Valimed

[Sassy]

Cdex targets $1B market for stopping fake drugs
http://www.bizjournals.com/washington/stories/2006/02/20/story4.html?from_rss=1
Neil Adler
Staff Reporter

Cdex, a Rockville business working on technology that detects chemicals, is about to go from developing a product to selling it. And that could mean big revenue and a larger staff for the small company seeking a piece of a $500 million to $1 billion market.

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With the first production run of its ValiMed system slated for April, Cdex expects to generate about $50 million in annual revenue in three years and $100 million by 2011.

The company (www.cdex-inc.com) has begun to sign up customers, including the University of Maryland Medical Center in Baltimore, for its chemical-detection system that helps medical professionals determine whether the drugs they receive are counterfeit.

"It's a big issue," says Howard Schiff, executive director of the Maryland Pharmacists Association. "Counterfeiting techniques are becoming more refined. It is very difficult to tell if [a drug] is counterfeit."

Cdex's technology uses X-rays and ultraviolet light -- as well as hardware and software -- to identify substances and weed out false positives, which happen frequently during attempts to detect hazardous materials. Customers are likely to pay about $25,000 for each ValiMed system.

"We're unaware of a competitor that is offering a similar product," says Jim Griffin, who joined Cdex Oct. 1 as chief operating officer and was named president and CEO Jan. 1. He replaced Malcolm Philips, who started the company in 2001.

"We believe what we have is exciting," says Griffin, who has also been named to Cdex's board.

The University of Maryland Medical Center will use ValiMed to perform end-product testing of intravenous medications in its pharmacy departments and to validate returned narcotics in operating rooms and nursing units. University officials say they are integrating the technology but preferred not to comment because they're just learning how to use the system.

The company has 17 employees between its Rockville headquarters and a facility for research and development in Tucson, Ariz. Griffin says he plans to at least double -- and perhaps triple -- the company's staff in the next 12 to 18 months. The new workers will be needed for sales, marketing and R&D.

Cdex, which is traded over the counter, plans to raise $3.5 million to $10 million this year for product development, although company executives won't say how the money will be secured. Cdex raised $3.6 million last year.
The company reported a net loss of

$5.2 million on revenue of $178,000 for fiscal 2005 ended Oct. 31, compared with a net loss of $5.9 million on revenue of roughly $4,000 a year earlier.

Cdex recently signed an agreement with Englewood, Colo.-based Baxa to sell its product line in the United States and Canada and is looking for partners to market the technology overseas.

The firm's technology targets health care but could be applied to the homeland security and brand protection markets, Griffin says. Defense officials, for example, could use it to screen for explosives and illegal drugs, and liquor industry leaders could use it to ensure the spirits they've ordered are legit.

Says Griffin: "Our opportunities are broad and vast."

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