Elscint closes alliance with Magna-Lab

June 19, 1996

Elscint Cryomagnetics, the Oxford, U.K., manufacturing subsidiaryof Elscint Ltd., has secured production and international distributionrights for the Magna-Lab dedicated MR extremity scanner. The dealcompletes negotiations that were begun in 1994 (SCAN

Elscint Cryomagnetics, the Oxford, U.K., manufacturing subsidiaryof Elscint Ltd., has secured production and international distributionrights for the Magna-Lab dedicated MR extremity scanner. The dealcompletes negotiations that were begun in 1994 (SCAN 12/14/94).

Under terms of a contract signed June 12, Elscint will manufacturethe Magna-SL for sales and distribution to customers in Europe,China, Australia, parts of the Middle East and Latin America,and other territories.

The terms cover a six-year period with automatic renewal everytwo years if minimum sales goals are met, said John Lombardo,director of operations for Magna-Lab.

Permanent magnets for scanners sold by Elscint will be builtat manufacturing facilities in Oxford. Scanner assembly will beconducted at its MR plant in Fort Collins, CO.

Magna-Lab will also build Magna-SL to support sales effortsin the U.S. and Japan. The company moved to a 15,000-square-footoffice/factory facility in Edgewood, NY, in May.

"The contract gives us worldwide sales presence throughElscint. We hope the relationship will strengthen over time toaid the development of the Magna-Lab platform through collaborationsbetween our engineers' work and their staff at Fort Collins andHaifa," said John Haytaian, Magna-Lab vice president of salesand marketing.

Magna-Lab employs a three-person sales force to cover the U.S.radiology market, and contracts with various distributors forthe U.S. orthopedic market. Beta Numerics, a medical marketingcompany with ties to Magna-Lab's board of directors, representsthe product line in Japan.

Magna-Lab completed extensive beta-testing of Magna-SL at sitesin San Antonio, TX, and Buffalo, NY, last year. Six of its backlogof nine systems are in production, Lombardo said.

As part of the contract, Magna-Lab received an immediate $250,000nonrefundable payment from Elscint to be applied against first-yearroyalties. The deal will generate at least $6.5 million in royaltiesfor Magna-Lab over six years if Elscint meets minimum sales guarantees,Lombardo said.

The two companies will collaborate on product development andproduction cost-reduction for Magna-SL. Under the agreement, Elscintis first in line for distribution rights to new Magna-Lab MRIproducts. The company is developing niche MRI scanners for mammography,spine imaging, and cardiac applications.