The investment was made at a pre-money valuation of US$180 million. Should the sale be completed, Elron’s expected return will be a total of $90-129 million, representing a 5-7 multiple on its investment in the company.
CartiHeal is developing an implant for the treatment of cartilage and osteochondral defects in weight-bearing joints and recently completed patient enrollment for its IDE pivotal clinical trial following the recommendation of an independent committee who reviewed the interim analysis results.
According to the agreements, Bioventus will invest $15-20 million in CartiHeal based on a pre-money valuation of US$ 180 million. Of this amount, US$ 15 million was invested immediately, and an additional $5 million can be secured, if needed, for the IDE study completion. In addition, Bioventus has an exclusive option to acquire CartiHeal (a call option), which may be immediately exercised, and CartiHeal and its shareholders have an option to sell CartiHeal to Bioventus (a put option), shortly after in case of success in the IDE study and obtainment of FDA PMA approval of CartiHeal’s Agili-C implant.
“I congratulate CartiHeal on the investment and acquisition option agreements,” says Eduardo Elsztain, chairman of Elron’s board. “The IDB Group and I are proud to be part of a deal that promotes an innovative and groundbreaking Israeli technology in the healthcare field, especially in these complex times. We believe that the transaction reflects Elron’s vision of creating value for its investors in its portfolio companies. I wish to thank Zvika Slovin, Chairman of CartiHeal, and Yaron Elad, Elron’s CEO, who led a transaction that demonstrates the strong belief in CartiHeal.”
Elron’s expected share in the proceeds from CartiHeal’s sale amounts to a total of US$ 126-129 million: US$ 90-92 million to be paid upon completion of the acquisition, and US$ 36-37 million to be paid upon achievement of sales amounting to U.S. $100 million over 12 consecutive months. This consideration represents a 5-7x multiple on Elron’s investment in CartiHeal.
Yaron Elad, Elron’s CEO, said: “I wish to thank Nir Altschuler, CartiHeal’s founder, and CEO for leading Cartiheal to this stage. The investment and option agreements with Bioventus are a testament to CartiHeal’s value, and further reinforce Elron’s confidence in the company. We believe CartiHeal is introducing a breakthrough technology for the cartilage repair market, as demonstrated in previous European clinical trials. Bioventus joined CartiHeal in 2018 as a strategic investor, and the new investment underscores its belief in CartiHeal’s ortho-biological technology.”