Despite talks with a strategic partner, MCS has halted all R&D efforts and initiated a second round of layoffs since 2015.
MCS Medical Compression Systems (DBN) Ltd. (TASE:MDCL) (MCS), which develops medical instrumentation to prevent blood clots during orthopedic operations, might be in talks with a strategic partner, but still announced layoffs today. The company said that at this stage, negotiations with the potential partner are only aimed at a marketing pilot in a limited area. Only if the pilot (regarding which no agreement was signed yet) succeeds, the parties will discuss an exclusive marketing deal. At present, the pilot is probably not expected to yield significant revenue, leading the company to reduce its number of employees by 30% and stop all R&D efforts.
Following this announcement, MCS shares dropped this afternoon by 4% to a market cap of NIS 34.7 million. This is the second round of layoffs MCS has been forced to undergo since its request to receive insurance indemnification for its product was rejected by the US Centers for Medicare & Medicaid Services (CMS) in 2015. One week ago, the company selected a new CEO (Gerry Feldman from Oridion) and received an US Food and Drug Administration (FDA) approval to market its device for home treatment, in addition to hospital treatment. However, MCS does not intend to market its product until changes are made in the US insurance indemnification system, which will make the integrative marketing of home treatment and hospital treatment solutions profitable.
Published by Globes [online], Israel business news - www.globes-online.com - on July 24, 2016
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