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Respiri (ASX: RSH) share price soars 7% on partnership agreement

little girl giving thumbs up whilst using asthma inhaler representing respiri share price
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The Respiri Limited (ASX: RSH) share price is up 6.82% to 23.5 cents in early afternoon trading. The surge in the Respiri share price comes following the company’s announcement this morning of a binding electronic manufacturing services (EMS) agreement with Entech Electronics for Respiri’s wheezo™ product.

Wheezo is a novel eHealth app developed to assist with managing asthma. Together with a simple handheld device, wheezo records a user’s breathing and analyses it for any wheezing.

Following on today’s intraday surge, the Respiri share price is up nearly 47% so far in September. Year to date, the Respiri share price is up 135%.

For comparison, the All Ordinaries Index (ASX: XAO) is down 12% since 2 January.

What do Respiri and Entech Electronics do?

Respiri develops innovative eHealth solutions with the goal of improving the management of chronic respiratory disorders like asthma. The company creates technology to help asthma patients and doctors monitor and manage asthma. Respiri aims to help improve the quality of life of asthma patients around the world.

Entech Electronics is a privately owned Australian contract electronics manufacturer, headquartered in Devon Park, South Australia. The company operates offshore production facilities in Shenzhen, China and has more than 34 years of experience in electronic manufacturing including across the medical device, aerospace and defence sectors.

What did Respiri and Entech Electronics agree on?

Respiri announced it has entered into a partnership with Entech Electronics for the global supply of its ground breaking wheezo product.

The company stated that the first orders for wheezo have been placed and that Entech Electronics has commenced production preparation at its Shenzhen facility. It reported that 12,000 devices have been commissioned and it expects to commence delivery in February 2021.

The new partnership will enable Respiri to increase its production levels to meet the expected global demand, while the shift to a low-cost production environment should see its cost of goods fall by 85%. The company noted the costs should fall even further with increased volume over time.

Addressing the strategic partnership, Marjan Mikel, Respiri’s CEO and Managing Director, said:

We are delighted to partner with Entech Electronics as they are well placed to support our global product volume requirements at cost positions that support Respiri’s business model

Wayne Hoffman, CEO of Entech Electronics, added:

We are welcoming Respiri as a customer with significant growth potential and look forward to contributing to the success of wheezo with both our medical device experience and electronic manufacturing competence. Our operation in Shenzhen has commenced investment in assembly and test equipment that will allow us to scale quickly and react to Respiri’s forecast growing global demand and accommodate monthly volume requirements well in excess of 10,000 devices.

If costs decline and demand for wheezo comes through as expected, the Respiri share price will be one to watch.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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