ABVC BioPharma Executes a Definitive Agreement to Receive License Fees of $3M and Royalties of 2% on Future Revenues
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Insights
The licensing agreement between ABVC BioPharma, Inc. and Senior Paradise, Inc. represents a strategic use of intellectual property and real estate assets to generate new revenue streams. The $3M upfront license fee, payable in cash or stock, along with a 2% royalty on revenues, indicates a direct financial impact on ABVC's balance sheet. Moreover, the potential for the Land to be repurposed for commercial or residential development could lead to capital appreciation and diversification of income.
It's important to note that the life sciences real estate sector has seen increasing transaction volumes, signaling a growing investor interest in this niche market. ABVC's decision to enter into this agreement aligns with this trend and could position the company favorably in the market. However, the actual financial benefit will depend on SPI's success in developing the Land and generating revenue, which introduces a level of uncertainty and risk.
The partnership between ABVC and SPI taps into the growing demand for healthcare-related real estate, particularly facilities like long-term care centers. With an aging population and increased focus on healthcare infrastructure, this sector is poised for growth. The use of ABVC's Know-How in developing the leased properties could enhance the value of these projects and attract further investment.
Given the historical data indicating a rise in life sciences real estate transactions, ABVC's strategic initiative may capitalize on this momentum. However, the successful execution of such real estate projects is subject to various factors including regulatory approvals, market conditions and the operational capabilities of SPI. Stakeholders should monitor the progress of this development to gauge its impact on ABVC's market position.
The definitive agreement between ABVC and SPI involves complex licensing and leasing arrangements that are subject to legal and regulatory scrutiny. The deal structure, involving payment in cash or stock, offers flexibility but also requires careful legal management to ensure compliance with securities laws. Additionally, the royalty agreement indicates a continued relationship between the parties, necessitating ongoing legal oversight to manage intellectual property rights and revenue sharing.
ABVC's proactive communication to shareholders about the agreement reflects transparency and a commitment to corporate governance. As the healthcare industry is heavily regulated, the implementation of ABVC's Know-How in SPI's projects will require careful adherence to healthcare regulations, including those related to botanical drug products and dietary supplements.
FREMONT, CA, Feb. 15, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire -- ABVC BioPharma, Inc. (NASDAQ: ABVC) ("Company"), a clinical-stage biopharmaceutical company developing therapeutic solutions in Oncology/Hematology, Neurology, and Ophthalmology, announced today that it signed a definitive agreement to license certain of its healthcare-related expertise ("Know-How") to Senior Paradise, Inc. ("SPI"), who will also lease certain of the Company's properties (the "Land") for further development related to the healthcare industry. The lease, SPI may build a long-term care center for the elderly, plant factories, and good agricultural practices (GAP) for botanical drug products and dietary supplements.
ABVC agrees to grant SPI a license to use the Know-How for the healthcare industry. Specifically, ABVC's Know-How will be strategically applied to develop the Land. The Company believes that by integrating its Know-How and Land with SPI's abilities, SPI's healthcare-related endeavors on the Land may achieve tremendous success. Under the agreement, SPI shall pay ABVC
"We hope the Land will provide a new revenue stream for ABVC. The Land can be repurposed for commercial or residential development, which we believe will allow ABVC to maximize its value. This strategic initiative optimizes the utilization of available resources," said Dr. Uttam Patil, ABVC's Chief Executive Officer.
As per a report by Greg Hyland, Head of Capital Markets, Asia Pacific at CBRE, in 2020, life sciences-real estate transactions accounted for just under
Erik Hill, Managing Director and National Sector Lead of Healthcare and Life Science at Partner Valuation Advisory, pointed out that Investors have come to appreciate the recession-resistant returns offered by healthcare real estate.2
ABVC urges its shareholders to sign up for the latest news alerts on the Company's website.
https://abvcpharma.com/?page_id=17707
About ABVC BioPharma
ABVC BioPharma is a clinical-stage biopharmaceutical company with an active pipeline of six drugs and one medical device (ABV-1701/Vitargus®) under development. For its drug products, the Company utilizes in-licensed technology from its network of world-renowned research institutions to conduct proof-of-concept trials through Phase II of clinical development. The Company's network of research institutions includes Stanford University, the University of California at San Francisco, and Cedars-Sinai Medical Center. For Vitargus®, the Company intends to conduct global clinical trials through Phase III.
About Senior Paradise, Inc.
Senior Paradise, Inc. is a Cayman registered Company working on real estate development in the healthcare sector for senior care. We will work with ABVC on this collaborative project in the Asian Special Economic Zone to develop good agricultural practices for the raw material of new botanical drugs to supply the global markets.
Forward-Looking Statements
This press release contains "forward-looking statements." The words may precede such statements "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential," or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified, and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. None of the outcomes expressed herein are guaranteed. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) our inability to manufacture our product candidates on a commercial scale on our own, or in collaboration with third parties; (ii) difficulties in obtaining financing on commercially reasonable terms; (iii) changes in the size and nature of our competition; (iv) loss of one or more key executives or scientists; and (v) difficulties in securing regulatory approval to proceed to the next level of the clinical trials or to market our product candidates. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors are urged to read these documents free of charge on the SEC's website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
Contact:
Leeds Chow
Email: leedschow@ambrivis.com
FAQ
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