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Medical Australia Secures First Mover Advantage In Europe With Animal Stem Cell Therapy

Medical Australia (ASX: MLA) is introducing a breakthrough regenerative animal stem cell therapy into the UK and Ireland.

The company has invested $500,000 to establish a fully functioning clinic in Hampshire, England, where it can cryogenically freeze stem cells for domestic pets, small animals and the equine market.

Importantly, the facility is believed to be the first of its kind in Europe, providing Medical Australia with a first mover advantage in the region.

Mark Donnison, managing director, said, "For MLA this represents a major strategic development for the company as it moves us into an area of the animal healthcare industry where we are offering a more cutting edge technology with higher margins, repeat business and future cross-selling opportunities.

"This technology is a major growth driver for MLA. It puts us in a leading position in the veterinary market in the UK and Ireland, as we are pioneering a unique technology that has immediate and significant commercial upside."

Medical Australia secured the rights to the stem cell therapy technology through its licensing agreement with Australian-owned MediVet.

Under the TUTAVet brand, the company is now actively marketing the technology to the UK veterinary market.

Pet owners, zoos, and the equine market spend considerable sums of money treating animals with degenerative diseases such as osteoarthritis, hip dysplasia, and ligament and cartilage injuries.

Donnison said pet owners and the equine market in particular spend thousands of dollars each year on regenerative treatments for pets and animals.

"Our technology offers much better outcomes for animal healthcare and is competitively priced. With more than 5,000 veterinary clinics in the United Kingdom and Ireland alone, we have a large and deep market to penetrate," he said.

"Each veterinary clinic is likely to invest A$10,000 to set up the technology offering in-house, and will spend around A$900 on consumables associated with each and every treatment."

By acquiring the TUTAVet technology and kit, veterinary surgeons will be able to offer surgery, harvesting, and administering of stem cells in-house in a three to four hour period.

Stem cells harvested from the animal's own fat tissue are administered to accelerate the healing of muscles and joints damaged by injury, disease or degeneration.

TUTAVet will also be able to cryogenically freeze stem cells and store them for customers at its facility in Hampshire.

The first procedure will be undertaken this month by Dr Mike Hutchinson, who has performed more than 300 stem cell procedures using this technology.

Medical Australia expects to sell its first kits in the coming months.

Re-rating

Earlier this year, an equity research and market intelligence firm reaffirmed its positive outlook on Medical Australia based on an updated DCF valuation model.

The price target of $0.038 offers an upside potential of 153% from the last traded share price of $0.015.

Last year the company entered into several major distribution agreements and supply contracts which is expected to substantially enhance Medical Australia's financial performance from financial year 2012 onwards.

One of the agreements tipped as significant in the research report was a global supply and manufacturing agreement with Sydney-based animal healthcare company MediVet.

The deal, which was secured in July 2010, launches Medical Australia into the lucrative US$11 billion pet healthcare market in the U.S and is anticipated to generate A$3 million in annualised revenues.