MIAMI--(BUSINESS WIRE)--IVAX Diagnostics, Inc. (AMEX:IVD) announced today that it intends to change its strategic direction to focus on the development of its new Mago® 4 instrument, the upgraded version of its existing Mago® Plus instrument, and to place any further development of the PARSEC® System on hold indefinitely. As a result, IVAX Diagnostics expects to take impairment charges of approximately $1.7 million associated with inventory, fixed assets and equipment on lease relating to the PARSEC® System.
IVAX Diagnostics also announced today that, as a result of the recent significant decline in its market capitalization, it expects to take impairment charges associated with goodwill relating to two of its wholly-owned subsidiaries – Delta Biologicals S.r.l. and ImmunoVision, Inc. The goodwill valuation process is not yet complete and IVAX Diagnostics is currently unable to provide an estimate of the amount of the impairment charges associated with goodwill. At June 30, 2007, IVAX Diagnostics had goodwill of approximately $6.7 million.
The impairment charges associated with the PARSEC® System and any goodwill are expected to be reflected in IVAX Diagnostics’ financial statements for the fiscal quarter ended September 30, 2007 and are not expected to have any impact on IVAX Diagnostics’ cash position.
As previously disclosed, as a result of continuing delays in the development of the PARSEC® System, IVAX Diagnostics engaged a third party consulting firm to independently evaluate the PARSEC® System and the status of its development. The consulting firm reported that it was not likely that IVAX Diagnostics would be able to meet its previously announced target for submitting its 510(k) application for the PARSEC® System to the Food and Drug Administration primarily as a result of the status of the proprietary operating system and other software components utilized in the development and operation of the instrument.
After reviewing the consulting firm’s findings and conducting its own internal reviews, IVAX Diagnostics has determined that its new Mago® 4 instrument can be developed and brought to market more quickly, using fewer resources and in a more cost-effective manner than completing the development of the PARSEC® System and its proprietary operating system and other software components. The Mago® 4 is expected to be able to perform both ELISA and IFA techniques simultaneously, perform positive sample identification and utilize disposable pipette tips. IVAX Diagnostics believes that the Mago® 4 will offer an enhanced automation solution to customers who prefer a more compact, lower-priced instrument with features and benefits similar to many of the other instruments currently offered in the marketplace.
As a result of this change in strategic direction, the timeframe during which IVAX Diagnostics had expected to begin marketing hepatitis test kits to be manufactured at its Italian facilities pursuant to a technology license will be delayed. At June 30, 2007, IVAX Diagnostics had approximately $1.2 million of intangible assets and approximately $0.5 million of accrued payables relating to the technology license. While IVAX Diagnostics believes that it will be able to bring hepatitis test kits to market, if the progress of its efforts to begin marketing hepatitis test kits is further adversely impacted, then IVAX Diagnostics could be required to record an impairment charge with respect to all or a portion of these intangible assets and pay all or a portion of these accrued payables.
About IVAX Diagnostics, Inc.
IVAX Diagnostics, Inc., headquartered in Miami, Florida, develops, manufactures and markets proprietary diagnostic reagents, instrumentation, and software in the United States and Italy through its three subsidiaries: Diamedix Corporation, Delta Biologicals S.r.l., and ImmunoVision, Inc. Teva Pharmaceutical Industries Limited, through its wholly-owned IVAX Corporation subsidiary, owns approximately 72% of IVAX Diagnostics, Inc.
Except for the historical matters contained herein, statements in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect the business and prospects of IVAX Diagnostics, Inc., including, without limitation: that actual charges and expenditures could materially exceed the estimated charges and expenditures indicated in this press release; that actual charges and expenditures could be reflected in IVAX Diagnostics’ financial statements for periods other than the period indicated in this press release; that IVAX Diagnostics may not successfully implement the change in its strategic direction described in this press release; risks and uncertainties regarding the PARSEC® System, including, without limitation, that the PARSEC® System may not ever be available, and that IVAX Diagnostics’ international activities associated with the PARSEC® System will be adversely impacted by the change in strategic direction described in this press release; risks and uncertainties regarding the Mago® 4, including, without limitation, that the Mago® 4 may not be able to be developed and brought to market more quickly, using fewer resources and in a more cost-efficient manner than completing the development of the PARSEC® System, that the Mago® 4 may not perform as or be available when expected or at all, that IVAX Diagnostics may not be able to submit its 510(k) application for the Mago® 4 to the Food and Drug Administration when expected or at all, that IVAX Diagnostics may not be able to obtain 510(k) clearance from the Food and Drug Administration for the Mago® 4 when expected or at all, that IVAX Diagnostics may not be able to obtain all necessary regulatory approvals for the Mago® 4 when expected or at all, that IVAX Diagnostics may not be successful in its marketing of the Mago® 4, that customers may not integrate the Mago® 4 into their operations as readily as expected, and that sales and reagent rentals of the Mago® 4 may adversely affect sales and reagent rentals of the Mago® Plus; risks and uncertainties regarding hepatitis technology and products, including, without limitation, that IVAX Diagnostics may not successfully receive the transfer of hepatitis technology when expected or at all, that if IVAX Diagnostics does successfully receive the transfer of hepatitis technology, then IVAX Diagnostics may not be able to manufacture its own hepatitis assays when expected or at all, obtain CE approval for its hepatitis kits when expected or at all, make commercial deliveries of its hepatitis kits when expected or at all, or cause its own hepatitis assays to be run in conjunction with the Mago® 4, and that if the progress of IVAX Diagnostics’ efforts to market hepatitis kits is further adversely impacted, then IVAX Diagnostics could be required to record additional expenses or impairment charges with respect to all or a portion of its intangible assets and pay all or a portion of the accrued payables relating to the hepatitis technology license which would adversely affect IVAX Diagnostics and its financial condition, operating results, cash position and stock price; that improved financial performance or results may not occur; and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. In addition to the risks and uncertainties set forth above, investors should consider the economic, competitive, governmental, technological and other risks and uncertainties discussed in IVAX Diagnostics’ filings with the Securities and Exchange Commission, including, without limitation, the risks and uncertainties discussed under the heading “Risk Factors” in such filings.
IVAX Diagnostics, Inc., Miami Duane M. Steele, 305-324-2338 www.ivaxdiagnostics.com