Jenex Corp., a Toronto-based developer of medical technology to treat Herpes sores, has unveiled limited details about its plans to acquire two medical device products with big market potentials.
Earlier this month, Jenex announced that it has entered into a non-binding letter of intent to purchase the products which have established sales and cash flow. Jenex, however, had not disclosed the names of its acquisition targets pending the close of the deal which is anticipated to be on January 31st, 2018.
“We look forward to completing the proposed acquisition over the next 90 days which adds a substantial increase in our top line revenue and earnings,” said Rob Fia, CEO of Jenex. “The proposed acquisition will be made at an attractive multiple to free cash flow (FCF) and will be immediately accretive to Jenex upon closing.”
He said the targets provide a strategic fit to enhance his company’s existing thermal therapy medical device offerings.
“We have identified a wide-range of synergies including potential new distribution channels for our existing product offerings and expect to identify additional opportunities as we complete our due diligence,” he added. “We believe the proposed acquisition represents an ideal fit, creates value for shareholders and effectively builds off Jenex’s core competencies.”
Based on the unaudited financial statements for 2016 the acquisition targets have generated approximately USD $3.0 million of revenue and approximately $1,800,000 of FCF.
If the Proposed Acquisition is completed, $750,000 cash payment is payable at closing and $1,500,000 payable in royalties over 3 years. The royalty of $1,500,000 will be discounted by $200,000 for total royalties payable in the amount of $1,300,000 if paid on or before June 30th, 2019.
Upon successful completion of the proposed acquisition, Jenex intends to use more than CAD $6,900,000 in operating losses against future income generated from the acquisition targets.
Fia believes there is a huge opportunity for Jenex in serving the market for treatments aimed at the Zika virus. The company’s TherOZap device is currently undergoing tests.
The hand-held device uses high temperature infrared thermal therapy to reduce the pain, itching, and inflammation associated with insect bites and stings. Jenex is seeking U.S. Food and Drug Administration approval for the Class II medical device.
Jenex is working with designers and a marketing company, Luminar Media Group Inc. to manufacture and distribute TherOZap.
Jenex also wants to relaunch another heat treatment product aimed at alleviating herpes sores. The company’s InterceptCS uses heat treatment to penetrate into the skin cells affected by the Herpes Simplex Virus (HSV-1). The product causes a microbial heat shock that causes the virus cells to self-destruct.