from the September 2007 issue

Teva invests in a startup - Mediwound

Teva Pharmaceuticals (TASE, Nasdaq: TEVA) is departing from custom and investing in a startup. The Israeli drug company is buying 12.5% of the shares in Mediwound from Clal Biotechnology Industries at a pre-money company value of $100 million.

Altogether Teva and the other shareholders are investing $20 million in Mediwound stock.

Mediwound specializes in technology to treat burns. Its Debrase Gel Dressing uses enzymes to selectively remove the eschar layer from burn tissue, without hurting healthy flesh.

"Deep second and third degree burns result in a thick layer of necrotic tissue which must be removed prior to further treatment, in a process termed "debridement"," the company notes. "This process is usually accomplished only by tangential excision surgery or lengthy mechanical procedures. In most cases following a single application of four hours, the necrotic tissue turns into a gelatinous form and can be wiped away leaving a clean healing or graftable bed."

The company's technique is aimed to replace surgery.

Its product addresses a $400-500 million a year market, and confers four advantages compared with surgery, that it does no damage to healthy tissue.

The second is that it spares the patient blood loss, and the third is that it's more comfortable for the burn patient. Fourth is that it costs less.

Pursuant to the agreement, Teva receives exclusive rights to market and distribute Mediwound's main product in certain countries.

Upon receiving marketing approval for the European Union, Teva will receive an option to expand its marketing license to the EU.

Once the U.S. Federal Reserve Board approves the product, Teva will also get an option to expand its marketing license to North America. If it decides to exercise that right, the Mediwound shareholders will receive an option to sell Teva 26% more of the company at a company value of $245 million.

Teva will receive an option to buy the same amount of shares at a company value of $306 million.

Reprinted from the Israel High-Tech & Investment Report September 2007

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