Looking $100 million

Liat Goldshaid-Zmiri

CEO Dr. Liat Goldshaid-Zmiri describes how a casual e-mail led to aesthetic medicine company Luminera's acquisition by AbbVie.

This month, American pharmaceutical giant AbbVie announced the acquisition of Israeli aesthetic medicine company Luminera Derm, which develops and markets subcutaneous injection products. Luminera's annual revenue is in the tens of millions of dollars, and the acquisition price is estimated at $100 million. The company is part of a group of companies, helmed by Dr. Dadi Segal and Dr. Eran Goldberg, that includes cannabis processing company Panaxia, which is traded on the Tel Aviv Stock Exchange, as well as medical products company Tree of Life, which operates in Israel and abroad.

Luminera is managed by Dr. Liat Goldshaid-Zmiri, in her first management position after completing a doctorate at the Weizmann Institute. Goldshaid-Zmiri, who founded the company together with CTO Goldberg and Segal, who serves as chairman, was on the 2018 "Globes 40 Under 40" list.

"A year and a half ago, we received an email in the company's info box, 'Hello, we’re from Allergan's business development department, please contact us,'" Goldshaid-Zmiri says. "Two weeks later, the person who is now my boss at Allergan, who was by chance on a family trip to Israel, dropped in at our offices, just to see if we were real.

"Two weeks after that, we were abroad at an exhibition and presented the company to them. And at the third meeting, which was already held at their offices, it was just me and Dadi - no investment bankers and no nothing. The truth is, we left that meeting deflated, we felt it didn’t go so well. But by our next conversation, they already were saying they were interested in buying the company."

All this happened more than a year ago: it took only a few months from the initial meeting to the declaration of intent to purchase, but then the slowdown happened. "At first it was Covid-19, then Allergan itself was acquired by AbbVie, and then those who’d made the decision to buy Allergan had to convince AbbVie's management that the acquisition was a good one, and that this was a good time to make it."

At the time, things were rough for Luminera Derm, too. "In March, in an instant, the coronavirus reset our revenue to zero." The company furloughed dozens of workers for a long time, but later brought them all back. "These days, even if the Israeli market is shut down, at least other markets are open. When the market reopened, we thought revenue would stay low because people wouldn’t prioritize spending on medical aesthetics. But we discovered that many see it as a basic necessity, like getting a haircut."

We’ve even heard about desperate people who tried to inject themselves, and ended up with serious infections and hospitalizations.

"There are supposedly intelligent people who buy products online, and do irreversible damage to themselves. It isn't called aesthetic medicine for nothing. You can't just do what you want."

We recently interviewed Moshe Mizrahy, CEO of aesthetic medicine company InMode, who told us he didn’t furlough his employees but kept them working in preparation for the future. This way, he improved his position for when the market reopened.

"I don’t know how they managed to do it. There were months when everything was completely shut down, I had nowhere to send even one single package. I’m delighted that we were able to bring everyone back and now we’re expanding, recruiting 15 more people."

Self-funded growth

AbbVie will make the acquisition through Allergan, one of the world's leading aesthetic medicine companies. It markets successful injectable wrinkle relaxer Botox and cosmetic filler Juvederm. The Israeli public knows Allergan mainly because of the deal in which it sold its generic division, Actavis, to Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA). The deal is considered to have decimated Teva's value. Following the deal, Allergan focused its activities on aesthetic medicine: facial injectables, body contouring, ocular aesthetics and more, and last May it was acquired by AbbVie for $63 billion.

Luminera Derm was founded in 2012, and within a few years has already begun to record significant revenue. It began by creating generic versions of injectables for filling wrinkles and smoothing facial skin. Initially, it developed generic versions of niche injectables, selling them at prices much lower than those of the branded originals to penetrate the market, and it indeed did capture significant market share.

The company soon established a network of distributors outside Israel, mainly in Europe. Over time, it expanded its product portfolio of generics, and also began marketing products it itself had developed, as well as establishing an independent distribution system in a number of European countries. In this way, it was able to self-finance growth without investment on the part of funds.

The facial injectables market currently turns over about $1.6 billion annually, and is roughly divided equally between Botox injections (mainly for treating the areas around the eyes and forehead) and hyaluronic acid and calcium hydroxyapatite injections (for treating the entire under-eye facial area). Non-Botox injectables are a new aesthetic medicine market that has grown 10-fold over the last decade, and is dominated by hyaluronic acid products. Luminera is based on the other category, "So, we complement the Allergan portfolio well, which is strong in hyaluronic acid."

Luminera's leading innovation is HArmonyCa, which consists of a composite matrix of cross-linked hyaluronic acid within which microspheres of calcium hydroxyapatite are embedded. The product is currently available in Israel and Brazil and, according to Allergan's announcement, is one of the main reasons for the acquisition.

Luminera previously forecast that this product would already be marketed in the US and Europe by 2020; this still seemed to pose a significant challenge because the material is new. With Allergan, it will be able to attain this goal more readily. "We chose to maintain ourselves for all these years without external investment, apart from the initial investment on the part of the founders. I’m happy to say that, as CEO, I didn’t have to engage in raising capital at all," says Goldshaid-Zmiri. "Every shekel of revenue was reinvested in R&D. We’d save shekel by shekel towards the purchase of another lab device, which can cost millions of dollars. Now all this will move full speed ahead."

The company will now also have the capital needed to conduct the clinical trials that will enable new product registrations. "I believe we could’ve done it on our own, but with backing like theirs, doors will open up much more easily for us," Goldshaid-Zmiri admits. The company's has additional products in its pipeline, including a product based on injectable threads.

Israelis not so enthusiastic

Israel is a world leader in aesthetic medicine, but over the years it has focused mainly on the light-based medical devices sector, first for hair removal, and then for applications such as skin tightening, wrinkle reduction, and scar treatment. Companies like Lumenis, Syneron Medical and Alma Lasers rose out of this sector, all of which have been sold for hundreds of millions of dollars over the last decade, and although all have retained operations in Israel, they are externally owned.

The senior managers at these companies have gone on to establish companies such as InMode, which is traded on Nasdaq at a $1.34 billion market cap, Venus Concept, traded on Nasdaq at a $100 million market cap, Home Skinovations and others. Luminera is unique in this arena. both in that it does not deal with light-based technologies at all, and in that its team is not part of the core group bred at the medical aesthetic companies of the 1990s.

Goldshaid-Zmiri says that when Luminera started marketing its products, they were surprised by the attitude of potential customers in Israel to locally-made products. "Abroad, there was an immediate, strong appreciation for products from the Startup Nation, which had already proven itself in this field. Ironically, in Israel, there are some who perceive Israeli products as inferior. But it’s a fact that we’ve passed all of Allergan's in-depth trials successfully."

Even post-acquisition, company management will remain in Goldshaid-Zmiri’s hands. "I'm excited about the future. This is my first time working in a corporation. It might be hard for me to give up on the freedom of action, but one needs to learn about those aspects as well, and then I can decide what’s best for me. In the meantime, we’ve been very well received."

Luminera Derm

  • Founded in 2012 by Dr. Dadi Segal, Dr. Eran Goldberg and Dr. Liat Goldshaid-Zmiri who serves as CEO.
  • Operates in the field of aesthetic medicine.
  • Chose not to raise capital; received only a few million dollars seed funding from the Panaxia Group.
  • Furloughed all employees during the first lockdown who were then brought back. Now recruiting 15 new workers.

Published by Globes, Israel business news - en.globes.co.il - on October 18, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Liat Goldshaid-Zmiri
Liat Goldshaid-Zmiri
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