CVT
05/09/2013 09:30
PLACE
REL: 0930 HRS Comvita Limited
PLACE: CVT: Comvita Announces Strategic Investment by Derma Sciences
Comvita has announced its global licensee for Medihoney specialist wound care
products, Derma Sciences Inc., has taken an approximately $9.0million
(USD$7.0million) strategic shareholding in Comvita Limited, with the purchase
of approximately 2.3million, newly issued common shares at a price of $3.90
per share*.
Comvita Chairman, Neil Craig said in conjunction with this investment, which
represents approximately 7.3% of Comvita's outstanding shares, Derma
Sciences' Chairman and Chief Executive Officer Edward J. Quilty, has joined
Comvita's Board of Directors.
Mr Quilty said, "With the rapid growth of our Medihoney products, Manuka
honey now is our single largest raw material purchase and an anchor product
in our Advanced Wound Care (AWC) segment, with sales growth of approximately
50% in the second calendar quarter 2013. Our expectations are for continued
rapid growth for the foreseeable future in both professional wound care and
over-the-counter channels."
Mr Craig said the proceeds of this share placement will be used to support
the company's apiary acquisition and harvest modernisation strategy, to
ensure sufficient supply of medical-grade Manuka honey to meet the strongly
growing demand for the Medihoney wound care product line.
"This strategic investment by Derma Sciences cements the relationship between
our companies in a very meaningful way and ensures an alignment of our
shared, longer-term interests in further developing Comvita's Manuka honey
business," said Mr Craig.
Comvita CEO, Brett Hewlett said, "The acquisition of strategically located
apiary businesses has been important to Comvita in providing supply surety
and meeting the growing global demand for Manuka honey. Comvita currently
owns apiaries that provide approximately 30% of our total honey needs. We are
now in a position to accelerate our apiary growth programme and meet our
strategic objective of owning up to 50% of our honey supply needs. The
balance of supply will come from long term contractual supply and partnership
relationships."
In February 2010 Derma Sciences licensed exclusive worldwide rights from
Comvita for the Medihoney professional wound and skin care products. Current
Medihoney products include Medihoney Calcium Alginate Dressing, Medihoney
Paste, Medihoney Gel, Medihoney HCS and Medihoney Honeycolloid(TM). In
addition, Derma Sciences makes over-the-counter private-label, honey-based
dressings for a leading U.S. pharmacy chain.
Comvita has an equity stake (and warrants) in Derma Sciences (NASDAQ: DSCI),
which is now valued by the market at approximately NZ$17.5 million. Under the
licensing agreement with Derma Sciences, Comvita receives ongoing monthly
royalty payments, revenue from the sale of bulk medical grade honey and
ongoing milestone payments on achievement of agreed sales targets. The
license agreement also provides for Comvita to sell Derma Sciences
manufactured Medihoney products to the Over-the-Counter (OTC) and pharmacy
markets worldwide. Comvita CEO Brett Hewlett is a member of the Derma
Sciences Board of Directors.
The global licencing rights agreement has proven to be outstandingly
rewarding for both Comvita and Derma Sciences:
o From a standing start in 2006, Derma Sciences Medihoney sales are now at a
'run rate' of US$15million pa.
o Comvita now receives a royalty stream of approximately $400,000 per quarter
and has received its second capital milestone payment of US$1million in
2012-2013 based on Medihoney sales reaching agreed sales targets.
o Sales by Derma Sciences are continuing to grow at approximately 50% pa.
# Ends #
For further information:
Comvita CEO, Brett Hewlett, 021 740 160
Comvita Chairman, Neil Craig, 021 731 509
Comvita Communications Manager, Julie Chadwick, 021 510 693
* In terms of the Subscription Agreement between Comvita and Derma Sciences,
should Comvita issue further shares to any third party investor by way of a
private placement within 6 months from now at a price of 10% or more below
$3.90 per share, the benefit of such lower issuance price must be extended to
Derma Sciences by issue of additional shares to Derma Sciences at no further
cost. There is currently no intention to issue additional shares to any
third party.
Background information
About Comvita (www.comvita.co.nz)
Comvita is an international natural health and beauty company committed to
the development of innovative products, backed by credible scientific
research. We are the global leader in Manuka (leptospermum) honey and
fresh-picked Olive Leaf Extract, which are at the core of the Comvita product
range. We have approximately 30% of honey supply under our ownership with the
balance of supply from long term contractual and partnership arrangements.
Comvita's Olive Leaf Extract is grown, harvested, extracted and bottled at
the world's largest specialised olive leaf grove, with over 580,000 olive
trees. Comvita sells into more than 18 countries through a network of
wholesale and third-party outlets and online. We have offices in New Zealand,
Australia, Hong Kong, Japan, Taiwan, South Korea and the United Kingdom.
About Derma Sciences (www.dermasciences.com)
Derma Sciences is a medical technology company focused on three segments of
the wound care marketplace: pharmaceutical wound care products; advanced
wound care dressings to address chronic wounds including diabetic ulcers; and
traditional dressings. The Company has begun its Phase 3 clinical trials in
diabetic foot ulcer healing with DSC127, based on excellent Phase 2 data. Its
MEDIHONEY product is the leading brand of honey-based dressings for the
management of wounds and burns. The product has been shown in clinical
studies to be effective in a variety of indications. TCC-EZ is its
gold-standard total contact casting system for diabetic foot ulcers. Other
novel products introduced into the $14 billion global wound care market
include XTRASORB for better management of wound exudate and BIOGUARD for
infection prevention.
End CA:00240725 For:CVT Type:PLACE Time:2013-09-05 09:30:34
