image: https://www.stockhouse.com/media/marketing/ceo_event/JenexFA_logo_2.jpg
The Jenex Corp. (
TSX: V.JEN,
Forum) has unveiled details of a proposed acquisition that could be a game changing transaction for the Toronto-based company.
Jenex is a developer of proprietary medical technology designed to treat Herpes-related cold sores and to inactivate ailments that stem for insect bites, including the Zika Virus.
On November 2, 2017, the company said it has signed
a non-binding letter of intent to acquire two medical device products with established sales and cash flow.
Jenex said the acquisition targets – as yet un-named -- have been sold worldwide under established brand names and utilize thermal therapy to relieve cosmetic related acne and other topical related applications.
News of the proposed acquisition comes just weeks after investors applauded results from the first tests on medical technology that Jenex is developing in a bid to inactivate ailments stemming from the dreaded Zika Virus.
Shares of
The Jenex Corp. (
TSX: V.JEN,
Forum) seesawed after the initial results were released. It was a sign that the market is waiting for more proof in upcoming results as Jenex tries to determine how effective its proprietary TherOZap technology will be in inactivating Zika, the West Nile Virus and other mosquito-borne diseases.
(More about TherOZap later).
The names of the latest acquisition targets remain undisclosed pending the execution of a definitive share purchase agreement with an anticipated closing date of January 31st, 2008.
Jenex Chief Executive Officer Rob Fia said the acquisition targets offer Jenex a huge potential market with the new acne produce and the chance to expand its focus beyond the Zika studies while potentially increasing its top line revenue and earnings.
He also said these targets provide a strategic fit to enhance the company’s thermal therapy medical device offerings.
“We have identified a wide range of synergies, including potential new distribution channels for our existing product offerings and expect to identify additional opportunities as we complete our due diligence,” he said.
Based on the unaudited financial statements for 2016, Jenex said the acquisition targets have generated approximately US$3 million in revenue and roughly US1.8 million of free cash flow. The proposed acquisition is priced at an attractive valuation of 1.25 times unaudited cash flow in 2016.
Prior to the announcement on Nov. 2, Fia said he sees the Zika virus as huge opportunity. That is, if ongoing tests prove that TherOZap can reliably inactivate the Zika virus, an ailment that became a household term in North America and around the world in the months before the 2016 Olympic Games in Brazil.
The lab is conducting the tests on a prototype model that was completed in April, 2017. The prototype is a hand-held unit, which when pressed against the area of the insect bite, utilizes high temperature thermal therapy (in this case infrared heat) in a bid to reduce pain and inflammation.
To evaluate the effectiveness of the TherOZap device against the infectivity of Zika virus, cells were infected with a range of Zika virus doses and treated with the Jenex device with heat.
In the cells that received the lowest viral dose, initial results showed infected cells that had been treated with the Jenex TherOZap device had a markedly lower cytopathic effect compared to infected cells that did not receive treatment. Cytopathic effect is a measure of cellular pathogenesis and cellular viability in relation to viral infection; results of a viral replication assay and measurements of live viral activity are pending, the company said.
The company said these preliminary results need to be confirmed through repeated testing as well as by measurement of virus viability.
However, Fia indicated that he is pleased with the initial results and said Jenex looks forward to receiving further data as it becomes available.
If the tests prove successful, Jenex will finalize the features for the consumer product and seek regulatory approvals where required.
Aside from TherOZap, Jenex is working to relaunch InterceptCS to treat Herpes Simplex Virus (HSV-1), a virus that affects 3.7 billion people under the age of 50, according to the World Health Organization.
InterceptCS uses heat treatment to penetrate deep into the skin cells affected by the HSV-1 virus. The treatment causes a microbial heat shock response, where the targeted viral cells release heat shock proteins to cause them to essentially self-destruct.
Jenex says InterceptCS remains the only product in Canada that has been granted permission to use a prevention claim in dealing with cold sores.
A key part of the strategy is to re-establish the company’s relationship and distribution agreement for InterceptCS with major Canadian retailers.
The company is also conducting tests on Cannabidiol oil derived from hemp to determine its effectiveness in inactivating both the Zika and West Nile viruses.
As
reported by Stockhouse, the company recently obtained conditional acceptance in relation to an application to reactivate its shares as a Tier 2 Life Science Issuer on the TSX Venture Exchange, marking an upgrade from TSX Venture’s NEX trading forum.
FULL DISCLOSURE: The Jenex Corporation is a paid client of Stockhouse Publishing.