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XVIVO Perfusion AB (publ) (“XVIVO” or the “Company) has today signed an agreement to acquire 100 percent of the shares in the Dutch medtech company Organ Assist B.V. (“Organ Assist”) for a cash purchase price of up to EUR 24 million, with an upfront payment of EUR 20 million and potential earn-out payments of up to EUR 4 million. Organ Assist focuses primarily on developing machines and consumables for liver and kidney perfusion. Through the acquisition XVIVO becomes the first organ preservation and evaluation company in the world to be actively involved in all major organs, which accelerates the Company’s strategy of becoming a global all organ provider. The acquisition is to be financed by way of a new share issue of shares of approximately SEK 500 million directed to Swedish and international institutional investors through an accelerated book-building procedure, which is expected to commence today.
Background and the transaction
Organ Assist is a medtech company primarily focusing on developing perfusion machines for liver and kidney. Organ Assist was founded in 2005 and its research and products have since resulted in a number of patents and intellectual property rights, and its products within the area of liver and kidney transplantations are CE-marked.
The total purchase price for 100 percent of Organ Assist’s shares amounts to up to EUR 24 million, whereof EUR 20 million will be paid in cash on completion of the transaction, and two additional cash milestone payments, each up to EUR 2 million, become payable based on sales target in 2021 and regulatory approval in the US for Organ Assist’s kidney device, respectively.
XVIVO secures that organs are kept in optimal condition during transportation and perfusion/evaluation with focus on lungs and hearts. Organ Assist has, since the company was founded in 2005, focused primarily on developing perfusion machines for liver and kidney. The companies’ synergies enable greater market opportunities for XVIVO’s and Organ Assist’s product portfolio through the integration of XVIVO’s unique and patented STEEN Solution™ technology with the Organ Assist kidney and liver machines, and by leveraging XVIVO’s international market presence.
The acquisition is in line with XVIVO’s commercial strategy to strengthen the Company’s product offering and accelerate the strategy of becoming a global all organ provider. The complementary product portfolio will create a unique position with presence in all major organs (lung, heart, kidney and liver). The combined offering expands XVIVO’s addressable market to approximately 98 percent of the organ transplantation market and aim to position the Company as the “first choice” for all multi-organ clinics.
XVIVO has a strong presence in the US and was the first company in the world to receive an U.S. Food and Drug Administration (FDA) approval (HDE approval) for a medical device for warm perfusion of an organ. Organ Assist’s products are CE marked and protected under patents and other intellectual property rights. The plan is to commercialize the Organ Assist machines in the US by utilizing XVIVO’s strong market presence and commercialization- and regulatory experience, once FDA approval has been granted.
“This acquisition will enable the execution of an accelerated growth plan, both in terms of sales as well as R&D activities, while building on a solid installed base and a leading position in liver perfusion. It is a token of appreciation of the innovative work done by our employees in Groningen. We are looking forward to working with the XVIVO team building a world leading medtech company, supporting our customers to save and improve patients’ lives” says Organ Assist CEO Wilfred den Hartog
“We are happy that Organ Assist becomes part of XVIVO Perfusion; it is the perfect partner to bring the Organ Assist’s innovative systems to the organ transplantation community” Willem van Lawick, Organ Assist’s Chairman added.
“XVIVO becomes the first organ preservation and evaluation company in the world to be actively involved with all major organs after this strategically important acquisition” says XVIVO Perfusion CEO Dag Andersson.
Financials and synergies
Organ Assist had a turnover of EUR 3.5 million and an EBITDA of EUR 0.1 million in 2019 and a turnover of EUR 1.3 million and an EBITDA of EUR 0.1 million in January – June 2020. Organ Assist has its head office and R&D center in Groningen, The Netherlands, where its 18 employees are based, and Groningen will remain as a competence center for the development and commercialization of machines and solutions for liver and kidney. Both product- and clinical development will be intensified after the acquisition.
XVIVO and Organ Assist have limited overlapping businesses within the field of thorax transplantations – lungs and hearts – and XVIVO therefore sees limited cost synergies since the companies as of today have few double costs and resources within this field. Within the field of abdominal transplantations – kidneys and livers – the businesses complement each other.
Financing and conditions
Completion of the acquisition is expected to take place during October 2020 and is conditional upon XVIVO raising proceeds to finance the purchase price through a private placement of shares on Nasdaq Stockholm. XVIVO has engaged Carnegie Investment Bank AB (“Carnegie”) to explore the conditions to carry out a directed share issue of up approximately SEK 500 million based on the authorization granted by the annual general meeting on 31 March 2020. The price of any new shares issued in the directed share issue will be determined through an accelerated bookbuilding procedure administered by Carnegie. Further information about the directed share issue and the accelerated bookbuilding procedure, which is expected to commence today, will be disclosed through a separate press release.