CollPlant Holdings Ltd. (TASE: CLPT) has signed a distribution agreement for its tendinopathy treatment with leading orthopedic product development company Arthrex, a company with $1.4 billion revenue. The product is approved for marketing in Europe and Arthrex has acquired distribution rights in Europe, India, the Middle East and other areas. After the announcement, the company's share dropped 1.3% and it is traded at a market cap of NIS 70 million.
This distribution agreement is a significant asset for CollPlant's forthcoming Nasdaq offering, in which the company seeks to raise $25 million. Since it reported on its listing plans three weeks ago, CollPlant's share price dropped 28%, probably due to estimates that it will issue at discount. Since the beginning of 2016, the company's share price has dropped 65%.
CollPlant said that the agreement terms are "standard in this field," without actually disclosing the terms (since agreements in the field are highly varied).
The product will be marketed in the field of sports medicine and clients will be sports physicians or orthopedists. Insurance companies do not yet provide indemnification for this product.
How committed is Arthrex?
At present, the standard tendinopathy treatment involves steroids and CollPlant hopes that its product, based on human collagen extracted from tobacco leaves, will provide a safer alternative. A CollPlant 'tennis elbow' tendinopathy treatment trial, with the participation of only 20 patients, had shown significant improvement in patients which used the product, compared with the control group. Results have been compared with existing data on treatment using steroids and using a new method involving platelet-rich plasma; CollPlant's product has been found to yield superior results to both of these methods.
Although the trial had been limited to elbow tendonitis, the product has been approved, and will be marketed by Arthrex, for all types of tendonitis. Products with no indemnification, without an extensive clinical trial, are usually expected to have a slow market penetration. In this case, market penetration largely depends on Arthrex's commitment to marketing the product, which is difficult to estimate without knowing the agreement's specifics.
At the end of the second quarter, CollPlant had NIS 1.3 million in cash; it raised NIS 11.8 in June and spent NIS 8.7 million in the first half of 2016.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2016
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