Tiny VivoMedica, the medical devices developer known until last September as Zi Medical, has been steadily shrinking in valuation in the past few years as cash reserves and investors’ patience dwindle.

However, the management, which includes chief executive Peter Leyland and chairman Sir Christopher Evans, have high hopes for the company’s two ‘pharmaware’ products, developed in conjunction with former government research agency Qinetiq.

Furthermore, the company’s accounts reveal that it is ‘currently in advanced discussions with potential sub-licensees’ for the patents of the less developed of its two products, PathScore, and is in discussions with its trade creditors (which include Qinetiq) about converting £1.2m of debt into equity.

However, PathScore, a computer-based system to improve cancer diagnoses, is still a long way from market and these discussions will need to conclude before any progress can be made. Its other Qinetiq-developed product, DrugPrint, is closer to market and may have the weight of potentially huge industry demand to propel it.

Former Baxter man Leyland, who arrived in April 2006 and has since disposed of the group’s ZiMed drug infusion business, says DrugPrint addresses a problem that is ‘of paramount concern to the pharmaceutical industry’. This is the wasted billions spent by companies developing drugs that are later found to cause cardiovascular side effects.

DrugPrint can use human stem cells to test early in the development process whether drug candidates cause these side effects. Leyland claims its use of human stem cells, boosted by a recent deal with leading sector player Cellartis, also reduces reliance on animal testing.

If either of VivoMedica’s behind-the-scenes talks come to fruition, it should imbue shareholders with a tad more confidence. However, for now, the shares are a tad high-risk for most tastes.

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VivoMedica	AIM	£1.6m	0.80p	0.00p
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