Deltex Medical Regulatory News (DEMG)

Deltex Medical Group plc

("Deltex Medical" or "the Company")

NHS England implementation plan update

2 April 2014 - Deltex Medical Group plc, the global leader in oesophageal Doppler monitoring ("ODM"), notes that NHS England (NHSE) has published its approach to driving the broader and deeper adoption of intra-operative fluid management ('IOFM') in the coming year.

Ewan Phillips, Chief Executive of Deltex Medical, commented:

"Deltex Medical welcomes these revisions to the NHS approach to driving the implementation of ODM as a high impact innovation. They put IOFM firmly into the mainstream of NHS care quality improvement initiatives and should result in more patients being treated in the next year, creating opportunities for us to work with hospitals towards widescale implementation of NICE's guidance on CardioQ-ODM."

The NHSE standard contract technical guidance for 2014/15 mandates that, by March 2015, all hospitals should "demonstrate to commissioners that trajectories for the intra-operative fluid management (IOFM) technologies are in place which are consistent with National Technology Adoption Centre (NTAC - now the Health Technology Adoption Programme) guidance".1,2

The inclusion of IOFM and other high impact innovations within standard contracts replaces the Commissioning for Quality and Innovation (CQUIN) pre-qualification mechanisms NHSE put in place prior to the 2013/14 NHS financial year. NHS organisations' revenues are dependent on contract fulfilment.

Since publication of its guide for implementation of IOFM in 2013, NTAC has become part of the National Institute of Health and Care Excellence ('NICE'). NICE estimates that over 800,000 NHSE surgical patients a year would benefit from CardioQ-ODM. With respect to IOFM CardioQ-ODM is the only technology recommended by NICE. NTAC specified a small number of procedures as the initial minimum trajectory for IOFM implementation.

Deltex Medical is the UK market leader in IOFM. In 2013 its products were used to treat 41,000 surgical patients in the UK including 35,000 NHSE patients. The Company is rolling-out its dedicated trainer approach to those hospitals seeking to adopt its products at pace and scale. Ten dedicated trainer accounts were established by 31 December 2013 with three more added in the first quarter of 2014. Where local clinicians have set goals for ODM adoption levels at dedicated trainer accounts, they typically cover broader categories of patients than those specified by NTAC.

1 See http://www.england.nhs.uk/wp-content/uploads/2014/02/tech-guide-240214.pdf

2 NTAC guidance is available to download at http://webarchive.nationalarchives.gov.uk/20130701143131/http://ntac.nhs.uk/web/files/intra_operative_fluid_management/iofm_adoption_pack_update_jan_2013.pdf

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Notes for Editors

Deltex Medical manufactures and markets CardioQ-ODMÔ Oesophageal Doppler Monitoring ('ODM') systems. ODM is the only therapy to measure blood flow in the central circulation in real time. Minimally invasive, easy to set up and quick to focus, the technology generates a low-frequency ultrasound signal, which is highly sensitive to changes in flow and measures them immediately. Randomised, controlled trials using Doppler have demonstrated that early fluid management intervention will reduce post-operative complications, reduce intensive care admissions, and reduce the length of hospital stay.

The CardioQ-ODM has two distinct established clinical applications: firstly, to guide fluid management during surgery and secondly, to monitor cardiac output in critical care settings.

Surgical market

In March 2011 the National Institute for Health & Clinical Excellence ('NICE') recommended that CardioQ-ODM be considered for use in patients undergoing major and high risk surgery and in high risk patients undergoing intermediate risk surgery. NICE estimated the applicable number of such patients in the NHS in England alone to be over 800,000 each year. CardioQ-ODM has been shown to be effective in both elective and emergency surgery and with both general and regional anaesthetics. This recommendation was specific to CardioQ-ODM and was based on the robust evidence base that supports its use.

Subsequent to the NICE guidance, the NHS in England announced its selection of ODM as a high impact innovation to be rolled out across the system fully, at pace and scale with significant financial penalties starting in the NHS 2013/14 financial year ending 31 March 2014.

The NICE evaluation and recommendation confirms that the potential global market for CardioQ-ODM in surgery includes tens of millions of patients, even if confined to developed health economies: the most conservative estimate of the potential value of the market opportunity Deltex Medical has created is in excess of £1 billion per annum. The Company's core focus is on building market leading positions in this surgical market, both geographically and by type of surgery.

Critical care market

In critical care settings, well-equipped hospitals will often have more than one cardiac output monitoring technology available. In this environment, ODM's strengths are that it is quick to set up, easy to use, safe, low cost and the ideal technology for a patient in crisis requiring rapid or frequent intervention. The potential market for cardiac output monitoring in critical care is a fraction of the size of that for intra-operative fluid management.

Through the 2012 launch of the CardioQ-ODM+, Deltex Medical has added the Pulse Pressure Waveform Analysis ('PPWA') approach to monitoring cardiac output to ODM functionality. Doing this has improved Deltex Medical's offer for monitoring applications as well as providing doctors and nurses with a choice of clinical strategies appropriate to individual patients in different clinical settings.

Company goal

Our goal is to make oesophageal Doppler monitoring (ODM) a standard of care for patients in both these markets. We believe that, in most modern health systems, it is essential to have a robust evidence base of both clinical benefit and cost effectiveness in order to achieve system-wide adoption of a new medical technology. Deltex Medical is one of the very first medical technology companies to have completed the investment necessary to build such an evidence base: as a result, use of ODM during surgery has the proven potential to deliver both clinical and economic benefits that are material at each of patient, hospital and system level.

The Company is currently in the implementation phase of achieving this goal in a number of territories worldwide and there are already over 2,800 CardioQ-ODM systems in use in hospitals worldwide. Distribution arrangements are in place in over 30 countries.