March 18, 2016

We’ve signed a major deal with Korea’s equivalent of Australia’s CSIRO and we think it’s going to transform our business.

The licence and technology transfer agreement with the Korea Research Institute of Standards and Science, which was signed and announced to the ASX last month, gives us access to state-of-the-art brain imaging technology called magneto-encephalography or MEG for short.

The deal brings together their market leading hardware and our market-leading software.

The significant imaging market opportunities this will open have the potential to generate more than US$20 million in annual revenues for us within 2 years.

MEG gives a much better view of the brain and its magnetic field activity, has greater sensitivity and gives faster measurement than other imaging technologies.

This will help in the early diagnosis and management of some of the most prevalent and debilitating neurological disorders including Alzheimer’s, epilepsy, Parkinson’s and autism, as well as traumatic brain injury. When recorded and analysed with Compumedics CURRY Neuroimaging Suite, EEG may be acquired simultaneously, providing additional information about the origins of disrupted brain activity. When recorded in isolation, MEG has the immense advantage of not requiring any special preparation; the patient’s head is simply placed inside the helmet containing the MEG electronics, and the magnetic fields are obtained without any contact. Therefore, as well as adults it is also ideally suited for pediatric neurology, which is the most critical expanding patient-population for surgical remediation of epilepsy.

The deal is a key milestone in our strategy to transition from being a technology leader in the US$50 million specialist brain research market to the much larger US$4 billion multi-modal brain imaging market.

We will change from selling US$30,000 MEG software packages to selling best of class fully integrated US$5.5 million MEG systems.

Invented by David Cohen at Massachusetts Institute of Technology in the 1970s, MEG technology can record the magnetic fields produced by electric currents generated by neurons in the brain.

It does this using a highly sensitive detector called a SQUID, short for super-conducting quantum interference device.

By maintaining superconducting magnetic detectors at super-cooled temperatures, the tiny but very fast (too fast for traditional MRI) brain characteristics associated with widespread neurological disorders such as dementia, autism, epilepsy can be detected.

The technology we’ve acquired is complementary to MRI (magnetic resonance imaging) or PET (positron emission tomography) scan but provides 50 per cent greater spatial resolution than the major MEG competitor currently on the market. That is how it gives a better view of the brain and its activity.

This technology expands our capability in multi-modal brain analysis, where the clinician wants to combine two or more imaging modes – such as electroencephalography (EEG), MRI and MEG – to locate and assess brain electrical activity non-invasively with unprecedented accuracy.

The agreement with KRISS is important because its technology will go to the market only with our software as well as our EEG hardware for the dual imaging systems.

By financial year 2018-19, we expect to be selling US$20 million a year worth of a complete new-generation MEG brain imaging systems.

The early detection of neurological disorders is a huge advantage because many are treatable if discovered in early.

Not only can this save lives, it can also save governments dollars. Given the ageing populations in much of the developed world – and also in China and India – health spending is mushrooming, which means governments have to choose the most effective diagnostic methods and treatments.

In particular, China and India are starting to spend heavily on their healthcare infrastructure and they don’t want to go through the intermediate brain-imaging technologies that the developed world went through. They want to go straight to state-of-the-art systems.

Demand for brain imaging services is growing much faster than health spending in general.

In this fast-growing market, we’ve hit the sweet spot at the right time. For us, brain imaging is now our third globally significant technology platforms behind premium sleep diagnosis systems and neurology/blood flow diagnosis systems. However, in time we see it generating most of our new sales.

About Compumedics Limited

Compumedics Limited (ASX: CMP) is a medical device company involved in the development, manufacture and commercialisation of diagnostics technology for the sleep, brain and ultrasonic blood-flow monitoring applications. The Company owns US based Neuroscan and Germany based DWL Elektronishe GmbH. In conjunction with these two subsidiaries, Compumedics has a broad international reach, including Americas; Australia and Asia Pacific; and Europe and the Middle East.

Executive Chairman, Dr David Burton, founded Compumedics in 1987. In the same year the Company successfully designed and installed the first Australian, fully computerised Sleep Clinic at Epworth Hospital in Melbourne. Following this early success, Compumedics focused on the development of products that sold into the growing international sleep clinic and home monitoring markets. Compumedics listed on the Australian Securities Exchange in 2000. Over the years, Compumedics has received numerous awards and accolades including Australia’s exporter of the year and has been recognised as a Top 100 Innovatorby the both German and Australian Governments.

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For further information please contact:

Dr David Burton, Executive Chairman, CEO
Compumedics Limited
T: + 61 3 8420 7300, F: +61 3 8420 7399

Mr David Lawson, Executive Director, CFO
Compumedics Limited
T: + 61 3 8420 7300, F: +61 3 8420 7399

For investor relations and media enquiries

Rod North, Managing Director,
Bourse Communications Pty Ltd
T: +61 3 9510 8309, M: 0408 670 706