Chengdu Kanghong Pharma buys Israel's IOPtima for $56m
21 Nov, 2017 17:15
The acquisition of the ophthalmology products company will generate $23-27.3 million in cash flow for BioLight, IOPtima's controlling shareholder.
BioLight Israeli Life Sciences Investments Ltd. (TASE:BOLT; Bulletin Board: BLGTY), which develops various ophthalmology products, has announced the completion of a deal to sell its IOPtime subsidiary. BioLight reported in April a memorandum of understanding for an initial investment in the company with an option for acquisition, and the option is now being exercised. IOPtima manufactures and markets a surgical device for treatment of glaucoma. BioLight's share price soared today by over 10%, pushing its market cap up to almost NIS 60 million.
The acquiring company is Chengdu Kanghong Pharmaceutical Group, which is listed on the Shenzhen stock exchange at a $6 billion market cap. The company works in the ophthalmology field, from R&D to marketing. BioLight reported that it would obtain $23.27.3 million in net cash flow from the deal, starting in late 2018. The deal will take place in four stages, with Chengdu Kanghong investing $7 million at a company value of $30 million, before money, in the first stage.
In the next stage, it will buy shares from IOPtima's existing shareholders, including BioLight, which has a 70% stake. If all of the stages are exercised, IOPtima will be sold at a $56 million value, to be paid gradually by 2021.
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Chengdu Kanghong will distribute IOPtima's products in China
Even before the deal is completed, Chengdu Kanghong will become a distributor of IOPtima's products in China. The terms for distributing the products are not known.
IOPtima is responsible for BioLight's only current commercial product. BioLight's revenue in 2016 totaled NIS 2.1 million, mostly from IOPtima's activity, and it lost NIS 21.8 million. The company had only NIS 544,000 in revenue in the first half of 2017, 33% less than in the corresponding period last year. IOPtima had NIS 25 million in cash as of the end of the first half of this year.
BioLight CEO Suzana Nahum-Zilberberg today remarked, "China is an important target market for the product. Cooperation with Chengdu Kanghong, which is active in ophthalmology inside and outside China, is the first step in future cooperation."
IOPtima CEO Ronen Castro said, "This is an important step for IOPtima that will enable it to deepen its penetration of the market in China and throughout the world, and to promote the unique solution that the company offers for glaucoma patients."
Israel Makov acquired BioLight in 2011 in order to realize his vision of assembling a group of companies in medical fields with synergy between them. Makov now owns 14% of BioLight, while Hong Kong investor Lau Ngai Cheung owns 18.8% and Indian investor Dilip Shanghvi owns 14%. IOPtima's product belonged to BioLight before Makov invested in the company, which has since added other products, including an intraocular eye implant for treatment of glaucoma, a product for diagnosing and guiding treatment of dry eye syndrome, and a platform for delivering drugs within the eye. These products are currently in development.
Published by Globes [online], Israel Business News - www.globes-