Urology and biliary stent maker Allium Medical Ltd. (TASE: ALMD) has acquired Embolic Protection System developerGardia Medical Ltd. in a share-swap deal. Gardia's shareholders, mainly Medica Venture Partner, will receive 13.55% of Allium, a stake with a current value of NIS 12 million. Gardia's shareholders will also receive additional Allium shares and $2.7 million in cash, subject to milestones, including the start of a clinical trial for its product, approval by the US Food and Drug Administration (FDA), and the sale of 5,000 products.
Allium also promises to invest $3.5-5.5 million in developing Gardia's product, expand its use in Europe, and conduct a clinical trial under FDA protocols.
Allium has NIS 32.2 million ($8.7 million in cash). Medica promises to invest at least $1 million in Allium's next rights issue, if one is held.
Gardia's Embolic Protection System is a catheter-based delivery system that integrates with the standard stents and other cardiovascular interventional procedures to prevent embolism. The product has already obtained EU CE Mark certification, and it is due to begin a clinical trial in the US. In March 2011, Gardia cancelled a planned IPO on the Tel Aviv Stock Exchange (TASE) to raise NIS 30 million at a company value of NIS 100 million, after money, due to adverse market conditions.
Gardia chairman Dr. Ehud Geller told "Globes", "We are pleased with this move, which will ensure Gardia's rapid progress toward its strategic objectives. This measure will give Gardia's shareholders a stake in a high-quality public company and the financing needed to promote Gardia's activity."
Allium chairman Elad Naggar told "Globes", "We think that this is an opportunity to create a company operating in a defined field. Gardia complements our plans because all of our products are for minimally invasive surgical procedures, and Gardia expands our offerings to the cardiology field."
"Globes": Wouldn’t you have had better synergy had you acquired another urology or gynecology products company?
Naggar: "There's a marketing advantage is approaching the same doctors through the same distributors, but the picture is more complicated. Not all the companies that came to us were real opportunities. Gardia met our requirements in terms of a ready product, market size, and clinical advantage. The combination also provides advantages beyond marketing, such as the consolidation of patent registration, production, the raising of capital, and operations."
Can an Israeli company with only a few products compete against giants like Boston Scientific Inc (NYSE: BSX) in the field of minimally invasive surgery?
"I believe that their products offer a real competitive advantage, even against the giants. Besides, we're not ruling out any future strategic channel, including selling the company or a certain product to the giants."
Biomedix Incubator Ltd. (TASE:BMDX) directly and indirectly owns 23% of Allium, and Filivest & Co. owns 45%. Last year, Allium acquired Israel Biomedical Innovations Ltd. (IBI, formerly Endogun), another Biomedix portfolio company. Both Allium and IBI have products on the market. Allium posted NIS 2 million in sales in January-September 2011.
Allium's share price rose 2.8% today to NIS 0.66, giving a market cap of NIS 94 million.
Published by Globes [online], Israel business news - www.globes-online.com - on January 30, 2012
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