Covalon Technologies Ltd.

Covalon Technologies Ltd.

May 04, 2009 07:00 ET

Covalon Announces Significant Cost Reductions

- Recently announced strategic alliance will permit Amsino International to co-market and manufacture Covalon technologies - Annualized savings of $900,000 in manufacturing and related operations expenses will allow Covalon to preserve its significant cash reserves even further - Makes Covalon more efficient by allowing it to focus on R&D and pursuing sales opportunities

MISSISSAUGA, ONTARIO--(Marketwire - May 4, 2009) - Covalon Technologies Ltd. (TSX VENTURE:COV) has announced that it has decided to significantly reduce its expenses as a result of its recently announced strategic alliance with Amsino International Inc.

Dr. Frank DiCosmo, President, CEO and co-founder noted, "Our strategic alliance contemplates Covalon utilizing Amsino's vast manufacturing facilities thus saving Covalon the capital cost of building its own facilities. Furthermore, given the large volume of high-quality medical products Amsino currently manufactures for some of the world's largest healthcare companies, they will be able to achieve lower costs than Covalon could have hoped to provide."

Staff at Covalon has been reduced from 41 individuals to a complement of 28. The Company estimates annual financial savings of almost $900,000 in direct costs. The Company estimates related severance costs to be $95,000.

William Jackson, Covalon's Chief Business Officer and co-founder said, "What excites me most is that Covalon now gets to focus almost exclusively on ensuring that every company in the medical industry becomes aware of the innovations our incredibly talented scientists have developed. We are in an excellent position to help virtually any medical company increase its sales by introducing innovative new products".

Mr. Peter Hobbes, Covalon's Chief Financial Officer said, "These changes will allow the Company to reduce its committed cost base and further preserve our cash position of $ 8.4 million. With our Amsino relationship and a leaner operation, I am confident about the Company's ability to capitalize on its broad technology base.

Included in the changes is the termination of the Company's contract with D. Bamforth Consulting Inc. for investor relations services, effective April 27, 2009.

Covalon Technologies Ltd. is an advanced medical products company that has developed, patented and commercialized therapeutic biomaterials for wound care and surgical applications and coatings. Polymer chemistry and surface coating technology have been combined to create a range of time-release drug delivery platforms that are applied to medical devices to treat many critical conditions. A variety of applications for these technologies have been identified and specific products have been developed. The products offer features and benefits providing solutions to many of the problems caused by current devices and their material properties which are used by most medical device manufacturers and suppliers. The problems include infection, poor biocompatibility, and microbial attachment.

This news release contains forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including the difficulty in predicting product approvals, acceptance of and demands for new products, the impact of the products and pricing strategies of competitors, delays in developing and launching new products, the regulatory environment, fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements. Many risks are inherent in the industry; others are more specific to the Company. Investors should consult the Company's ongoing quarterly filings for additional information on risks and uncertainties relating to these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. The Company assumes no obligation to update or alter any forward-looking statements whether as a result of new information, further events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Covalon Technologies Ltd.
    Frank DiCosmo, Ph.D.
    President & CEO
    (905) 568-8400
    (905) 568-5200 (FAX)
    Covalon Technologies Ltd.
    Peter Hobbes, CA
    Chief Financial Officer
    (905) 568-8400
    (905) 568-5200 (FAX)