Shareholder Letter Dated November 18, 1998
Dear Shareholder,
As the end of the year approaches, I would like to take this opportunity to bring you up to date on some of the activities of your Company during the past year. We appreciate your continued interest in Chromatics Color Sciences as we seek to build value on behalf of our shareholders by commercializing the potential of our proprietary technologies and intellectual property rights. There have been several developments that we believe have brought us closer to realizing our objectives.
We have recently entered into a manufacturing agreement for the production of the Colormate TLc-BiliTest(TM) -- the Company's device for pain-free, non-invasive monitoring of bilirubin (infant jaundice). This is a tremendous step forward for us in bringing our color technology to the medical community.
Both an electrically powered model of the device and a lightweight hand-held battery operated monitor will be manufactured under FDA QSR as well as ISO 9000 manufacturing regulatory requirements. The system includes a proprietary calibration standard for each non-invasive measurement taken on an infant while being measured for hyperbilirubinemia.
The Company's new contract manufacturer is an ISO 9001 certified facility. Due to corporate marketing policies including competitive concerns of certain potential distribution partners (and our Company), we have been asked to request confidential treatment concerning the name and other aspects related to our manufacturer.
The manufacturing agreement follows a series of successful exhibitions and presentations of the TLc-BiliTest(TM) at medical conferences around the world during the past six months. The response from health care professionals has been very strong and our intention now is to get the TLc-BiliTest(TM) into their hands as soon as possible.
The conferences have included:
- The pediatric Academic Society conference in New Orleans, in May.
- The SINOMED ‘98 Exhibition -- the 7th China International Medical Equipment and Facilities Exhibition in Beijing, In June.
- The 22nd Annual International Congress of Pediatrics in Amsterdam, in August.
- The National Association of Neonatal Nurses meeting in Cincinnati, in September.
- The American Academy of Pediatrics meeting in San Francisco, in mid-October.
- The 5th Annual Pediatric Critical Care Medicine Conference, held in Guilin, China, in late October.
To implement its marketing efforts, the Company has recently opened a medical marketing, sales, and distribution support division in Connecticut and hired Vice President Sheila Kempf and other qualified sales, marketing and inservicing staff there.
The Company's Consultant Mr. Frederick Frank, Vice Chairman of Lehman Brothers and a leading health care industry authority, continues to assist the Company in the evaluation and negotiations related to potential agreements for global distribution of the Colormate TLc-BiliTest(TM).
While the Company remains in ongoing negotiations and continues to move toward the completion of recently required due diligence with potential global distributors, the Company anticipates marketing and distributing the newly-manufactured Colormate TLc-BiliTest(TM) through the Connecticut office in order to accommodate the interest already generated at the conferences for the TLc-BiliTest(TM) during the expected transition period as we move to global distribution once an agreement is entered into.
The Colormate® TLc-BiliTest(TM) has FDA clearance for commercial use and the Company believes, is the first non-invasive bilirubin monitoring device for babies of all races, even under phototherapy treatment. A study of the device was recently published by Pediatrics, the publication of the American Academy of Pediatrics. The study was led by Dr. Ian R. Holzman, chief of newborn medicine at New York's Mt. Sinai Medical Center; along with two Mt. Sinai-based pediatricians -- Dr. Donald Gribetz and Dr. Irwin Gribetz -- and Dr. Roland Tayaba, who is director of the neonatal intensive care unit at City Center Hospital Center of Elmhurst in New York City.
This study found that the TLc-BiliTest(TM) was effective in diagnosing and tracking jaundice compared to current invasive techniques involving taking blood from infants -- often repeatedly. The study involved 2,441 infants at two hospitals who were repeatedly measured for bilirubin. Accuracy was not affected by infant race or weight, or by the use of phototherapy. The researchers reported, “This instrument used in newborn nurseries may allow physicians to shorten lengths of stay more safely and decrease the use of invasive blood tests.”
In further support of our marketing efforts, we have initiated a broadened program of independent multi-center studies of the Colormate® TLc-BiliTest(TM) under protocols developed and supervised by Dr. Jeffrey Maisels of the Company's Board of Medical Advisors and one of the world's leading experts on bilirubin infant jaundice.
Studies have been concluded at Parkland Hospital in Dallas and William Beaumont in Michigan with a high correlation to the blood test results. Studies have commenced at King Edward Hospital in Durban, South Africa and at the Beijing OB/GYN Hospital, and have been authorized to commence shortly at Columbia Presbyterian in New York City.
In July, approval was given for clinical trials at Mt. Sinai hospital aimed at determining the effectiveness of Colormate® technology for a second medical application in dermatology.
In addition to opening an office in Beijing China staffed by two representatives of the Company, we have signed a letter of intent with the China National Medical Equipment and Supplies Import and Export Corporation, which is interested in supporting the distribution and helping establish appropriate pricing structures for marketing the Colormate® TLc-BiliTest(TM) in the Republic of China.
We have also signed a lease and license agreement with Nordstrom Department Stores for use of the Chromatics technology and Colormate® Systems, to be used to formulate and recommend Nordstrom's “C20 Color to Order(TM) line of proprietary cosmetic products which will be introduced in 4 Nordstrom Flagship stores for evaluation over a three month period for extended use including additional store locations.
We are also proud to announce that the Company has been granted an additional patent for “Method for Selecting Personal Compatible Colors” in Canada on August l8, 1998.
We have also welcomed to our Board of Directors, two outside Directors, Mr. Edmund Vimond and Mr. Edward Mahoney whose responsibilities are more clearly outlined in the accompanying proxy materials. We also welcome our new financial auditors, BDO Seidman, and an additional Public Relations and Shareholder Relations firm, Howard Rubenstein all of whom will be working to assist the Company in moving to its next stage of operations.
As the pace of activity outlined above suggests, we are progressing and pursuing opportunities in a measured and deliberate fashion. As events warrant, we will of course publicly announce new developments as they occur. In the meantime, thank you for your continued confidence and support.
Sincerely,
Darby S. Macfarlane
Chairman and Chief Executive Officer
Certain of the matters discussed in this letter contain forward-looking statements........ |
