On 12 June 2017, Trendlines reported that the product developed by its Most Valuable Portfolio Company (“MVP”) is on schedule for launch in 2018. This information was provided to Trendlines by the company (“the Acquirer”) that, in November 2014, signed an asset purchase agreement with the MVP for the acquisition of the MVP’s medical product (“Product”). Trendlines also reported that the Acquirer is currently in the process of establishing a high-volume manufacturing facility for the production of the Product.
The asset purchase agreement included a cash payment at closing, milestone payments, and royalties from future sales of the Product. In addition to the cash payment received at the initial closing in November 2014, Trendlines Incubators Israel Ltd., Trendlines’ wholly owned subsidiary, has been paid approximately US$1.6 million in dividends, to date, by the MVP. As Trendlines and the MVP are bound by a confidentiality agreement, additional details of the agreement cannot be disclosed at this time.
Under the terms of the agreement, once sales of the Product begin, the Acquirer will make royalty payments to the MVP which, in turn, are expected to be distributed to the MVP’s shareholders, including Trendlines Incubators Israel Ltd. Trendlines will provide further updates to the status of the MVP Company’s Product as it gets closer to market launch and as authorized by the Acquirer.
As at 30 September 2017, Trendlines’ share in the MVP was valued at US$42.9 million, which represents the net present value of Trendlines’ share of estimated future royalty payments, after adjusting the cash flow to take account of multiple risk factors, including market risk, manufacturing risk, and product risk, and then applying a financial discount rate.