Polartechnics in US distribution deal

Sydney-based devices company Polartechnics (ASX:PLT) has signed a heads of agreement with US company Open Systems Imaging (OSI) to market and sell its melanoma detection and monitoring system SolarScan in the US.

The exclusive distribution agreement initially will cover a territory including California and the south-western states, as well as Florida, said Polartechnic's executive chairman Tony Grey.

"If they do well, we'll extend their range. We didn't want to put all our eggs in one basket," he said. "We want to see how well OSI performs in the US before extending their range."

OSI will develop two markets for SolarScan, Grey said -- corporate wellness and clinical services. The former will target corporate health services through an existing relationship between OSI and US imaging service flexSCAN to provide mobile melanoma screening services to companies on site, while the development of the clinical services market will focus on placing instruments in diagnostic clinics.

According to Grey, the business model for SolarScan is to sell the instrument for a relatively modest amount, probably around US$10,000. A clocking mechanism built into the instrument will be used to charge a fee of US$15-20 per use that will flow back to Polartechnics as ongoing revenue.

The company has already received its first order from OSI for five instruments to be delivered in January. Grey said minimum performance standard built into the agreement require OSI to sell more than 100 units in the first 12 months.

Polartechnics closed up five cents to AUD$0.86 yesterday after announcing the agreement.