Elron Electronic Industries Ltd. (TASE: ELRN) unit Kyma Medical Technologies, which has developed a RF(radio frequency)-based device for remote monitoring of chronic heart failure (CHF) patients, has signed a Memorandum of Understanding (MOU) for its sale to an unnamed company for immediate payment of $35 million in cash. There will also be milestone payments, which will be calculated based on the company’s growth in the first 4.5 years of the deal (for example, if the company’s revenue grows from $1 million to $10 million, some multiple of $9 million will be paid), as well as royalties of a percentage of revenue. The completion of the deal is contingent on due diligence.
Elron, which is owned by Eduardo Elsztain’s IDB Group, holds 26% of Kyma (through RDC, the commercialization company that it owns with Rafael Advanced Defense Systems Ltd.). Elron’s profit, based on the immediate payment of $35 million, will be $7 million. Elron stated that it is examining the accounting consequences of the performance-dependent payments.
Following the announcement, Elron’s share price rose 4%, giving a market cap of NIS 524 million. Kyma hopes to receive approval to market its product in the US by the end of this year, without needing additional human trials.
Kyma was founded by Assaf Bernstein and Uriel Weinstein, both engineers, who met at the biomed company QuantomiX. Kyma’s technology uses miniaturized RF technology to detect fluid in the lungs indicating a CHF attack.
Published by Globes [online], Israel business news - www.globes-online.com - on June 8, 2015
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