Wound treatment company Polyheal, in which Clal Biotechnology Industries Ltd. (TASE: CBI) owns a 47% stake, has signed a cooperation agreement with Spanish company Praxis, which specializes in marketing orphan drugs.
Praxis will manufacture and market Polyheal's products, and pay the Israeli company royalties amounting to 10% of sales or 50% of the proceeds from granting a license to another company in countries where Praxis has no activity. The deal includes no advance payment or payments for milestones.
The Clal Biotechnology share rose 4.5% following the announcement, after having tumbled 10.2% the previous day with no announcement. The Clal Biotechnology share is traded at a NIS 668 million market cap.
Polyheal's leading product, Polyheal2, has not yet been approved for marketing in Europe, but the companies believe that approval will be granted within a year. The first generation product already has marketing approval, but its sales are insignificant.
The wound healing market is worth billions of dollars, but Polyheal's product is more expensive than the prevailing products in the market. Clinical tests have shown that it is effective in treating especially difficult wounds for which there is currently no cheaper treatment, and the company is therefore aiming at this market. The companies estimate the market potential at $100 million, so that Clal Biotechnology's revenue could amount to several million dollars a year, or to tens of millions of dollars a year in the event of exceptional success. This is also the reason why the selected partner is a company specializing in orphan drugs - the sub-sector for which the product appeals is relatively small.
Polyheal was formerly a subsidiary of MediWound Ltd. (Nasdaq:MDWD), which deals in treatments for burns, and also has a product for treating wounds in its development pipeline. The companies merged in 2010, and their products were given to Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) for development, which sought to building a new wound treatment division based on them. Following a change in its strategy, Teva returned the company's technology, and Polyheal's shareholders chose separation between the companies. Mediwound has since held its IPO at a company value of $141 million.
Other shareholders in Polyheal include entrepreneur Dr. Vladimir Ritter and Menachem Oren, each with 11%. The company's CEO is Yuval Zuk, former CEO of ActiViews, sold in 2013 to Stryker Corporation for $20 million, and cofounder and former CEO of Odin Medical Technologies, sold to Medtronic in 2006 for $9 million. Odin Medical is still Medtronic's development center in Israel.
Polyheal's products are based on technology combining a lotion having a liquid texture containing materials that encourage cell growth with negatively charged polystyrene, a plastic material. In Europe and other countries, the product is recognized as a medical device, because it is smeared on the wound, and does not enter the body. In the US, however, it is considered a drug, and it has therefore been decided meanwhile not to register it in the US.
The first generation product is limited, because it must be kept in refrigeration at a pharmacy and applied twice a day. The second generation product does not require refrigeration, and need be applied only once every other day.
Praxis employs 60 sales personnel in both Europe and Latin America, where Polyheal's drug has also been approved for marketing. Praxis's revenue amounts to tens of millions of dollars a year.
Published by Globes [online], Israel business news - www.globes-online.com - on April 30, 2015
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