LBT royalty deal lower than hoped

LBT Innovations Limited (ASX:LBT) has negotiated to receive royalties of at least US$600,000 ($560,000) per year for one of its lab diagnostics products, which is less than had been expected.

The Adelaide-based lab technology company has agreed to a three-year deal with international licensee bioMérieux.

The agreement covers minimum royalty payments for LBT's PREVI Isola automated pre-poured media streaker.

In a statement announcing the deal, LBT said that “whilst the minimum royalty is less than LBT had hoped and took longer than expected to finalise, it is expected to continue to cover the day-to-day operating costs of business for the company.”

Sales of PREVI Isola units have been slower than expected since the product launched in November 2008. But LBT Innovations, which under the terms of the contract is entitled to double-digit royalty payments based on the number of units sold, said sales have been gaining traction.

Units have now been sold in APAC, Europe and the Middle East, and the company is expecting sales to exceed the minimum royalty threshold during the next three years.

PREVI Isola is a disposable applicator designed to aid in media processing tasks in clinical microbiology laboratories.

Under the terms of its license, bioMérieux is responsible for global manufacture, sales and marketing of the device.

LBT Innovations (ASX:LBT) shares grew 12.5% on Monday afternoon to 4.5c, after declining 14.9% the day before.