Comvita reaches Medihoney deal

Natural healthcare company Comvita has completed a heads of agreement for a $6 million deal with Derma Sciences covering the worldwide licensing rights for Medihoney professional woundcare and skincare products.

The agreement is subject to the completion of full documentation and a successful capital raising and listing in January on the Nasdaq by Derma, a United States-based specialty medical device company in which Comvita has a 10 per cent stake.

Comvita said that under the deal Derma would have exclusive worldwide rights to manufacture and sell the full range of Medihoney woundcare and skincare products to the professional and medical market worldwide.

Comvita would retain exclusive worldwide rights to sell the same products to the over the counter (OTC) market.

Derma would manufacture the range of Medihoney products for Comvita to sell to OTC customers, Comvita would supply medical grade manuka honey to Derma, and there was a joint research and development cooperation agreement between Derma and Comvita.

When the capital raising was finished, Comvita would receive US$4.25 million ($6m) - US$2.25m in cash and US$2m in Derma shares at the same issue price as the capital raising.

Further capital payments were possible based on a series of sales milestones by Derma for Medihoney products, Comvita said.

Dependent on sales growth, Comvita anticipated receiving a further US$2m of those payments within three years.

Comvita would also receive ongoing royalty payments from Derma on all Medihoney products it sold. Those were projected to be around $500,000 in 2010/2011, the first year of the arrangement.

Comvita said it would continue to hold more than 10 per cent of Derma and would have the right to a director on the Derma board.

The deal had been delayed for more than a year due to turmoil in global financial markets, Comvita chairman Neil Craig said.

Around mid-afternoon Comvita shares were up 7c to $1.35.

- NZPA