Ventracor to sell off its former core division

Ventracor (ASX: VCR) is in negotiations to sell off its e-Health division to a potential purchaser identified after a worldwide search.

"We hope that discussions and negotiations would end this month and hope to announce the outcome by the end of the month," said Ventracor CEO and managing director Michael Spooner.

The divestment of the ECG design and manufacturing division will mark the complete makeover of MicroMedical Industries, from ECG heart monitor design and manufacturing company to artificial heart developer. The company changed its name earlier this year after deciding that it needed to focus on its VentrAssist heart implant technology.

Spooner said that the move to sell off the e-Health division was initiated by an unsolicited offer from a consortium consisting of a number of members of the division's management team in August.

Rather than sell the division to the consortium, Spooner said that the company decided to look worldwide for potential buyers for the division, to maximise shareholder returns. In the meantime, the original consortium retracted their offer, he said.

"It's been a difficult decision to make, and goes back to the roots of the company," said Spooner. The e-Health division formed the original core of MicroMedical Industries, which initially floated on the Australian Stock Exchange in 1993.

But Spooner said that the company would prefer to focus its limited resources on the development of the VentrAssist device, which has a significantly larger market.

He noted sales of the ECG heart monitors by the e-Health division had dropped significantly as a result of the events of September 11 and the subsequent downturn in the airline industry, which formed one of the key markets for the heart monitors.

Spooner said that the company was on track for its forthcoming submission to the ethics committee at the Alfred Hospital in Melbourne to obtain permission to do the first human trials of its implants later this year, depending on patient recruitment.

In addition, the company recently received two Australian Research Council collaborative grants -- with the University of Sydney and the University of Technology, Sydney -- for development of biocompatible surface coatings for this device and other medical devices, as well as to develop a better mathematical understanding of the mechanics of the device.