AIM-Listed Zi Medical, which focuses on production and manufacture of ‘class II’ medical devices, recently won regulatory approval for its portable AD ambulatory Syringe Pump (‘AD’).

This means that Zi can now start marketing the device in the UK and Europe. AD administers a constant dose of intravenous fluid to patients who are not bedridden and sounds an alarm when power is low, preventing interruption in the administration of fluid.

The company intends AD to replace the current leading market product produced by rival Graseby medical, which was reported to the Medical Devices Agency following confusion between two models of the pump. According to the MDA, this led to ‘inappropriate infusion rates being set, leading to serious overinfusion and patient death’.

Zi Medical has already received a first order for 150 units from distributor Alaris, a big player in the market with a 50-60% share globally, for delivery in July. The exclusive UK distribution contract, signed recently with Alaris for three years, could be worth as much as £1.75m in revenues. Having announced a pre-tax loss of £1.86m on £111,000 turnover, this would certainly lift shareholder spirits.

Chief executive Peter Leyland says AD, ‘paves the way for the first of our three major product lines to be commercialised over the next 12 months’. This includes Pathscore, a cancer identification device using hard tissue biopsy (initially with animal tissue, with a view to moving into human tissue if legislation can be negotiated) anticipated to launch in Q2 of 2007, and DrugPrint, a data analysis tool for testing the reaction of cells to introduced substances.

Drugprint could be used to see how ‘beating heart cells’ respond to certain drugs, for example. The board hopes to be generating revenue for this product by the end of 2007 and ideally, would like to see the test integrated into the approval processes for drug candidates, saying that it could offer a three per cent saving to the total drug budget by reducing costs and testing times, as well as avoiding failed compounds due to late detection of toxicity.

Shares in Zi Medical currently trade at 4.88p. Recommended by Growth Company Investor at 5.88p, the shares have been as high as 11p before an unwelcome slip due to a downbeat trading statement at the end of 2005. If product launches stay on schedule, they could well be on the recovery path. Certainly one to watch.