Sources inform ''Globes'' that US-based Oncura, created through last year's merger of a division of Amersham (LSE, NYSE, OSE: AHM) and a division of Galil Medical, is ready to go public on Wall Street, and will raise $50-70 million by the end of the year, at a value of $200-300 million, before money. Oncura develops therapies for prostate and other cancers.
Discount Investment Corporation (TASE:DISI) owns 20% of Galil Medical directly, while Elron Electronic Industries (Nasdaq:ELRN; TASE:ELRN) (in which Discount Investment has a 37.5% stake) and Rafael Development Corporation (RDC) jointly own 33% of Galil Medical. As result of merging Amersham's brachytherapy business with its urology business, Galil Medical now owns 22% of Oncura, with an option to increase it’s holding to 25%, at a $150 million company value.
Oncura combines Amersham’s expertise in prostate brachytherapy with Galil’s innovative cryotherapy technology. Brachytherapy involves the placement of small radioactive seeds in the prostate, sparing patients from the more invasive radical prostatectomy surgery. Cryotherapy is a rapidly growing minimally invasive hyper-cooling treatment that enables rapid and controlled destruction of cancerous tissue.
Traditional prostate cancer radiotherapy treatments brought Amersham $70-80 million in revenue per year. However, the field is highly competitive and profitability is shrinking.
Radiotherapy is far from being an ideal treatment. For this reason, Amersham was interested in Galil Medical's cryotherapy technology, which has not yet resulted in revenue but has great potential.
Oncura's present sales rate is $15-20 million per quarter, and after a year of post-merger restructuring, the company is growing once more. Oncura expects this year to be profitable, and to record up to $10 million in operating profit.
Galil Medical's share in Oncura, which was valued at $152 million for the purposes of the merger, had a recorded value of $29.3 million, as of the end of 2003. Floating Oncura at $200-300 million company value, before money, will increase the value of Galil Medical's stake to $55-85 million.
Published by Globes [online] - www.globes.co.il - on Monday, March 29, 2004