PLC Systems Inc. (OTC:PLCSF) announced a series of moves aimed at keeping it afloat, hiring a New York investment firm, slashing its workforce and outsourcing the production of its flagship product.
The Franklin, Mass.-based medical device maker has been riding a rocky road for years. PLC went public in the mid-1990s, seeking to bring its transmyocardial laser revascularization technology to market.
But the company hit a bump with the Food & Drug Administration, which denied its first clearance application and asked it to go back to the laboratory for more clinical trial work. After regrouping and winning clearance, however, there just wasn’t enough cash left over to commercialize the product.
That plan has met with some success, but the company has struggled to maintain its momentum. A series of international distribution deals helped boost the top line, but bottom-line progress has been fitful. PLC cut its net losses in half during the second quarter last year, even as revenues slid nearly 6 percent, but losses widened during the third quarter on a 36 percent sales plunge.
Yesterday the company said it will keep its focus on developing RenalGuard sales, announcing three new distribution deals covering Russia and all of the former Soviet Socialist republics, the Benelux nations, Portugal, China and Taiwan. But in an effort to pare its costs even further, PLC laid off eight workers, or 33 percent of its total workforce, and said it will begin outsourcing its RenalGuard manufacturing.
"We believe that our RenalGuard technology has significant value, and working with our Board, we have developed a strategic plan to explore available opportunities to realize and maximize this value for the benefit of the Company and its shareholders," Tauscher said in prepared remarks. "We are hopeful that the steps we are taking will help expand RenalGuard’s reach and raise visibility among potential partners who can assist us in bringing our innovative technology to more potential customers."
The moves are expected to save PLC about $750,000 a year starting in the third quarter and will mean a special charge of roughly $230,000 on its first-quarter balance sheet.
PLC said it hired Natixis Bleichroeder to help it raise capital and to examine the proverbial "strategic alternatives," which could mean anything from a technology licensing deal to selling the company outright.
The company also said a clinical trial in Italy continues to deliver positive results, showing that the RenalGuard system helped reduce the rate of contrast-induced nephropathy. The device uses sterile saline solution to eliminate iodine-based contrast agents used during cardiac catheterization procedures for patients with poor renal function.