Eastland Medical (EMS) $0.047 Recommendation: SPEC BUY Analyst: Allan Franklin Tel: 08 9263 1151 Event Eastland has been informed by Dr Roland K Wildner, the CEO of hc Berlin Pharma AG (Berlin Pharma) that he has commenced insolvency proceedings. Dr Wildner has commenced insolvency proceedings of Berlin Pharma due to the financial situation of the Company. Berlin Pharma has been Eastland's contracted manufacturer for the ArTiMist malaria treatment. Eastland still hold a manufacturing agreement with ProtoPharma Ltd which provides for ArTiMist manufacture in the United Kingdom. Eastland has no amounts owing to Berlin Pharma and as such Eastland expect the process will have no material effect on the Company's financial position. However Eastland may have to write off the balance of their investment in Berlin Pharma which amounted to $1.113m at 31 December 2009 as well as amounts receivable of $57,000. Impact Over the last period, Eastland has been in discussion with Berlin Pharma over numerous commercial issues. Most of which relate to irregularities within Berlin Pharma's accounts and processes. Little progress had been made to date. A simple insolvency process would allow for the manufacturing contract to be terminated. Eastland would then use ProtoPharma to manufacture ArTiMist, ProtoPharmawas expected to be the initial manufacturer in the first instance anyway. We expect that Eastland would have no difficulty in finding another long term contract manufacturer. Importantly, we still believe a 'trade sale' of the ArTiMist project is Eastlands primary objective rather than in house manufacturing and distribution process. Eastlands forward program for ArTiMist remains intact. AFG Ventures Group will progress ArTiMist marketing and evaluate commercialisation options over the coming months in light of the Phase III confirmatory trial. The confirmatory multi centre study is expected to commence in September 2010. Planning for the confirmatory trial has seen personnel from ProtoPharma and OnQ Research visit clinics in a number of African countries over the past weeks. The visits allowed for an audit of potential sites in order to submit protocols to each country for Governmental approval. Our positive view on the ArTiMist project has not changed. Our recent research highlighting the recent trial is attached.
EMS Price at posting:
4.8¢ Sentiment: None Disclosure: Held
