IDMoS plc Fundraising And Admission to AIM

12 November 2004

IDMoS plc, ("IDMoS" or the "Company"), a company formed in 2001 to commercialise disease detection technology from the Universities of Dundee and St Andrews, has today published its document for the Admission of its shares to trading on AIM. The first application of the Company's technology will be in the management of dental decay. The Company has raised approximately £5 million before expenses and it is expected that dealings in the Company's shares will commence on 22 November 2004.

The Placing and AIM Admission

Background

On IDMoS's AIM Admission, Stephen Westwood, Chief Executive, commented: "We are delighted that institutional investors have supported our plans for a flotation on AIM and can see the potential of this leading edge technology which has taken eight years to develop. With this support, we are now able to move to commercialise the CMS System for the detection and monitoring of dental decay."

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Code Securities Limited and Altium Capital Limited which are authorised and regulated by the Financial Services Authority, are acting for the Company only and will not be responsible to any other person for providing the protections afforded to clients of Code Securities Limited or Altium Capital Limited or for advising such person on the matters referred to in this announcement. Code Securities Limited and Altium Capital Limited have not approved the contents of, or any part of, this announcement.

NOTES TO EDITORS
INTRODUCTION
IDMoS Dental Systems Limited was formed in 2001 to commercialise disease detection technology, which had arisen from research conducted by its Founders over the preceding eight years at the Universities of Dundee and St Andrews. The Group has subsequently recruited a team to continue the development and exploitation of this clinical ACIST technology. The first application of this technology will be in the management of dental decay, a recognized global problem, by using the IDMoS CMS System. The System, comprising a Base Station, integral analysis software and a sensor, will enable dental practitioners to accurately distinguish between stages of dental decay and will provide a level of detection accuracy and sensitivity otherwise unavailable from existing commercial techniques. Accurate detection should enable either the reversal or arrest of decay if identified early enough, or the appropriate treatment of decay if established. Successful market adoption would enable changes in dental practice, which the Directors believe would ultimately lead to a significant reduction in the use of fillings in patients. Existing methods generally used by dentists, such as X-ray devices, have well-documented limitations with regard to accuracy and safety. The Group's System would offer dentists the ability to overcome these limitations. This would complement modern reimbursement trends, which involve switching to preventive decay management practices from restorative procedures (fillings). Consistent with this change, two major dental teaching hospitals in the United States have expressed their intent to adopt the IDMoS CMS System, when finalised, into their current curricula, in order to train dental graduates in new preventive practice.

The Group plans to commercialise the System through one-off sales of the Base Station and recurrent sales of the disposable sensors and software upgrades. IDMoS is currently finalising the specification of its System and is also in discussion with distribution partners to assist with commercialisation and eventual sales. The Group's immediate goals are to finalise a production version of the System by the end of 2005, to make provision for commercial-scale manufacture, and to conduct clinical studies and to seek regulatory clearance for sale in Europe and the US, initially for the detection of primary coronal caries. It is intended that commercial versions of the system will be marketed by the end of 2006. In the medium term, the Company's strategy is to develop additional applications for the clinical ACIST technology in the area of caries management, including 3D imaging. The Company has longer term plans to develop further its clinical ACIST technology platform to address other applications such as lesion detection and imaging in oncology.

BACKGROUND
The development of the Group's clinical technology to date has been based on the Founders' substantial experience in dental disease detection, monitoring and preventive clinical management. The Founders have made significant contributions in the international field of dental cariology through published research, as invited key note speakers at dental conferences and as elected officers of research and professional organisations. The Founders identified a robust and well-established technique used in the electro-chemistry and battery fields, the AC Impedance Spectroscopy Technique (ACIST), and designed sensors to employ a new application of this technique in the field of caries detection on which patent applications were filed in 1996. Further laboratory and clinical development at the University of Dundee and in association with the University of St Andrews continued in conjunction with caries clinical trial developments. Clinical feasibility, including speed of measurement and safety, was demonstrated in a clinical study involving involving 2,139 adolescent subjects using prototype systems, which was organised and financed by an international oral health company. This research and development effort culminated in the spin-out of IDMoS Dental Systems Limited from the University of Dundee in 2001, so that commercialisation of this application of the ACIST technology could be pursued.

DEVELOPMENT OF IDMoS
Since formation, the Group has progressed the development of its technology including furthering development work in conjunction with Diagnostic Instruments ("DI") on prototype versions of the IDMoS CMS System. Prototype Base Stations have been constructed based on intellectual property created by the Founders and technology incorporated in devices, which DI currently manufactures and sells for non-clinical commercial and industrial uses. A member of the SKF Group, DI has an established track record of supply and in-market support to instrumentation manufacturers such as Siemens and Rockwell. DI is currently retained by the Group to assist in the finalisation of the commercial version of the CMS System for volume manufacture. In addition to development of the first prototype Base Stations with DI, IDMoS has also developed and filed patent applications for new types of sensor and a 3D imaging system, which the Directors believe to be unique. The Company is working with EG Technology Limited to source suppliers and manufacturers to finalise the commercial specification of its new types of sensor, in anticipation of commercial production.

MARKET POTENTIAL
The Group plans to address a significant market opportunity worldwide. The target market segments include software, dental equipment and supplies as well as X-ray systems. Estimates suggest the market for dental professional equipment and supplies reached $3 billion in 2003 in the US alone, and is expected to grow to approximately $4 billion in 2009 (source: US Department of Commerce). In addition, US sales if X-ray apparatus and tubes were $4.4 billion in 2003, and are estimated to reach $5.9 billion in 2009 (source: US Department of Commerce). While there are clear markets for the Company's planned Systems, the Directors believe market adoption will be generated by changes in modern dental practice. Such changes away from restoration and towards prevention are being advocated and adopted worldwide, but at different rates in different territories. Scandinavian countries have been practicing preventive caries management for the last two decades, Australia has moved significantly in this direction in the last ten years, whereas other western economies are starting to change their decay management methods. For example, the German government has significantly reduced the levels of reimbursement for restorative dental work, and the UK government and US health insurers have already acknowledged that in 2005 the balance in remuneration of caries care will shift in favour of prevention. This shift, combined with lower incidence of cavities generally, ultimately reduces the amount of funding available to dentists for restorative procedures, and moves the reimbursement emphasis towards preventive services. Until recently, dental decay has generally been treated in its later stages, when lesions can easily be detected by eye, or with a conventional diagnostic system, such as an X-ray. By this time, the decay is often too advanced for preventive treatment to reverse or arrest the decay. Only comparatively recently has the wider dental profession become aware that in fact, these detectable lesions can take up to 5 years to form, and that if decay is detected early enough, it is indeed arrestable or reversible.

BOARD OF DIRECTORS