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Echo Therapeutics ramps up R&D spending during first quarter

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Echo Therapeutics pocketed some of its first licensing revenues ever during the first quarter but it was far from enough to overcome a hefty jump in operating expenses.

The Franklin, Mass.-based manufacturer of wireless, continuous-use glucose monitors said operating costs in the January-to-March quarter spiked 178 percent compared with the first quarter of 2009, reaching $2.4 million. Included in that rise was a $654,000, or 123 percent, increase in selling, general and administrative costs and an $1.1 million leap in research and development spending.

The higher R&D costs reported May 17 coincide Echo’s bid to branch out into additional business lines. The company is now partnering with the Ferndale Pharma Group to develop a device to deliver controlled dosages of lidocaine to the skin to control moderate pain. The companies recently began clinical trials of the device, with Ferndale expected to apply for 510(k) premarket notification pending a successful outcome of those trials.

Echo also began work in January on its Prelude SkinPrep System, essentially identical to the device now being tested by Ferndale and designed to deliver a variety of drugs through the skin using the company’s AzoneTS transdermal drug reformulation technology.

In a statement, Chief Executive Patrick Mooney said Echo is working on several internal initiatives intended to soon boost higher revenues, including an ongoing trial of its flagship Symphony glucose monitor. “We anticipate securing additional strategic partner licensing arrangements while we begin manufacturing scale-up for Prelude’s product validation and planned product launch in late 2010,” he said.

Licensing revenues for the quarter were $14,000 after Echo last year signed a pair of 10-year agreements that included certain non-refundable payments recognized during the first three months of 2010. Another $552,000 is expected to be recognized over the next 12 months, the company said.

Echo reported no revenues in the year-ago quarter.

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