Keyhole surgery firm eyes US obesity market

The Leeds-based group will launch LogiFlex as soon as it receives regulatory approval in either April or May.

The device uses pioneering technology to help surgeons fit gastric bands on obese patients.

LogiFlex was launched in the UK last year and was well received by surgeons at the World Congress of the International Federation for the Surgery of Obesity and Metabolic Disorders (IFSO) as an "innovative cost effective solution".

Surgical's chairman Doug Liversidge said it was clear from the outset that the key market for LogiFlex is the US, where obesity affects more than 60 million citizens and is the second largest cause of preventable death.

"It is estimated that there are 250,000 annual bariatric procedures in the US where the LogiFlex device can be used," he said. "As a consequence, we have submitted a request for FDA approval and anticipate this will be received in the second quarter of 2010."

Mr Liversidge was speaking yesterday as the group announced a 17 per cent fall in 2009 retained profits to 525,000.

He said this was largely due to unavoidable third party issues, which have since been resolved.

The issues resulted in a delay in the delivery of a major industrial devices order before the year end, but the order has now gone through and will result in a 600,000 windfall this year.

In addition, the group has written down the value of its autologous blood transfusion assets, following a strategic review.

Surgical has decided to either sell the blood transfusion business or seek a joint venture partner. "It's a good business but it needs 2m to 3m to develop it," said Mr Liversidge. While a suitable exit is being sought, the board has decided to write-off all assets relating to the business, which resulted in a 200,000 reduction in the group's operating profits.

Surgical has more than doubled its staff numbers from 40 to 90 over the past year and said there may well be more job creation this year.

The group has made staff appointments in all areas of the business including production, design, quality, HR and business development.

Despite the fall in 2009 profits, Mr Liversidge said Surgical is poised to have a record year.

"We have a record order book and the company is doing extremely well."

The group is now keen to develop the business in new areas and has already embarked on veterinary procedures.

Another new area is arthroscopy and the group is talking to surgeons who specialise in hip, knee and shoulder joints. Cardiovascular is another possible new field.

The group announced plans to change its structure so it can pay dividends at some point in the future and reward its 4,500 shareholders. The group said that 2010 year-to-date revenues are at an all time high and it has a 2m short term order book.

Opportunities in vet market

Surgical Innovations moved into the vet market earlier this year with its first keyhole operation on a reindeer at Edinburgh Zoo.

The UK is a nation of pet-lovers – it is estimated that around one in two British households owns a pet.

Vets perform an average of 600,000 open abdominal procedures every year, but only one per cent of them currently practise laparoscopic surgery, or keyhole surgery as it is better known. Surgical Innovations believes the vet market represents a significant opportunity for the group and is working closely with the UK's leading vets to educate them about the benefits of laparoscopic surgery.