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Nanosonics Ltd receives US approval for trophon2

Nanosonics Ltd (ASX: NAN) has announced this morning that it has received US Food and Drug Administration clearance for its new device, trophon2.

Nanosonics describes itself as a leader in infection control solutions. It has received the vitally-important FDA 510(k) clearance for its second generation trophon device, trophon2.

The Chief Executive Officer and President of Nanosonics, Michael Kavanagh, said “This is excellent news delivering earlier than anticipated FDA clearance for our next generation trophon device. Further, it delivers the first regulatory approval of our targeted new infection prevention solutions.”

The company has put a lot of energy into re-designing the trophon device to make it even better than the last one. It has new mechanical and software design that apparently gives a range of new benefits based on input and feedback from its global customer base.

Nansonics took the views of infection prevention specialists into account on the future trends and requirements of infection control devices. The new device has a redesigned chamber for new and existing probes as well as a number of other features.

The new device has also been designed with the European market in mind, as each country may have specific guidelines for infection control devices. The regulatory submission for Europe is currently under review.

Mr Kavanagh said that the commercial release for trophon2 is anticipated for the first quarter of the 2019 financial year. The product is currently being put into the manufacturing cycle with a ramp up of production expected during the next three months.

Nanosonics also said that the original trophon device will remain in the market as an entry level device, although the company expects most sales will shift to the new device.

The company did warn that there could be a short-term impact on both inventory and trading volumes as the change occurs, which will have a ‘transitionary impact’ on revenue recognition in the current quarter. However, any short-term negative impact is expected to be overcome after the full commercial release of trophon2.

Foolish takeaway

Getting approval sooner than expected should be a good thing for the company and will hopefully lead to continued long-term growth for Nanosonics. At the current value it could be a decent long-term buy as the share price has dropped off over the last few months. However, I’m personally not going to invest in the near future until at least the transition phase is over.

Instead, I'd much rather buy shares of these exciting growth businesses which are leaders in their industries.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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