Chairman’s Message – September 2012

Greetings all

I am taking this opportunity to bring you up to date on several key areas of interest pertaining to commercialization. These include: Canadian distribution; Manufacturing; FDA regulatory status; International regulatory status; revised time-lines regarding early sales estimates; and Roadshows.

While there may be other areas of interest to shareholders that haven’t been included in this particular publication, please note that comprehensive updates will be made available when it is deemed relevant and prudent to do so.


Canadian Distribution Underway

As reported in our September 12th press release, Medizone has delivered its first production AsepticSure systems to C3 Contamination Control Corporation with additional systems on order. C3 is the disinfection division of CanMedical, established to specialize in both AsepticSure decontamination services and sales in Canada.

The initial AsepticSure systems purchased by C3 are being put to use immediately and will be used in their decontamination service business, as demonstration units for marketing purposes and in support of Medizone for an upcoming hospital trial soon to be announced. The upcoming trial in question has been designed to demonstrate measured reductions in HAIs following implementation of AsepticSure practices in a hospital.

Despite the lengthy manufacturing delays (4-6 months) that have delayed the soft-launch rollout as initially planned, C3’s involvement from this point on should allow us to expedite the process moving forward. NOTE: Subsequent progress regarding the soft-launch will be reported when appropriate.


Manufacturing

The early manufacturing challenges have needed to be addressed in order to assure that the production variant of AsepticSure is a robust and quality-driven system as it comes off of the production line.

Medizone believes that quality control is paramount to earning a reputation that will ensure market success. These production delays have simply proven to be part of the process in developing a superior product. 


Regulatory Affairs – USA

A regulatory decision has been received from the United States FDA.  In keeping with the expectations of our regulatory team, the FDA has ruled that AsepticSure will be classified as a Class 1 medical device for sales in the US. The FDA Class 1 ruling has straightforward requirements we are now in the process of meeting. Final regulatory approvals for the US market by both the FDA and EPA should be achieved not later than January 2013.

Our regulatory team has fully strategized the global regulatory approach and thus far has proven very successful. EU approvals are expected to be straight forward following the final FDA approval.


Regulatory Affairs – International
 

Medizone has recently been notified that Medsafe, Ministry of Health NZ, has followed a similar path to Health Canada and has made a decision not to regulate AsepticSure as a medical device. This means that AsepticSure has now achieved clearance for sales in two countries – Canada and New Zealand.

NOTE: One of our first production units had been pre-sold to a customer located in Auckland.  The purchaser, who has formed a business using an AsepticSure service model, will be traveling to Canada in October to receive training in a hospital environment in the use of the equipment alongside of C3, hospital and Medizone personnel. He will then return to New Zealand with his AsepticSure system and put it into commercial service.  

The unit specification for the New Zealand market is the same specification as that for the EU market. This particular unit has seen a significant number of hours of proven and successful daily use in our laboratory over the past month. We anticipate it will continue to serve well for our customer in New Zealand, thus assuring we can safely ramp up production of the 220V design next year when EU penetration might be expected to start.

In summary:

  • Canadian and New Zealand approvals are in place.
  • US approvals to follow later this year.
  • EU approvals are expected early in 2013.

NOTE: AsepticSure may now be used for investigational purposes in the United States, allowing that final FDA and EPA approvals are required prior to sales in the US market.  


Sales & Production Ramp Up

Once the EPA and FDA approvals for sales are in place and production ramp up approved by the Company, additional North American sales penetration may be expected.  The task of securing specific distribution channels for both North America and the EU is still in the development stages.  NOTE:  News on distributor agreements will not be reported during the negotiation stages. Only when final distribution channels are in contract will they be publicly reported.

Our current estimation for initial penetration into the EU and other related regions is mid to late 2013. High North American demand and the possibility of early production limitations might alter this time-frame. Importantly though, this has not prevented us from taking initial steps towards securing one or more major EU distributors.

In the meantime, closer to home, based on the requirements of C3 and the interest being shown from their customer base, we are now estimating the first significant “ramp up” following soft-launch will be for 40 units during the Q1, 2013 time-frame. It currently appears that the time-frames and production estimates over the coming 6 months look like this:

* First 5 units, delivered or in research use.

* Next 10 units, delivered between now and January.

* Followed by an estimated 40 units to be delivered (or on order) during Q1, 2013.

I do not believe it would produce anything but blue sky to make a hard estimate of production numbers beyond Q1. However, post Q1, demand will tell the story.

Based on currently available information (not all of which can be publicly reported at this time) we clearly anticipate sales will increase significantly quarter to quarter as the impact of AsepticSure (in demonstrating greatly diminished HAI infection rates) is reported across the health care sector from multiple end-users.


Roadshows

Two events are scheduled (with one confirmed) between now and the end of the year, with more anticipated in 2013.

On September 20, Dick Zoutman, Medizone’s Chief Medical Officer, will be giving a public lecture on the topic of ‘Novel Methods for Room and Space Disinfection in Healthcare and Other Interesting Places’. The lecture will be held at the Peterborough County Health Unit in Ontario, Canada.

During the talk Dr Zoutman will be discussing the importance of the environment as a reservoir for infectious disease pathogens in all healthcare settings and the severe limitations that exist in the way we clean hospitals today. He will review the history of the use of different aerosol and vapor-based methods that have been tried in the past and describe some of the newer methods that have emerged. He will also highlight the results of the AsepticSure system in comparison to what is available presently.

The high level of synergy between ozone and hydrogen peroxide will be stressed as a novel and critical contribution to the safety of healthcare in the future. Achieving 1 million fold kill of deadly pathogens, including Clostridium difficile spores, is a transformational change in the healthcare field that has the potential to virtually eliminate healthcare associated infections.

Subject to final acceptance, Dr Zoutman will also be presenting ‘The Case for Asepticsure’ at the Hospital Infection Society in Liverpool, England, in November.


Future Updates

More information regarding progress will follow in the coming weeks and months, including updates on the first real-world deployments of AsepticSure technology by Medizone and C3.


Best Wishes

Ed

Contact:

Medizone International, Inc. (MZEI.OB)

4000 Bridgeway, Suite 401
Sausalito, CA 94965

Telephone: 415-331-0303

Email: operations@medizoneint.com

Investor Relations:

John Pentony

Investor Relations
Medizone International, Inc.

Telephone: (415) 331-0202

E: j.pentony@medizoneint.com

Media Contact:

Gary Hanauer

Media Relations
Medizone International, Inc.

Telephone: (510) 686-1238

E: GarHan@aol.com