Avinger Announces Strategic Partnership and up to $15 Million Equity Funding Agreement with Zylox-Tonbridge
Avinger, Inc. (AVGR) announces a strategic partnership with Zylox-Tonbridge Medical Technology Co., Ltd. to access the Greater China market. The partnership includes a $15 million equity funding, licensing agreement, and technology transfer to expand Avinger's product reach. The deal also involves a three-year extension of existing debt terms, strengthening Avinger's balance sheet.
Positive
Strategic partnership with Zylox-Tonbridge opens access to the Greater China market for Avinger.
Equity funding of up to $15 million, licensing agreement, and technology transfer enhance Avinger's product distribution capabilities.
Strengthened balance sheet through debt restructuring and cash infusion.
Zylox-Tonbridge achieved $58 million in sales in the most recent 12-month period, showing impressive growth.
Avinger to benefit from Zylox-Tonbridge's established sales and marketing network in China.
Avinger gains potential access to Zylox-Tonbridge's peripheral vascular products for distribution in the U.S. and Germany.
Improved operating cost structure and new revenue growth opportunities for Avinger.
Transaction signifies confidence in Avinger's product portfolio and future growth prospects.
The strategic investment and partnership between Avinger, Inc. and Zylox-Tonbridge Medical Technology Co., Ltd. signifies a considerable development in Avinger's financial and operational strategy. The infusion of up to $15 million in equity funding from Zylox-Tonbridge, particularly the initial $7.5 million at-the-market investment, provides Avinger with a strengthened balance sheet. This capital injection is critical for Avinger as it likely improves their cash position, potentially extending their runway and enabling further investment in research and development.
The three-year extension of existing debt terms with CRG Partners is also a significant development. By deferring principal payments until 2027, Avinger gains financial flexibility, which could alleviate short-term liquidity pressures and improve financial stability. However, it is important to consider the potential increase in the total interest paid over the extended loan period, which could impact long-term profitability.
The strategic partnership opens up the Greater China market for Avinger's intravascular image-guided devices, which is a substantial opportunity given the region's large patient population and growing healthcare sector. However, investors should monitor the progress of regulatory activities and the achievement of sales milestones, as these are crucial for realizing the full potential of this partnership.
The entry into the Greater China market through this partnership is a strategic move for Avinger, considering the robust growth rate of over 50% reported by Zylox-Tonbridge in the region. Access to Zylox-Tonbridge's established distribution network and sales force could significantly enhance Avinger's market penetration and sales volume. The collaboration may also provide Avinger with competitive advantages through cost-efficient manufacturing and the potential distribution of Zylox-Tonbridge's peripheral vascular products in the U.S. and Germany.
It is essential to understand the competitive landscape within the Greater China interventional markets. Avinger's ability to capture market share will depend on the efficacy and differentiation of its image-guided devices compared to existing solutions. Additionally, the long-term success of the partnership will hinge on the seamless integration of Avinger's products into Zylox-Tonbridge's portfolio and the effective management of cross-border regulatory and operational challenges.
The technology transfer agreement to build cost-efficient manufacturing capacity is a critical component of this partnership. This aspect could not only reduce production costs but also improve the scalability of Avinger's operations. The manufacturing and distribution rights granted to Zylox-Tonbridge for the Greater China region suggest a significant commitment to the partnership. However, the execution of technology transfer and the establishment of manufacturing facilities in compliance with regulatory standards, such as the FDA, will be crucial for the success of this initiative.
The potential distribution of Zylox-Tonbridge's peripheral vascular products in the U.S. and Germany through Avinger could diversify Avinger's product offerings and strengthen its position in these markets. The ability to source finished goods from Zylox-Tonbridge following FDA registration could also be a game-changer for Avinger, potentially enhancing its supply chain efficiency and product availability.
Investors and stakeholders should be aware of the inherent risks in international partnerships, such as potential intellectual property challenges, quality control across manufacturing sites and the complexities of navigating different healthcare systems and regulatory environments.
03/06/2024 - 07:30 PM
Initial $7.5 Million Strategic Investment
Strategic Partnership Opens Pathway to Access Greater China Market
Strengthened Balance Sheet and Three-Year Extension of Existing Debt Terms
REDWOOD CITY, CA / ACCESSWIRE / March 6, 2024 / Avinger, Inc. (Nasdaq:AVGR), a commercial-stage medical device company developing and marketing the first and only intravascular image-guided, catheter-based systems for diagnosis and treatment of vascular disease, today announced a new strategic partnership with Zylox-Tonbridge Medical Technology Co., Ltd. (2190.HK, "Zylox-Tonbridge"), a leading medical device company in the neuro- and peripheral-vascular interventional market in China.
