Conavi Medical (TSXV:CNVI) has announced that its exclusive licensing partner in China, East Ocean Medical (Hong Kong) Company Limited (EOM), has received approval by the China National Medical Products Administration (NMPA) for its coronary imaging system, which is based on Novasight Hybrid™ System intellectual property licensed to it by the Company via a June 2021 technology transfer and licensing agreement.
Pursuant to the agreement, the NMPA approval of EOM’s coronary imaging system triggers a fourth and final milestone payment of $5.9 million by EOM to Conavi Medical. While Conavi Medical expects to recognize the milestone payment as licensing income in the current fiscal quarter, it will use the total proceeds to fund the repurchase of the outstanding principal plus accrued interest balance in respect of a promissory note owing to EOM. The balance of this promissory note is also US$5.9 million, thereby extinguishing all of the Company’s debt owed to EOM.
Upon future commercialization in China, EOM will pay to Conavi Medical certain tiered royalty payments, ranging from 5.0%-10.0% of 75.0% of amounts invoiced to EOM coronary imaging system customers, provided that EOM shall pay a minimum nonrefundable annual royalty of US $250,000, which shall be creditable against the royalties otherwise due pursuant to the agreement.
“We congratulate our China licensing partner, EOM, on receiving NMPA approval of its Novasight Hybrid-based coronary imaging system,” Conavi Medical’s CEO, Tom Looby, said in a statement. “The NMPA approval marks a major milestone for both companies and provides important additional validation of our hybrid imaging technology, which is the first to combine two major intravascular imaging modalities – IVUS and OCT – to help guide common minimally invasive coronary procedures. China is an important market for emerging medical technologies, and we look forward to EOM’s commercial launch of the technology early next year.”
