Symbollon Pharmaceuticals Signs Term Sheet to Acquire Chinese Pharmaceutical Company
Monday March 10, 10:25 am ET
Acquisition Will Expand Symbollon's Drug Development Efforts
FRAMINGHAM, MA--(MARKET WIRE)--Mar 10, 2008 -- Symbollon Pharmaceuticals, Inc. (OTC BB:SYMBA.OB - News) today announced that it has signed a term sheet with all shareholders of Xi'an Maidefa Pharmaceutical Co., Ltd. ("Medpharm") to acquire Medpharm. Medpharm is a fully integrated pharmaceutical company currently marketing 23 products to the dairy and aquaculture markets in China. Medpharm was founded by Dr. Yongjun Duan, the former director of research and development of Symbollon.
Symbollon hopes to achieve the following from the acquisition:
-- Positive cash flow from anticipated 2008 Medpharm revenues;
-- Development of product formulations using Medpharm's experienced
development team;
-- Access to the Chinese clinical development market for its molecular
iodine technology;
-- Eventual commercialization of Symbollon's products in high-growth
Chinese market;
-- Broadening of Medpharm sales by in-licensing of third party products;
-- Increased licensing of our product opportunities based on clinical
data produced in China;
-- Access to low-cost manufacturing capacity for new products; and
-- Significant increase in human resources to facilitate growth.
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"This acquisition is a significant step forward in our plans to commercialize our proprietary molecular iodine technology," said Paul Desjourdy, President and CEO of Symbollon Pharmaceuticals. "The major drivers for this acquisition are the synergies it will create. Symbollon owns a technology platform with over 12 product opportunities. We plan to utilize Medpharm's research and development team to initiate clinical development of some of these opportunities in China. The production of clinical data in the cost-effective Chinese market should, if successful, support attempted commercialization of these products in China and possible licensing of these products in the United States, Europe and other parts of the world. We also plan to in-license compounds for Medpharm to add to its current product portfolio. We believe that the anticipated synergy from combining Symbollon's proprietary technology with a fully integrated pharmaceutical company operating in one of the fastest growing markets in the world should produce incremental value for our stockholders."
Medpharm was founded in February 2003 by Dr. Yongjun Duan. Dr. Duan was employed from 1994 through 2001 by Symbollon, most recently as its director of research and development. While at Symbollon, Dr. Duan helped develop the IoGen(TM) compound, Symbollon's proprietary drug currently in clinical trials for the treatment of breast pain and tenderness associated with fibrocystic breast disease. After leaving Symbollon, Dr. Duan was incentivized by the Chinese government to return to Chinese to establish Medpharm. Since initiating sales in 2005, Medpharm has more than doubled its annual sales year-over-year to their current levels of over $400,000 in 2007. Based on current activities, Medpharm is anticipating further sales growth in 2008. Currently, Medpharm employs over 30 employees, with over 70% holding college degrees. Upon closing of the acquisition, Dr. Duan will be joining Symbollon as its Vice President of Asian Operations, overseeing, in part, the Medpharm activities.
Under the term sheet, Medpharm will be acquired for $1.5 million. Symbollon will acquire approximately 64% of the company in a stock swap for Symbollon shares and acquire an option to purchase the remainder of the company for cash. The option is exercisable at any time after the initial closing over the remainder of 2008. The initial closing for 64% of Medpharm is expected to occur during April 2008. Symbollon's stock shall be valued at the 20 business day weighted average of the closing price as quoted on the OTC Bulletin Board preceding the closing, not to exceed $1.42 per share. Symbollon will need additional resources in order to exercise the option and acquire the remaining 36% of Medpharm shares.
The securities to be offered to the Medpharm shareholders will not be or have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The acquisition contemplated by the term sheet is subject, among other things, to entering into a definitive agreement among the parties, completion of due diligence, and receipt of Chinese governmental agency approval.