Based in Hangzhou, China and listed on the Hong Kong Stock Exchange, Zylox-Tonbridge has developed and launched 36 products into the Greater China interventional markets since its founding in 2012. With a sales and marketing organization of more than 130 people and a vast distribution network, Zylox-Tonbridge achieved the equivalent of approximately $58 million in sales in the most recently reported 12-month period (ended June 30, 2023), representing a growth rate of greater than 50% compared to the prior year period.
The strategic partnership provides up to $15 million of equity funding from Zylox-Tonbridge in two tranches, a licensing agreement providing access for Avinger's products in the Greater China region, and a technology transfer agreement to build cost-efficient manufacturing capacity to support global sales. In addition, the parties have signed a strategic collaboration agreement which provides the opportunity for Avinger to access certain Zylox-Tonbridge peripheral vascular products for distribution in the U.S. and Germany.
Key Terms of Financing Agreement
Under the terms of the financing agreement, Zylox-Tonbridge will invest up to $15 million into Avinger through the purchase of preferred and common stock in two tranches. The initial $7.5 million investment was priced at-the-market under Nasdaq rules at a purchase price of $3.66 per share on an as converted to common stock basis. A second tranche of $7.5 million will be funded upon achieving key milestones, including successfully registering Zylox-Tonbridge as a manufacturer of Avinger's products with the U.S. Food & Drug Administration ("FDA") and Avinger achieving $10 million in aggregate revenue over four consecutive quarters.
Avinger's obligation to accept conversion of the initial shares of preferred stock and issue and sell shares of preferred stock upon completion of the milestones are each subject to receipt of the approval of Avinger's stockholders.
Concurrent with the Zylox-Tonbridge first tranche investment, CRG Partners, the primary holder of Avinger debt and preferred equity exchanged its Series A preferred stock with an aggregate liquidation preference of approximately $60 million for new Series A-1 preferred stock with a value of $10 million . The new Series A-1 preferred stock is convertible at the same price as the Zylox-Tonbridge transaction and carries no liquidation preference or dividends. Additionally, CRG extended principal payments on Avinger's debt from the first quarter of 2024 to the first quarter of 2027, with interest payments accruing during this time.
Key Terms of License, Technology Transfer and Strategic Collaboration Agreement
Under the terms of the license and technology transfer agreement, Zylox-Tonbridge has exclusive rights to distribute and manufacture Avinger's proprietary image-guided devices in the Greater China region, including mainland China, Hong Kong, Macao, and Taiwan (the "Territory"). Zylox-Tonbridge will lead all regulatory activities for the registration of the Avinger products in the Territory. Avinger will supply product to Zylox-Tonbridge until such time Zylox-Tonbridge's manufacturing capability has been established. All sales of Avinger products in the Territory will be royalty bearing to Avinger.
In addition, the parties have signed a strategic cooperation framework agreement, which provides the opportunity for Avinger to access certain Zylox-Tonbridge peripheral vascular products for distribution in the U.S. and Germany. The agreement also provides the option for Avinger to source finished goods from Zylox-Tonbridge following registration of their manufacturing facility with the FDA.
"We are excited to announce this strategic transaction with Zylox-Tonbridge, a dynamic leader in the peripheral interventional market in China," said Jeff Soinski, Avinger's President and CEO. "Our broad-reaching partnership creates an exciting new pathway for Avinger products to enter the large and growing Greater China market through an established commercial channel. It also provides the opportunity for a more cost-efficient manufacturing structure to support the growth of global sales, as well as the potential for Avinger to access Zylox-Tonbridge's high-quality peripheral products for distribution in the U.S. and Germany."
Dr. Jonathon Zhao, Chairman and CEO of Zylox-Tonbridge, said, "We are pleased to partner with Avinger to provide Chinese healthcare professionals and patients with cutting-edge medical technologies and disruptive innovative products. We believe this collaboration will expand the company's Peripheral Vascular Intervention product portfolio, reinforce our market leadership, and accelerate the growth of the vessel preparation business in China's peripheral vascular intervention market. By leveraging our leading manufacturing capabilities and working with Avinger, we are confident in bringing patients more cost-efficient and high-quality products. We are looking forward to cooperating with global partners to share growing market opportunities by offering high-quality and affordable innovative medical products and services."
