BIOLASE enters affiliation agreement with Sun Dental Labs

BIOLASE is a nonexclusive distributor for the Trios IOS, manufactured by Copenhagen-based 3Shape A/S, in the United States and Canada. The company is in negotiations for additional distribution internationally. Federico Pignatelli, chairman and chief executive officer of BIOLASE, stated: "We are extremely pleased with the opportunity to partner with Sun Dental Labs, which currently has thousands of doctors utilizing their digital dental laboratory network in the United States alone. Their significant customer base represents nearly a 5% market share of the dental offices in North America. This is a tremendously valuable network, and Sun Dental Labs has already provided our sales force with several qualified referrals." Under the Agreement, BIOLASE will provide the primary inside and outside sales teams, installation and training services, and after-sales support. Sun Dental Labs will provide access to its expansive customer base of dentists and dental laboratory associates, provide marketing material, schedule appointments for BIOLASE sales representatives, and provide a rebate to BIOLASE Trios owners who use its services. IOS sold under this arrangement will be preprogrammed with Sun Dentals Labs' direct connect as the preferred laboratory provider. In consideration of this marketing alliance, BIOLASE's Board of Directors granted Sun Dental Labs an initial warrant for 500,000 shares of common stock on April 26, 2013, at the market closing price of $5.90 per share. The warrant will vest based on performance at a rate of 1,000 per each Trios IOS sold in conjunction with the agreement. For the purposes of the agreement, a sale is defined as a Trios IOS that has been installed at the customer's place of business, and is fully operational where the customer has been trained while the Trios IOS has been paid for in full by the customer. Any unvested warrant shares will expire April 24, 2014. Fred Furry, chief operating officer and chief financial officer of BIOLASE, said: "This presents a sound opportunity for BIOLASE. Not only will this generate incremental sales of Trios IOSs, but it will also create prospects for our core WaterLase and diode laser products, as well as our CBCT digital imaging equipment at hundreds of high-tech dental practices. This warrant is purely performance-based. By way of example only, if the agreement ultimately results in 500 Trios IOS's being sold over the next 12 months, then it would translate into approximately $16 million to $20 million in gross revenues and contribute significantly to the cash we generate from operations over the next 12 months." "Sun Dental Labs' preference of the warrant over a conventional commission or discount also demonstrates the conviction that Sun Dental Labs has in BIOLASE and the potential value Sun Dental Labs sees in our stock," Furry added. "The warrant will also preserve BIOLASE's full margin on the Trios IOS product line. The agreement will also give us an entry into the high-tech dental practices currently serviced by Sun Dental Labs." Chuck Stapleton, vice president of global operations of Sun Dental Labs, said: "We have leveraged 3Shape's superior scanning and software solutions into our dental technology manufacturing to streamline productivity, decrease costs, and improve quality. We believe that with BIOLASE supporting the Trios IOS, it will be just as successful for the clinician in the dental office." The Trios digital solution, which includes a hand-held scanner, operator's control cart, and intuitive software, provides faster impression taking, improved accuracy and clinical results, reduced need for retakes, and less adjustment and grinding. Trios' unique features include spray-free scanning, high accuracy optimized for an extensive range of indications, clinical scan validation, online communication with the dental laboratory, intuitive Smart-Touch user interfacing. Color and laptop versions of the Trios were introduced in the 2013 first quarter. For more information, visit www.sundentallabs.com and www.biolase.com. To comment on this topic, go to http://community.pennwelldentalgroup.com.