Compumedics Ltd has entered into a framework agreement with China-based Meinian Onehealth Healthcare Holdings Co Ltd (also known as “Health 100”) to work together over the next three months to finalize a proposed joint venture (PJV) into a formal joint venture (FJV) agreement and other supporting agreements to enable both companies to commercialize the Somfit product and technology platform in China.

Somfit is Compumedics’ mobile wearable system and platform for the monitoring of sleep in a consumer/community environment.

The key points of the proposed joint venture are:

  • Compumedics will own approximately 49% and Health 100 will own approximately 51% of the PJV.
  • Compumedics will receive an A$11.3m (US$8.45m) pre-tax payment as an upfront payment in part for providing the PJV with the Somfit-related intellectual property and technology rights for the greater China region.
  • Health 100 will commit to purchasing an initial 1 million Somfit devices for the China market in the first two years following the Somfit device receiving China Food and Drug Administration (CFDA) approval. This sale will generate at least A$133m (US$100m) revenue to the PJV over this period.

It is the intent of both parties to execute formal agreements to establish the PJV no later than Thursday, August 16, 2018. Both parties will work over this period to complete all legal arrangements, including payment of the funds noted, and to formalize and establish the FJV.

David Burton, PhD, chairman and CEO of Compumedics, says in a release, “Compumedics is very pleased to be taking this significant and transformative step forward with Health 100. We are also honored that the Premier of Victoria, the Hon. Daniel Andrews MP, and Victoria’s Commissioner to China, Mr Tim Dillon, have attended today’s signing ceremony between Health 100 Chairman, Dr Rong Yu, and myself, on behalf of Compumedics Limited.

“Today’s partnership announcement comes after an introduction resulting from the Premier’s 2017 visit to China. This announcement marks the commencement of substantial and reciprocal trade and investment between Victoria and China, particularly as it relates to positive health-care transformation and associated knowledge-based job-generation.

“Compumedics and Health 100 have been in discussions for some time now about the way both parties, together with the Somfit product and technology platform, can transform sleep and brain healthcare in China. The signing of the Framework Agreement is the first formal step along the path to establishing the Joint Venture and commencing the commercialization of the Somfit product and technology platform in China.

“Getting to this point has taken Compumedics 30 years of product and technology innovation and development, and together with Health 100, we will make history transforming health and leading the way of the future for primary, secondary, and tertiary community-wide healthcare.

“Importantly, both Health 100 and Compumedics share common values regarding people, ethics and each parties’ contribution. This, coupled with a formidable driving force to build a great joint venture, will positively transform the world of sleep, brain and associated healthcare in China.

“We look forward to completing the formalities over the next month or two to enable this important journey to commence, while we plan and commence delivery of major healthcare outcomes.”

Compumedics notes that while both parties have negotiated in good faith and agreed to the key points detailed above, as part of both parties entering into the framework agreement, there is a possibility, due to reasons unknown by either party at this point in time, that the PJV will not eventuate in the time frame currently anticipated or may not eventuate at all.

The new Health 100 and Compumedics PJV has the potential to mobilize up to or more than 15,000 Health 100 employees to positively transform sleep and neurology health across China, commencing with the new Compumedics sleep/neuro diagnostics and Somfit mobile wearable systems and platform, for the management of sleep and associated disorders.

Somfit technology allows consumers to access personalized management of true-sleep measures based on Compumedics’ sleep analytics. The Somfit platform covers sleep and associated disorders, including sleep-disorder breathing, sleep treatment devices, cardiology, respirology, neurology, and diabetes, among other sleep-related health management disciplines. In addition to the deployment of 1 million Somfit systems and associated health management platforms and device eco-systems, the PJV also involves the establishment of Health 100’s sleep management network spanning the Health 100 centers in greater China.