Mr. Soinski continued, "Concurrent with this transaction, we have significantly improved our balance sheet with a cash infusion, the exchange of our Series A preferred stock for new Series A-1 preferred stock, and the deferral of principal payments on our existing debt for three years. Combined, these transactions represent a strong show of confidence in our product portfolio.
"With this transaction, we have positioned Avinger to access exciting new growth opportunities in China and improve its operating cost structure as global manufacturing comes online. We have also provided the opportunity for new revenue growth and increased sales productivity in our current markets through the potential distribution of Zylox-Tonbridge products in the U.S. and Germany. We are excited to move forward in 2024 as we continue to drive sales of our best-in-class commercial peripheral products and ready our groundbreaking image-guided coronary CTO-crossing device for IDE submission later this year."
Detailed terms of the Zylox-Tonbridge transaction will be filed on Form 8-K with the United Stated Securities and Exchange Commission.
About Avinger, Inc.
Avinger is a commercial-stage medical device company that designs and develops the first image-guided, catheter-based system for the diagnosis and treatment of patients with vascular disease in the peripheral and coronary arteries. Avinger is dedicated to radically changing the way vascular disease is treated through its Lumivascular platform, which currently consists of the Lightbox series of imaging consoles, the Ocelot and Tigereye® family of chronic total occlusion (CTO) catheters, and the Pantheris® family of atherectomy devices for the treatment of peripheral artery disease (PAD), estimated to affect more than 200 million people worldwide. Avinger is developing its first product application for the treatment of coronary artery disease (CAD), an image-guided system for CTO-crossing in the coronary arteries, which provides the opportunity to redefine a large and underserved market. Avinger is based in Redwood City, California. For more information, please visit www.avinger.com .
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About Zylox-Tonbridge
Zylox-Tonbridge is one of the leading players in the neuro- and peripheral-vascular interventional medical device market in China. The Company was founded in 2012 and is headquartered in Hangzhou, China. As an integrated medical device company supported by in-house R&D and manufacturing capabilities, proprietary technological platforms, and commercialization capabilities, Zylox-Tonbridge strives to provide all patients, regardless of their ethnicity, age and economic conditions, with accessible medical devices and services.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding benefits of the strategic transaction with Zylox-Tonbridge, benefits to our manufacturing structure, the pathway for Avinger products to enter the Greater China market, benefits of accessing Zylox-Tonbridge's peripheral products, the potential expansion of the Peripheral Vascular Intervention product portfolio of Zylox-Tonbridge, potential benefits to patients of the collaboration with Zylox-Tonbridge, the improvement in our operating cost structure, the opportunities for new revenue growth and increased sales productivity, and obtaining stockholder approval to facilitate the equity financing. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties, many of which are beyond our control, include our dependency on a limited number of products; the resource requirements related to Pantheris, Tigereye and our Lightbox imaging console; the outcome of clinical trial results; the adoption of our products by physicians; our ability to obtain regulatory approvals for our products; as well as the other risks described in the section entitled "Risk Factors" and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2023, as amended, and Quarterly Reports on Form 10-Q. These forward-looking statements speak only as of the date hereof and should not be unduly relied upon. Avinger disclaims any obligation to update these forward- looking statements.
Investor Contact:
Matt Krepsmkreps@darrowir.com
Public Relations Contact:
Phil Preusspr@avinger.com
SOURCE: Avinger, Inc.
press release on accesswire.com
What is the strategic partnership announced by Avinger, Inc. (AVGR)?
Avinger announced a strategic partnership with Zylox-Tonbridge Medical Technology Co., Ltd. to access the Greater China market.
What are the key components of the partnership between Avinger and Zylox-Tonbridge?
The partnership includes equity funding of up to $15 million, a licensing agreement, and a technology transfer to expand Avinger's product reach.
What financial benefit did Zylox-Tonbridge achieve in the most recent 12-month period?
Zylox-Tonbridge achieved approximately $58 million in sales in the most recently reported 12-month period, showing a growth rate of over 50% compared to the prior year.
What opportunities does the partnership provide for Avinger in terms of product distribution?
Avinger gains potential access to Zylox-Tonbridge's peripheral vascular products for distribution in the U.S. and Germany.
How has the balance sheet of Avinger been strengthened through the partnership?
The partnership includes a cash infusion, debt restructuring, and a three-year extension of existing debt terms, improving Avinger's balance sheet.
