Last checked at (Sharecast News) - Clinical diagnostics specialist Novacyt has completed the sale of 'NOVAprep' assets to Algimed Trade, it announced on Friday, for a total consideration of €0.4m and a 10% royalty on sales in certain defined territories.
The AIM-traded firm said Algimed specialises in complex equipment supplies for clinical and food testing laboratories, and is formerly the NOVAprep distributor for Belarus.
It said the sale followed a strategic review by the board, which it completed in December 2018.
As a result of that review, and as previously announced, NOVAprep was deemed to be non-core and outside the company's in vitro diagnostic products expertise.
The sale followed the successful sale of the Clinical Lab business, completed in July.
Novacyt said it would now focus on the expansion of 'Primerdesign' and 'Lab21', which it described as its profitable core reagent development and manufacturing businesses.
The company said it was receiving €0.15m in cash on completion.
Following ownership transfer of patents detailed in the executed asset agreement, it would receive the remaining €0.25m in deferred payments, in cash over three years.
It would receive €0.1m one year after completion, with €75,000 due after two years and the final €75,000 after three years.
In addition, Algimed had entered into a transitional services agreement for up to 12 months for a one-off payment to Novacyt of €10,000 at completion.
That agreement would cover regulatory and other technical support from Novacyt regarding the CE-mark accreditation transfer to Algimed.
"I am pleased to announce the completion of the sale of NOVAprep, which significantly streamlines our operations and strengthens our financial position," said chief executive officer Graham Mullis.
"The sales of the Clinical Lab and the NOVAprep assets could eventually generate in excess of €2.2m cash during the next five years through a combination of purchase consideration, royalties and the operational cash inflow generated in the second half of 2019.
"I am particularly pleased to create this value for the benefit of the company whilst removing the loss-making Clinical Lab and NOVAprep assets, and enhancing the future profitability of the remaining core businesses."
Mullis said he was "confident" that Algimed was the ideal owner of NOVAprep, with its "strong track record" of servicing cancer and infectious disease clinical markets so that patients and clinicians could continue to benefit from the NOVAprep technology.
"We will utilise the funds from the transaction for working capital purposes as we continue to invest in our product offering and develop new and existing partnerships with global diagnostics companies.
"Novacyt remains committed to its core strengths of in vitro diagnostics product development, commercialisation and contract manufacturing as we focus on driving value from our profitable Primerdesign and Lab21 businesses."
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