Medical equipment group Eitan Medical, controlled by husband and wife team Boaz and Tali Eitan, recently completed the sale of its Sorrel wearable drug delivery device business to LTS (Lohmann Therapie-Systeme AG), based in Andernach, Germany. The acquisition price is estimated at over $100 million.
Eitan Medical, produces and sells infusion pumps and software to manage the pumps’ operation. It was founded in 1996 under the name Q-Core. The Eitans bought it in 2009 from receivership for NIS 5.6 million and a commitment to inject NIS 20 million into the company. Today, it has annual revenue of over $100 million, and employs about 400 people at its Netanyahu offices and production facility (150 of them in the Sorrel business).
Shaul Eitan, son of the owners, recently took over as CEO of Eitan Medical (Boaz Eitan is chairperson), after managing operations and the medical pumps division of the company for the past decade. "We sold Sorrel because an opportunity arose to do so," he said. "There are two times when you can sell a company: too soon, and too late, and too soon is better. The current period is an excellent one in which to be a company with cash. Money on the market is expensive. We’ll use the cash to strengthen Eitan Medical’s business, where we have a tremendous opportunity in online infusion pumps, and perhaps also to buy young or emerging companies."
Sorrel, which was set up as a subsidiary within the Eitan Medical group, develops wearable pumps for regular injection of drugs into the body. Its products represent an alternative to injections or infusions of biological drugs, and enable treatment at a clinic to be replaced by treatment at home. Sorrel developed the product in collaboration with drug companies that produce the drugs in the pumps.
In the past, Eitan Medical estimated that Sorrel’s products would reach the market by 2021. In fact, it is about to launch its first product, and expects to receive US Food and Drug Administration (FDA) approval for it this year, with approvals in other countries to follow. "We’re talking about approvals for pumps containing immunological and oncological drugs, which are very important for our partner companies," Eitan explains.
Boaz Eitan was formerly a prominent figure in Israel’s technology industry. As a combat pilot, he fell into Syrian captivity in the Yom Kippur War of 1973. After his release, he completed a doctorate in physics at the Hebrew University, and in 1997 founded Saifun, a developer of memory chips. Saifun was floated on Nasdaq in 2005 at a valuation of $675 million, and reached a market cap of over $1 billion, but its share price swiftly plunged, and it was sold to US flash memory company Spansion in 2007 for just $370 million.
Boaz Eitan left Spansion after the company had been through a period of bankruptcy, and, encouraged by his son Shaul, invested in Q-Core, which itself has been through difficult periods, but is now, as Eitan Medical, well established, partly thanks to high demand for its infusion pumps for patients on ventilators during the Covid pandemic.
In late 2021, Eitan Medical was reportedly set to become a public company through a merger with a Nasdaq-listed SPAC (special purpose acquisition vehicle), which was the hot trend at the time, at a valuation of $1.3-1.4 billion. This, however, was just before the trend cooled, as technology stocks on Wall Street took a downturn, and the move did not go ahead.
"Our goal is to continue to grow and create opportunities, so that if the market is open to it, we’ll be able to float the company within three years," Shaul Eitan says. He adds that, when the family first invested in the medical devices business, it was anxious about regulation, but that the disadvantage became its greatest advantage. "Tali (Shaul Eitan’s mother Adv. Tali Eitan, a lawyer specializing in intellectual property, G. W.) became an expert on the subject, and made us upgrade our FDA approval every two years. This contrasts with competing companies that didn’t want to touch their regulation, and so in the end their products were not up to date and even had to be recalled."
Published by Globes, Israel business news - en.globes.co.il - on June 20, 2023.
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