Luther Medical Given Contract by Travenol : Revenue Boost May Put Company in Black
Luther Medical Products Inc. said Wednesday that it has reached a five-year agreement under which a subsidiary of giant Baxter Travenol Laboratories Inc. will market certain Luther needles and catheters under private label, a deal that could be a significant break for the tiny and so-far profitless company.
Although the value of the agreement cannot be immediately determined, it could give the highly specialized Santa Ana-based company its first annual profit since it was founded in 1980. Luther’s revenues last year totaled $445,642.
The deal calls for Luther Medical to supply Travenol Laboratories Inc. with several versions of its specially designed needles and soft catheters for use with premature babies and infants, said Ron Luther, the 7-year-old company’s chairman and founder.
Shipments will begin by the end of March, but Luther said he could not say how much the agreement might mean in revenues for the company. “The closest I can come to a number is to say that this will probably put us into the black for the first time in history,” he said.
Peter Halter, editor of Biomedical Business International, a Tustin-based trade journal, said the deal could be rewarding for Luther because Baxter Travenol typically spends millions of dollars over the course of long-term agreements with suppliers.
Despite its small size, Luther has won wide acclaim for its patented “peel-away” needle, which allows non-surgical insertion of a soft catheter. But because the company only recently emerged from the development stage, it has lost nearly $3 million since its founding.
Several potentially valuable deals have fallen through, the most recent a possible merger with a British firm that was canceled last year when a new catheter material developed by Luther was found to be too sensitive to alcohol to meet European medical standards.
After the merger collapsed in July, Luther Medical stock slid to a new 12-month low of just 56 cents a share. Its high for the year was $1.50 a share. Luther Medical stock closed in over-the-counter trading Wednesday at $1.25 a share, up 6.25 cents for the day.
The stock began rebounding after the private sale in November of $1.5 million worth of warrants to an unnamed Canadian investor, said Chris Bohnet, a broker with the Denver brokerage of EJ Pittock & Co. The warrants are to be exercised during the current year, Luther said.
