Medigus Ltd. (TASE:MDGS) is advanced negotiations with an unnamed international company for the joint manufacture and marketing company's SRS endoscope for intra-luminal treatment of Gastroesophageal Reflux Disease (GERD). The interlocutor is apparently a US company. Medigus predicts that it will sign a contract within a couple of months.
Under the proposed agreement, the two companies will both manufacture the endoscope at their own facilities. The international company will market the endoscopes, and Medigus will receive half of the royalties. The agreement will be for ten years with a ten-year option to extend.
Medigus will also receive $11 million from the international company: $4.5 million when the contract is signed, $1.5 million when Medigus completes recruitment for a clinical trial of the endoscope, and $5 million when the US Food and Drug Administration (FDA) approves it for marketing.
Medigus said that if the trial succeeds, it will obtain FDA approval for the endoscope next year.
The agreement does not include an investment in Medigus. Medigus CEO Dr. Elazar Sonnenschein told "Globes", "The company was interested, and the agreement was changed several times during the negotiations, but our share price was quite low, so it offered us terms that did not suit us. Now that our share price has risen, we won't add an investment clause to the agreement, because we like what has been written."
Sonnenschein wants to build a factory in the Beersheva suburb of Omer, where the company is located. "We want to initially hire dozens of employees, and then grow."
Medigus's share fell 2.3% today to NIS 2.56, giving a market cap of NIS 150 million.
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2009
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