CLEVELAND, Feb. 12, 2004 (PRIMEZONE) -- MDG Medical Inc., developer and marketer of the ServeRx(r), a breakthrough automated pharmaceutical dispensing system for use in hospitals and long-term care institutions, announced today that it has closed its Series "B" financing round with a total of $7.5 million in equity capital.
Investors in the Series "B" financing round include: LSKW Investment LP, a Venture Capital Group and existing investor in MDG; RSL Investment Management, an investment arm of Ronald S. Lauder, the Estee Lauder Cosmetics heir; and Michael D. Siegal, Chief Executive Officer and President of Olympic Steel.
MDG will use the funds for production of the MDG ServeRx(r), which has moved from its development to commercialization stage. MDG will now begin selling the ServeRx(r) in Israel, with plans to begin sales in Europe immediately after a European distribution partner is signed in early 2004. MDG also plans to use its new funds to install its USA beta site at Richmond Heights Hospital, one of the community hospitals in the University Hospitals Health Systems ("UHHS") network in the Cleveland Ohio area. The company plans to begin the installation in the Spring of 2004.
"University Hospitals Health System is excited to work with MDG as it tests and validates the ServeRx(r) system," said UHHS President and CEO Thomas F. Zenty III. "Proper medication delivery is an important issue for healthcare administrators across the country. There is need for a cost effective system for our medium to small community hospitals. Working together with MDG, we hope to prove out the MDG technology and value proposition for UHHS. This funding will help this happen."
MDG has developed a computerized system that enables hospital staff to monitor all phases and aspects of medication distribution. The ServeRx(r) system is designed to prevent human error during medication distribution as well as providing an efficient method of managing inventory. Due to the high costs of most currently available systems, less then 5% of hospitals in Europe have implemented medical distribution technology. Most community hospitals in the United States also have not installed or have installed very few automated systems due to pricing and functionality concerns.
MDG's market includes the more then 4,000 US hospitals and medical institutions, as well as 17,000 nursing homes, which represent more then 100,000 wards.
"MDG has made significant progress since establishing its base of operations in Cleveland last November," noted Matt Jennings, President & CEO of BioEnterprise, a business development and accelerator group, who is also a member of the MDG Board of Directors. "The company has hired a top-notch executive to lead their operations, identified collaborative research partnerships, and is now in the midst of launching its first U.S. beta testing site. Previous beta-site testing in England and Israel was successful, and European sales are beginning. This new investment is a vote of confidence in that progress and in the potential market success of the ServeRx(r) system."
New Executive Management Team
MDG has also named a new executive management team. Mark Saffran, a 30 year industry veteran with Pyxis, NextRx, and American Hospital Supply Corp. has been named Chief Executive Officer. Ken Tauber, a finance and operations executive from companies such as LSKW Investment LP, The Walt Disney Company, and Bertelsmann, has been named Chief Financial Officer, Kathleen Severt, an operations specialist from Cardinal Health has been named Vice President of Operations, and Denton Mease and IT engineer for Cardinal Halth has been named Director of Technical Operations. Ze'ev Schriber, an operations executive formerly with Baxter International and Teva Pharmaceuticals has been named General Manager of the company's research and development subsidiary in Tel-Aviv Israel. Michael D. Siegal, Chairman and Chief Executive Officer of Olympic Steel, and an investor in MDG, has been named Chairman of MDG's Board of Directors.
Research has shown that millions of people are injured every year as a result of medical errors. According to a study by the Institute of Medicine in the US, medical malpractice leads to more than one million maltreated patients and another one hundred thousand deaths every year in the United States alone. The number of prescription and dosage errors represents a significant percentage of medical malpractice incidents. According to a study published in the Archives of Internal Medicine medical journal, one out of five hospital patients has received incorrect medication. "I am very excited to lead the company as we transition from an R&D company to one of sales and marketing" said Mark Saffran, MDG's Chief Executive. " Having spent time with several other automation companies, I believe the ServeRx(r) closed loop technology offers hospitals the most comprehensive system at an affordable price. We have addressed issues that hospital workers have been asking the other automated companies to address for years."
About MDG Medical
MDG Medical develops technology that helps prevent medication error in hospitals and other medical institutions. MDG's flagship product is ServeRx(r), a system that reduces human error in medication distribution and improves efficiency of medical staff and management of hospital pharmaceutical supplies. ServeRx(r) is already in use at the Sheba Medical Center, Tel Hashomer, in Tel-Aviv Israel, which serves as the first worldwide beta site location. The system is also in use at the Hammersmith Hospital Trust in London, one of Europe's leading hospitals. Over the coming months the ServeRx(r) system will be installed in additional hospitals throughout Israel, Europe and the United States.