Endoscopy co Peer Medical merges with EndoChoice [Globes, Tel Aviv, Israel]By Gali Weinrib, Globes, Tel Aviv, IsraelMcClatchy-Tribune Information Services
Jan. 06--Israeli endoscopic start-up Peer Medical Ltd. has merged with US gastrointestinal endoscopy company EndoChoice Inc. Accelmed, run by chairman Mori Arkin and managing partner Uri Geiger is the largest investor in Peer Medical.
According to EndoChoice, Sequoia Capital will lead a $43 million financing round in the merged company. Given the size of the investment and the previous transactions by the two competing companies, it is possible to estimate that Sequoia is making the investment at a company value of several hundred million dollars.
EndoChoice and Peer Medical did not disclose the relative proportions of the merger. EndoChoice is presumably the larger partner, but Peer Medical's shareholders will own a large stake in the merged company.
EndChoice has more than 2,500 customers in 34 countries, and will be responsible for the marketing of the two companies' products. Peer Medical will continue to function as the Israeli R&D center for both companies, and will help develop EndoChoice products.
The merger fits in with Accelmed's strategy to acquire US companies with domestic distribution networks and combine them with products from Accelmed portfolio companies. The cost of building a new distribution network can cost tens of millions of dollars and it is not worthwhile for a single product. Accelmed therefore seeks to combine products from its portfolio companies with existing distribution networks, not through the usual method of distribution agreements, but by taking over existing networks or by merging operations as in the case of Peer Medical and EndoChoice. This gives the manufacturer greater control of the marketing activity.
Accelmed is the largest shareholder in MCS Medical Compression Systems (DBN) Ltd. (TASE:MDCL) as well as in start-ups Cardiapex Ltd., Cartiheal Ltd., Eximo Medical Ltd., EndoSpan Ltd., NLT Spine (Non Linear Technologies) Ltd., Pi-R Squared Ltd., and Valcare Medical Ltd.
Peer Medical has developed an endoscope to diagnose gastrointestinal polyps, which can develop into bowel cancer. Current diagnosis is based on colonoscopy, which can miss 25-40 percent of polyps. Peer Medicals' device provides a broader image of the bowel.
EndoChoice chairman and CEO Mark Gilreath (a former VP at Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN)) compared Peer Medical's Full Spectrum Endoscope with standard products as driving with and without a rear-view mirror, respectively. Peer Medical's product already has US Food and Drug Administration (FDA) clearance, but the company is waiting on sales until the merger is completed.
Peer Medical was founded in 2006 by CEO Avi Levy and its other founders previously founded Sightline, which was sold to Stryker Corporation (NYSE: SYK) for $140 million. Stryker subsequently closed its Israeli operations and halted development of Sightlline's product.
Levy said today, "We are thrilled that the fastest growing medtech company in the US will now be offering the world's most innovative endoscope. We look forward to building on EndoChoice's platform and established customer base and working together to commercialize this breakthrough technology."
Geiger said, "This is a deal that represents the vision of creating real companies. We preferred the platform model which combines Israeli technology with a US commercial platform over acquisition by a big company in the belief that the merger of the companies will created the biggest Israeli medical company in the world."
(c)2013 the Globes (Tel Aviv, Israel)
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