Cellmid buys Advangen and looks to expand hair growth reach in Japan and China
The deal sees a payment of JPY120M (AU$1.2M) in cash and the issuing of 55,737,624 shares at 5 cents each, and gives Cellmid full ownership of the FGF-5 inhibitor technology platform bolstering its own hair care offering whilst building on Advangen’s strong revenues in Japan.
As such, Cellmid will gain immediate access to the established Japanese hair growth market and will also pursue expansion in China where import permits are already in place for the Lexilis and Jo-Ju branded products.
Last year Advangen secured Chinese import permits for its branded lotions and shampoos, and China is expected to become the most significant market for the products.
The profitability of its existing hair growth product, evolis, sold in Cellmid's existing markets will improve as there will no longer be royalties payable, and savings are expected on raw material costs of the active ingredients.
Progress
Director of both investment funds active in Japan's biotech industry, Dr Takeo Matsumoto, welcomed the deal and said "We have been very impressed by Cellmid's progress with evolis on the Australian market and are happy to be invested in Cellmid shares."
"We believe Cellmid can translate their strategy to global markets and increase sales for all of our FGF-5 inhibitor brands. We are also excited about the potential of Cellmid's midkine diagnostic and therapeutic portfolio, which is becoming well known and accepted as a strong target."
Cellmid CEO, Maria Halasz, sees the deal as a gamechanger for the company as it looks to establish itself as a global leader in scientifically and clinically validated hair growth technology.
“The plan is to generate substantial revenues in the next three to five years,” she said.
Market potential
The market for hair loss products is US$1-2 billion annually in the USA alone, affecting 52 million patients (US Department of Health and Human Services, 2009).
The global market is estimated to be several times this amount, meaning there is good potential for Cellmid's clinically proven FGF-5 inhibitor product range to gain a significant share of this market.