CollPlant Holdings Ltd. (TASE: CLPT) today announced that it has signed a non-binding memorandum of understanding with a Chinese for investment in CollPlant and the commercialization of its products in China.
CollPlant's share price rose 18.3% in heavy trading by midday today, to NIS 0.30, giving a market cap of NIS 45 million.
Under the memorandum of understanding, the Chinese company will invest $4 million in CollPlant in exchange for an allotment of shares and the commercialization of its products, apart from orthopedic products, in China. $2.5 million of this sum will be invested in CollPlant at the time of the signing of the final agreement, in exchange for 10% of the shares of the company, at NIS 0.53 per share. This investment implies a valuation of $25 million for CollPlant.
The Chinese company will also pay $1.5 million to commercialize CollPlant's products in China, according to predetermined milestones. $500,000 of this amount will be paid immediately when the final agreement is signed.
CollPlant will be eligible for single-digit royalties on future sales of its products in China. CollPlant will sell its collagen product to its Chinese partner at a predetermined price.
CollPlant said that the memorandum of understanding was non-binding and that there was no certainty that a final agreement would be signed.
CollPlant develops and produces medical products on the basis of human collagen. Its share price has risen 30% from the beginning of the year through yesterday.
"The signing of this agreement is in line with our plans to find partners to rapidly commercialize the company's products," said CollPlant CEO Yehiel Tal. "China has huge potential for CollPlant's products, and the Chinese partner will help obtain the regulatory permits for the products, and will bring them to the Chinese market through its relations with hundreds of hospitals across the country. The first product which will be sold in China is Vergenix FG injectable wound gel for the treatment of diabetic sores."
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2013
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