Sources inform ''Globes'' that Medigus Ltd. (TASE:MDGS) is about to close a deal for the sale of the rights to its flagship product, an esophageal endoscope. The sources added that the buyer is apparently Japan's Hoya Corporation (TSE: 7741), which acquired Pentax two years ago, one of the world's leading photography companies.
Medigus declined to comment on the report.
According to the pending deal structure that Medigus announced two months ago, the buyer will receive marketing rights to the endoscope for $11 million in initial and milestone payments, and royalties of 50% of sales. The two companies will jointly manufacture the endoscope, so that Medigus's manufacturing costs must be deducted from the value of the royalties.
The final deal is apparently larger than what was envisaged.
Medigus will received $4.5 million when the deal is signed, $1.5 million when the clinical trial of the endoscope is completed, and $5 million when the company obtains US Food and Drug Administration (FDA) marketing approval, which it could get next year. The company has reported positive results on 24 patients in a preliminary study.
The present agreement includes a license for two other Medigus products that are in earlier stages of development. In this case too, Medigus will be eligible for half of sales revenue if the products reach market.
Medigus's share fell 3.5% today to NIS 2.40, giving a market cap of NIS 165 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2009
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