Medical devices company Medigus Ltd. (TASE:MDGS) has begun substantial layoffs of sales personnel in the US and employees at its development center in Israel. About 10% of the company's 60 employees have been dismissed, and the employees remaining at the company will have their salaries cut by 20%. A company announcement to the Tel Aviv Stock Exchange (TASE) last week when the cuts began was entitled, "Medigus’ MUSE Continues to Gain Clinical Adoption in the US."
Medigus, a veteran company based in Omer, is developing a medical device for treatment of heartburn as a replacement for surgery. As of the end of the first quarter, the company had $7.5 million in cash, and was burning $2.9 million a quarter. First quarter revenue totaled $262,000, a 274% increase resulting mainly from development services provided to third parties, not from additional sales of the device. The company's market cap is NIS 25.7 million, and its American Depository Receipts (ADRs) are listed on Nasdaq.
In effect, the company is currently re-launching its product; following the initial launch, the product was discovered to be unready for the market, as frequently happens with Israeli medical device companies. Its upgraded product was launched early this month. A fairly large clinical trial highlighted the product's advantages, and the company is making progress in attaining reimbursement from medical insurance companies for patients using the device. Nevertheless, the company needs a large amount of money in order to survive, it will probably have to raise capital, together with its efforts to reach strategic partnerships of various types.
Medigus's principal shareholders are OrbiMed Advisors LLC (19.8%), Senvest Management (13.8%), Armistice Capital (11.9%), and Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) (12.8%).
Published by Globes [online], Israel business news - www.globes-online.com - on June 28, 2016
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