilst it was very well received by the industry at August's launch, the retail launch has fallen about a month behind schedule."