In the fall of 2019, we communicated for the first time that our underlying strategy is to build up Chordate’s value in order to eventually divest the company. This may have been obvious to some investors, but we wanted to make our ambition clear to everyone.
By being clear about the fact that we’re aiming for a divestment we give our shareholders a safer and more transparent horizon for investment.
In addition, we are focused on one single technology, albeit with two big and promising utilization areas. It cannot be ignored that the risk of having just one single product increases over time, which often results in projects of this type being subject to technical expansions, including acquisitions etc. and which can be difficult for a shareholder to keep a track of.
Our ambition is that the Chordate project shall be easy for our investors to track, and when an exit opportunity arises, it should be perceived as a logical move.
In the spring of 2019, the international multi-center study investigating the preventative K.O.S. migraine treatment was subject to an interim analysis. The analysis recommended that we continue the study without modifying the number of patients participating. We interpret this as a strong indication that the design of the study is correct and that it is likely to achieve the desired results.
Our forecast is now that the last patient will leave the study around the turn of 2020/21, after which study data will be analyzed. The results can then be converted into a scientific article during the second quarter. However, this may be delayed by Covid-19 and the impact the pandemic has had on healthcare facilities worldwide. When the article has been approved for publication in a scientific journal, we can announce the results of the study. These statistics are needed so that we can get migraine, as an area of treatment, approved for CE certification.
In 2020, the University of Amsterdam published a study analyzing the data material from an older study from 2013-14. It concluded that the K.O.S. treatment has a significantly better effect than placebos. This confirms our view that the market for K.O.S has great potential.
It is far more difficult for a small medtech company to garner commercial success on many markets internationally than it was 20-30 years ago. The structural resistance and the complexity of regulatory requirements increase incessantly on the clinical market, as well as the various reimbursement mechanisms that pay for the products. In the 1990s, you could register products relatively easily and you would get a license to sell them across the world. Business deals were struck directly with doctors or departments. This is no longer the case. Today, there are a lot more obstacles to navigate, meaning it is mainly large multinationals who have the muscle and competence to successfully establish new products on a global scale.
Large multinationals are increasingly unwilling to invest broadly in internal technical research and development, however, even though they continue to carry out some cutting edge development. Risks and obstacles are simply too great. This has resulted in a symbiosis of sorts, where small, fast-moving and risk-taking companies get to deliver proven medtech projects that the larger companies can then acquire as long as the projects are fairly cheap and the financial risks are assessable. Chordate’s goal is to be such a project.
There are a lot of statistics and information available about the size and number of mergers and acquisitions carried out within the medtech sector. One reference is CrunchBase. In the table below, you can see the smaller acquisitions carried out by Medtronic (US), Boston Scientific (US) and LivaNova (UK) in the past five years. These companies count among the five largest within the neurostimulation sector to have actively carried out acquisitions. They are big names within the medtech industry overall, but LivaNova is only focused on neurostimulation. The table shows that, aside from larger business deals – where Big Medtech acquire and divest units between themselves – they also acquire smaller specialized companies. Chordate’s goal is to be such a company.
According to CrunchBase, these three companies have carried out a total of 46 smaller takeovers within the past five years. Six acquisitions, valued between $540 million and $4 billion, as well as 20 acquisitions of which the price-tags were undisclosed, have not been taken into account. Twenty of the acquisitions listed are worth between $30 million-$465 million, with an average price of $222 million.
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For questions about the medical effects of the K.O.S treatment, please see if the answer is here.
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