Medical Device Daily Israel Correspondent
ZICHRON YA’AKOV — The MoneyTree quarterly survey for the second quarter of 2007 by PricewaterhouseCooper Israel — Kesselman and Kesselman (Tel Aviv) came as no surprise. Venture capital is still backing Israeli technology companies at top levels.
Eighty companies, mostly start-ups, raised an average of $4 million each, an aggregate $319 million, 4% greater than the $307 million raised by 81 companies the preceding quarter, and 6% more than the $300 million raised during 2Q06.
Twelve companies in the Life Sciences sector, taking 16% of the total invested, raised about $50 million, as compared to 10 companies that raised an equal amount the previous quarter. The average per-company investment was $4.1 million this quarter, as compared to $5 million in the previous quarter.
Medical device firms also took 17% of the total additional support by the Israeli Office of the Chief Scientist, $147 million of the total invested, with biotechnology taking just 7%.
According to Israel Venture Capital Research Center (IVC; Tel Aviv)) estimates, $1.5 billion in capital is currently available for investment by Israeli venture capitalists, of which $900 million was earmarked for seed or first investments in high-tech companies.
An additional $700 million is expected to be raised in 2007 by Israeli VCs for investment in Israeli high-tech.
Zeev Holtzman, chairman of IVC and Giza Venture Capital, said it is expected that the next capital-raising cycle of the leading Israeli VC funds — the fifth cycle since 1992 — will start later this year and will reach its peak in 2008.
Medical device companies appear to be favored over biotech endeavors, Holtzman said, because, currently, “capital available for investment by Israeli funds equals two years investment, a markedly shorter period than in the U.S., indicating that there is no over-supply of capital in the Israeli market.”
Medtronic/Kyphon merger benefits Disc-O-Tech
When Medtronic (Minneapolis) bought up Kyphon (Sunnyvale, California) in a deal valued at $3.9 billion (Medical Device Daily , July 30, 2007), both companies noted the exclusion of outstanding payments owed by Kyphon, including about $220 million to Disc-O-Tech Medical Technologies (Lod).
Disc-o-tech, a start-up specializing in expandable implants for minimally invasive orthopedic devices, sold part of its portfolio of devices for treating spinal disorders and associated intellectual property to Kyphon .
Disc-o-Tech is yet another of the creations out of the inner sanctum, from brother physician/inventors Rafael and Mordechay Beyar, bioengineer Shlomo Ben Haim, and serial entrepreneurs Oren Globerman and Lewis Pell.
Rafi Beyar, one of the pioneers of interventional cardiology in Israel and known for the original cardiac B-stent, founded Disc-o-Tech in 1998.
Medtronic acquired InStent (Haifa) from Pell and Ben Haim in 1996 for what was then an astronomical $220 million, fueled by the early stent wars between J&J and Guidant.
Disc-O-Tech already has received payment of $100 million with transfer of products early this year. The remaining $120 million is slated to be received for its Confidence System in three equal annual installments, beginning January 2008, unrelated to milestones.
Disc-O-Tech will continue its own development, including additional devices for hip and thigh surgery.
TransPharma completes drug/device product
TransPharma Medical (Lod) reported “promising results in its Phase I clinical trials demonstrating the safety and pharmacokinetic profile of its drug/device ViaDerm-hPTH (1-34) product to treat osteoporosis.” The trial demonstrated that ViaDerm could effectively deliver hPTH (1-34) to the bloodstream in 48 healthy, elderly, post-menopausal women. hPTH (1-34) is a synthetic version of the Forteo drug from Eli Lilly (Indianapolis).
Importantly, the women were able to tolerate multiple doses of the ViaDerm hPTH (1-34), at blood levels comparable to Forteo, delivered by injection.
The ViaDerm system incorporates a pocket-sized electronic control unit, which provides a radio frequency current to the skin, opening micro-channels through which the drug is delivered, and a patch containing hPTH (1-34).
TransPharma’s device allows even large compounds to enter the skin. Its dry-foam patch preserves complex drugs, so it has the great advantage of logistics, longer shelf life and consistency, compared with traditional patches that contain gel.
The company has partnered with Teva Pharmaceuticals on drug candidates for osteoporosis and human growth hormone.
Dr. Daphna Heffetz, CEO of TransPharma, said, “We plan to initiate a Phase II study, bringing this product to an advanced clinical stage before seeking a partner to take it to market.” She has said the first product will reach the market by 2010.
Founded in 2000, the company has raised $34 million in three rounds led by Argonaut Private Equity, Biomedical Investments, Evergreen Partners, Pitango Venture Capital, Teva Pharmaceuticals, Vitalife Partners
TransPharma is still in early-phase testing. It will compete with Alza (Mountain View, California), a company acquired by Johnson & Johnson (New Brunswick, New Jersey) for $10.5 billion in a stock-swap deal.
Bikur Holim hospital bought by Gaydamak
The neck-and-neck horse race between Arcadi Gaydamak vs. Africa-Israel Investment Housing’s Lev Leviev ended in a photo finish when Gaydamak signed a contract to buy Jerusalem’s landmark Bikur HolimHospital, with a bid of $35 million. The hospital’s liquidator, Adv. Shlomo Shahar told the Knesset Finance Committee that contracts would be fully completed within the deadline set by Jerusalem District Court Judge Joseph Shapira.
Leviev offered $2 million more for the sought-after property in downtown Jerusalem, where some of the most famous cardiologists have made their names. But Globes, the Financial Times of Israel, reported that Gaydamak won the tender because he promised not only to renovate and reopen it, but also to leave all the original dedications on the buildings.