British healthcare technology group BTG plc (LSE: BTG) has agreed to acquire global oncology cryoablation technology leader Galil Medical, headquartered in Minnesota, US and Yokneam, Israel, for $84.5 million (£58.3m), with additional milestone payments up to $25.5 million (£17.6m).
Cryotherapy, also referred to as cryosurgery or cryoablation, is a minimally invasive procedure that involves cooling the tip of an ultra-thin needle to extremely low temperatures using compressed argon gas. This forms an iceball, which engulfs the targeted tissue and destroys diseased cells.
“I am very pleased to announce that Galil will be joining the BTG family. Our two companies share a passion for patients and a commitment to innovation that will be better served through this acquisition,” said Martin J. Emerson, Galil Medical president and CEO.
“This bolt-on acquisition builds on our leadership in Interventional Oncology, expanding our portfolio of minimally invasive therapies with the leading technology in the cryoablation of kidney cancer,” said Louise Makin, BTG’s CEO. “It also offers significant pipeline opportunities, including lung and bone metastases if regulatory approvals are granted. In addition to enhancing our offering to interventional radiologists, Galil Medical provides access to other specialist physicians that may in future include pulmonary specialists, complementing our existing PneumRx and EKOS businesses. Longer term, we are excited by the opportunity to explore the use of our locoregional radiation and cryoablation therapies alongside other developing technologies.”
The acquisition will be funded from BTG’s existing cash resources. BTG expects Galil Medical to be profitable and the transaction to be earnings accretive in the first full year of ownership.
The transaction is expected to close before the end of June 2016.
Evercore Partners International LLP advised BTG on the transaction. Galil advisors for this transaction include Houlihan Lokey, Fredrikson & Byron, Raved Magriso Benkel & Co (Tel Aviv), Willkie Farr & Gallagher and EY.
BTG is a growing international specialist healthcare company bringing to market innovative products in specialist areas of medicine to better serve doctors and their patients. The company a portfolio of interventional medicine products to advance the treatment of liver tumors, advanced emphysema, severe blood clots and varicose veins, and specialty pharmaceuticals that help patients overexposed to certain medications or toxins.
The company, formerly known as British Technology Group, was founded in 1981 through the merger of the National Research & Development Council and the National Enterprise Board. The group was privatized in 1991. BTG completed the acquisition of Protherics PLC in 2008 and of Biocompatibles International plc in 2011. In 2015, BTG acquired PneumRx Inc. BTG is based in London, UK. BTG is a constituent of the FTSE 250 Index.
Galil Medical was founded in 1997 in Yokneam, known as Israel’s Startup Village, as it boasts the highest concentration of medical research companies in Israel. The high-tech hub is located in a hilly region of the lower Galilee at the base of the Carmel Mountains, overlooking the Jezreel Valley. Yokneam’s proximity to the Technion and the University of Haifa have helped it become a high tech center with annual exports of approximately $5 billion.
The company owns, manufactures and sells a portfolio of cryoablation systems and needles. Galil Medical currently employs approximately 100 people globally. It’s corporate headquarters are in Arden Hills, Minnesota, and its R&D headquarters are in Yokneam, Israel.
In the US, Galil Medical’s products are indicated for the treatment and palliative care of kidney and other cancers, in addition to a number of other uses, including in urology. Galil Medical is also conducting two clinical studies, both nearing completion, that could lead to US regulatory clearance for use in lung metastases and bone metastases.
Galil Medical sells in the US through distributors and its own specialist sales force, and through distributors outside the US. Global revenues were approximately $22m in 2015, of which US revenues were approximately $15m. Global revenues from non-urology sources, principally interventional radiologists treating kidney cancer, have shown a 39% CAGR over the last six years and constituted ~$15m of revenue in 2015. Galil Medical reported gross assets of $14.1m and a loss before tax of $8.5m in 2015.
In 2003, Galil Medical, at the time a subsidiary of Israeli multinational high-tech holding company Elron Electronic Industries Ltd (NASDAQ:ELRN), established Oncura, a global urology sales and marketing joint venture with UK-based Amersham (LSE, NYSE, OSE: AHM).
Amersham contributed its brachytherapy radiation oncology call point, while Galil Medical contributed its urology call point to Oncura, with Amerhsam holding a 75% stake and Galil keeping a 25% stake. Amersham in turn was acquired by GE Medical. The major Israeli shareholders of Galil, in addition to Elron, were RDC Rafael Development Corporation Ltd. and Discount Investment Corporation Ltd (TASE: DISI).
In 2006, Galil Medical raised $52 million in growth equity funding from Thomas, McNerney & Partners, The Vertical Group, and Investor Growth Capital. Galil then bought back the sales and marketing assets of Oncura.
In October 2015 Galil Medical announced it had agreed to acquire Perseon Corp. (NASDAQ: PRSN), a leader in the field of microwave ablation, in an all cash transaction valued at $10.6 million, but the transaction failed to close. On January 12, 2016, Perseon’s shares were delisted from Nasdaq “after a failure to comply with annual meeting rules.”
Photo: Startup Village – Yokneam.