Tru-Test invests millions in Neuronz nous

By SIMON COLLINS science reporter

Agritech company Tru-Test has bought the rights to a New Zealand-designed brain monitor that it believes could earn more than its traditional agricultural Machines.

The privately owned Mt Wellington firm is already one of the country's biggest exporters, earning $125 million a year from exports of milk meters, animal weighing machines, electric fences and others.

It has paid Auckland University spinoff Neuronz several million dollars for the rights to a monitoring machine that detects brain injury in premature babies.

Managing director Des Scott said the new business, Brainz Instruments, could eventually be floated or sold.

Tru-Test has already manufactured prototypes of the machines on contract to Neuronz after alternative manufacturers in the US and Japan proved too expensive.

The prototypes have been tested at National Women's Hospital in Auckland and two hospitals in Melbourne. Trials are about to start in Utrecht, Holland, and Geneva, Switzerland, and are planned at Harvard University in the US this year.

Neuronz will continue to develop new products on contract to Brainz. But it will put the profit from selling Brainz into research into drugs to counteract brain injury.

"It will keep us going for a substantial period of time," said Neuronz chief executive David Clarke.

"We are going to enter phase-one clinical trials for one of our lead compounds this year in New Zealand. We will need more capital as we go into clinical trials of phase two in 2003."

Scott said Brainz could have future sales in the hundreds of millions.

"Potentially it could be bigger than any other product we've got," he said.

"There are at least half a dozen companies around the place with technologies which are not as unique as this but with a market capitalisation of US$80 million-$150 million [$167 million-$317 million]."

The machine will sell for around US$19,000 ($40,000). Tru-Test will also sell electrodes costing US$30-50 each, which have to be discarded after use on each baby.

Although the machine was initially designed for premature babies, which are most likely to suffer brain damage, the company is working on new models suitable for full-term babies and for adults, such as heart-bypass patients, who are at risk of brain damage during surgery.

The company expects approval to sell the machine in New Zealand, Australia, Canada and Europe in the next two months, and will submit an application to the US Food and Drug Administration on November 30. Approval is expected to take 90 days.

Scott said worldwide marketing would "almost certainly be in partnership with a US-based company" that would also be involved in deciding where the machine will be made.

"It depends on what the deal is with the distribution network," he said.

"It may not be manufactured here. It's also possible that it will be. It depends what deal we strike."

He said Tru-Test had all the necessary facilities and expertise and the manufacturing contract was "not something that we would give away lightly".

"But if it makes more strategic sense to make it somewhere else to make it part of a bigger instrument, we would have to consider that."

Brainz will remain a separate company with independent directors including lawyer Dr Robin Congreve, professional director Mike Smith and New Zealanders "in the high-tech area with hugely significant overseas experience".

Scott will also be a director.

He said that if Brainz succeeded, he would look to spin it off eventually through either a public float or a trade sale to "some Nasdaq or similar company that will say, 'This is our lifeblood, this is what we do, what's it going to take?' "

The company will continue to be managed by Mark Bellas, 39, a South African-born investment director for Oceania and Eastern Group, an investment company owned by Congreve and others and which is a major shareholder in Neuronz.

David Cotter, a former export manager for Fisher & Paykel Healthcare and most recently for furniture maker Design Mobel, has been hired as marketing manager.

Brainz