Micro-cap Cogentix nabs $7M to back disposable endoscope cover, urinary neuromodulation

Urgent PC Neuromodulation System--Courtesy of Cogentix Medical

Cogentix Medical ($CGNT) was formed in late March with the merger of Uroplasty and Vision-Sciences. Now it's managed to raise a $7 million line of credit from Venture Bank to back sales growth for its disposable endoscope cover EndoSheath as well as its percutaneous tibial nerve stimulation for the office-based treatment of overactive bladder, the Urgent PC Neuromodulation System.

The former came from Vision-Sciences, while the latter was from Uroplasty. The company has a market cap of only about $35 million. But it has guided to revenues of $49 million to $51 million that would represent growth in the range of 9% to 13%. It said its gross margin in fiscal 2016 will be about 67%, with cash operating loss of only $2 million to $3 million for the year.

The company had only $6 million in cash at June 30. Cogentix expects to be profitable in the second half of its 2016 fiscal year, which ends at June 30.

The EndoSheath could take advantage of the ongoing disinfection problems with endoscopes, including duodenoscopes and bronchoscopes. These devices are used repeatedly, but are difficult to clean consistently. Ineffective cleaning of endoscopes has persistently resulted in cross-contamination of patients, including the transmission of drug-resistant bacteria that have resulted in a number of deaths.

Last fiscal year, Cogentix reported $3.8 million in sales in its Endoscopes and EndoSheath products, a 26% increase over the prior year.

The company expects that its existing access to the urologist office for the Urgent PC System, will help it to market the EndoSheath.

"We believe that our already established presence and relationships in the Urologist office creates a significant opportunity for the combined company to expand EndoSheath sales which will in turn make our sales team more valuable and more meaningful to their customer," summed up Cogentix President and CEO Rob Kill on an August earning call. He was previously the president and CEO of Uroplasty.

- here is the financing announcement
- and here is the August transcript from Seeking Alpha