Shares of ABVC BioPharma (NASDAQ: ABVC) skyrocketed on Wednesday after receiving a $460 million milestone payment from AiBtl BioPharma. This payment marks the initial installment of global licensing fees.
ABVC BioPharma (NASDAQ: ABVC) and its subsidiary BioLite, Inc. have received an aggregate of 46 million shares from AiBtl BioPharma Inc. as the initial milestone payment by their global licensing agreement. The agreement sets a value of $460 for this payment, equivalent to $10 per share. AiBtl operates as a private company, and the valuation of its shares is determined by the terms outlined in the agreement between the involved parties and the valuation report conducted by an independent third party.
On November 12, 2023, ABVC finalized a comprehensive global licensing agreement with AiBtl BioPharma for its CNS drugs targeting Major Depressive Disorder (MDD) and Attention Deficit Hyperactivity Disorder (ADHD). Under the terms outlined in the agreement, AiBtl fulfilled the initial milestone by providing ABVC with 46 million shares. ABVC BioPharma anticipates that AiBtl will attain additional milestones specified in the agreement, triggering potential payments for the Company, including up to $7 million in cash and 5% royalties on net sales, capped at $200 million.
Uttam Patil, Ph.D., the Chief Executive Officer of ABVC, expressed satisfaction with the collaborative efforts between ABVC and AiBtl, highlighting ABVC’s robust growth and enhanced cash flow.
In his words,
“I am delighted with the progress achieved through the collaborative efforts of ABVC and AiBtl, showcasing ABVC’s capacity for growth and increased cash flow.”
Patil further explained that following the licensing payment, AiBtl has officially become a subsidiary of ABVC BioPharma (NASDAQ: ABVC), with ABVC holding a 57% majority stake in AiBtl. Consequently, AiBtl is now classified as a related party within the consolidated shares of ABVC.
“We believe this milestone payment marks the beginning of ABVC’s revenue generation through licensing deals and opens new avenues that could potentially increase ABVC’s revenue. AiBtl will help ABVC conduct international business development for the MDD and ADHD markets and bridge the partnership with international pharmaceutical companies.”
Russman Jaimes, Chief Executive Officer of AiBtl, emphasized,
“Our primary focus is on completing out-licensing arrangements for the licensed products to strengthen our partnership with ABVC.”
He further noted,
“AiBtl is a US company registered in Delaware. We are working on progressive joint ventures in Asia to expand the healthcare business and are poised to strengthen it. With ABVC’s strong pipeline of products, we believe AiBtl has a strong future.”
Management expresses confidence in the Company’s product pipeline, citing substantial market potential. According to the Future Market Insights report, the Major Depressive Disorder (MDD) market, valued at $11.51 billion in 2022, is projected to reach $14.96 billion by 2032, exhibiting a Compound Annual Growth Rate (CAGR) of 2.8% over the forecast period. Similarly, the global Attention Deficit Hyperactivity Disorder (ADHD) treatment market, reported at $15.23 billion in 2022 by Polaris Market Research, is anticipated to grow at a CAGR of 7.3% from 2023 to 2032. Moreover, the global botanical drug market, valued at $163 million in 2021 per Straits Research, is poised for significant growth, expected to reach $3.2 billion with an impressive CAGR of 39% from 2022 to 2030.
ABVC stock surged nearly 61% to close trade at $1.93 on Wednesday.
Maria Reed is a financial journalist with a passion for covering US equities. She joined the ABBO News team in June 2023. Maria holds an M.S. degree in International Economics and Finance from Otto-von-Guericke University in Magdeburg and is a CFA Level 2 candidate.
