Asian Fusion—Asahi and NxStage Partner in Dialyzers

Asahi (Japan-based Asahi Kasei Kuraray Medical) has agreed to partner with NxStage Medical to take advantage of their joint expertise and resources as makers of dialyzers. Asahi will deliver a better loan rate to NxStage, while NxStage will deliver manufacturing and business expertise to the Asian manufacturer of dialyzers. Dialyzers are part of dialysis machines that act as the filters, with patient’s blood in one compartment and dialysate in the neighboring compartment.

Asahi will provide Lawrence, Mass.–based NxStage with $40 million of debt financing to pay off its entire $28 million debt obligation owed under its GE credit facility and infuse the U.S. company with funding. Asahi’s $40 million loan is being delivered as a four-year term loan at 8 percent. NxStage’s former loan carried 11 percent annual interest.

NxStage plans to give Asahi a license to its production technology (without royalties) to make and sell NxStage’s current dialyzer. Asahi will sell this design exclusively in Asia and nonexclusively in other places.

NxStage’s dialyzers will be manufactured and sold under the Asahi brand at NxStage’s facilities in Germany. NxStage will license its blood tubing technology to Asahi. In return, Asahi will supply its polysulfone hollow-fiber membrane to NxStage.

Looking forward, the companies will operate with more potential capacity. Asahi has agreed to pay for a new NxStage facility if the Asian dialyzer firm sees more demand. The new facility would provide more production resources and potential cost savings for both companies.

NxStage announced net revenue for the first quarter of 2009 of $33.7 million, a 9 percent increase from last year’s first quarter.

The company was fourth in line as the business with the largest revenue gain in Massachusetts during a challenging year for nearly every industry. The Boston Business Journal listed Massachusetts-based companies on percent change in revenue, and NxStage jumped nearly 115 percent to $128.8 million in 2008. In 2007, the company had revenues of $60 million.

NxStage CEO Jeffrey Burbank noted that revenues grew robustly because of the company’s drive to encourage daily home hemodialysis with the NxStage System One. In addition, NxStage acquired Medisystems, which makes dialysis supplies like tubing and needles, and expanded its critical care customer base.