Shares of junior biotechnology company, Nanosonics Ltd. (ASX: NAN), soared as much as 12% today following a bullish market update released to the ASX this morning.
The company's announcement read a "new study shows trophon® EPR is the only high level disinfection system for ultrasound probes proven to be effective against high-risk, cancer causing strains of human papilloma virus (HPV)."
Nanosonics is a $500 million company which makes and distributes its flagship product, trophon EPR, to local and international hospitals.
Trophon EPR is a proprietary technology which disinfects ultrasound probes.
For more information on the machine, click here to view a video of how trophon EPR works.
In its ASX announcement today, the company said studies have shown that between 3% and 7% of probes used in examinations are contaminated with HPV, despite the use of probe covers and routine disinfection with wipes.
Researchers from two universities in the U.S. found disinfectants gluteraldehyde and ortho-phthalaldehyre (OPA), "failed to inactivate natural, infectious, high-risk HPV16 – even after 24 hours of contact time."
Research in a more recent test involving HPV16 and HPV18 as well as the trophon EPR system "showed that the trophon EPR was the only disinfectant to completely inactivate HPV."
Nanosonics CEO Michael Kavanagh said, "The results of this latest study are clinically very significant and emphasise the importance of effective reprocessing of ultrasound probes to minimise the risk of cross contamination."
"The outcomes of this study along with ongoing clinical work we are conducting further supports our objective of establishing trophon EPR as the new standard of care for the high level disinfection of ultrasound probes."
Should you buy Nanosonics shares?
Nanosonics shares have been on a tear over the past year, rising 127%. Whilst the company has only recently turned its first profit, personally, I think it'd be safe to assume brighter pastures lay ahead for the company and its shareholders.
Although shares trade at a seemingly high valuation; Nanosonics says there are just 4,500 units currently installed in North American hospitals, whilst the market potential is approximately 40,000 units.
In addition the company is switching away from its exclusive distribution rights with GE, targeting sales in Australia and New Zealand, and will leverage growth from a key partnership with Miele Professional in Europe.
Overall, I think long-term investors could do worse than add Nanosonics to their watchlist and/or portfolios in 2015.
