Medlab Clinical has sold AUS Nutraceuticals, the Australian-only part of its nutraceutical business, to health and wellness company PharmaCare for an initial A$1.6 million.
The company said high distribution costs in the nutraceutical space require the critical mass and pharmacy infrastructure which PharmaCare can provide.
PharmaCare will pay $1.6m in cash on November 1, enabling Medlab to save around $2m annually on operating expenses and “better align its focus on areas of strategic growth”. The deal also includes a two-year earnout being the greater of $500k or 5% of net sales in the first two years.
Medlab will now restructure its business to focus on its core local and international NanaBis and NanoCelle R&D and emerging commercial partnership opportunities having gained patents in 48 markets globally.
Medlab has retained ownership of its R&D and the companies will work together on future product development.
All nutraceutical assets have been sold to PharmaCare, except for certain Medlab intellectual property that will be provided to PharmaCare under licence in perpetuity for the Australian territory. Medlab has reserved all its nutraceuticals rights for the rest of the world.
CEO and founder Dr Sean Hall said: “The engagement we have had with PharmaCare has been incredibly professional and sets us up for a very collaborative future to continue to innovate for the Australian population.”
Executive director Laurence McAllister added: “This really sharpens our focus and frees up our senior team to focus on developing our core NanaBis and NanoCelle technology.
“This nutraceutical business has been an ongoing concern for many shareholders. We are a biotech, however we will consider commercialising healthcare opportunities that can support our revenues for clinical studies and global partnering.”