Lombard Medical Divesting its OEM Business

Lombard Medical Technologies plc is about to get an infusion of cash from its OEM business.

The company is divesting its non-core OEM business in Prestwick, Scotland, to United Kingdom-based Culzean Medical Devices, a medical fabrics and manufacturing firm. The sale price is 600,000 pounds, or $972,834, according to Lombard Medical, and will be paid in four annual installments from the end of 2014. Lombard will continue to run the OEM business (which manufactures a range of medical products) through Dec. 20.

Lombard executives said the money will be used for general working capital purposes. The book value of the OEM business was less than 100,000 pounds as of Dec. 31, 2012; last year, the business generated 100,000 pounds in profot and 700,000 pounds in revenue. OEM revenue in the first half of 2013 was 300,000, and is expected to show a loss for the full year.

Under the divestment agreement terms, some employees in Scotland will transfer to support Culzean’s various business activities, while others will be given the choice to relocate to Didcot, where Lombard is expanding its manufacturing and resesarch facilities to handle increasing demand for its lead product, Aorfix. R&D and process development activities for Aorfix that currently are performed at the Prestwick facility will be transferred to the expanded R&D and manufacturing facilities in Didcot. The larger

Lombard has experienced growing demand for Aorfix in the United States after the product was greenlighted by the U.S. Food and Drug Administration earlier this year. Executives expect the endovascular stent graft to be approved in Japan in the first half of next year. Such demand has prompted the company to expand its Didcot facilities by 10,000 square feet and add a new cleanroom and materials handling space. The 300,000 expansion project is expected to be completed by late March 2014.

Lombard’s Aorfix is the only endovascular stent graft licensed in Europe to treat aneurysms in complex anatomies with neck angulations of up to 90 degrees. The Aofrix stent’s coil design makes it flexible and suited to patients with tortuous anatomies that cannot be treated with other licensed stent grafts.

Lombard is headquartered in Oxfordshire, United Kingdom and operates a facility in Irvine, Calif.