Medical Device Daily Contributing Writer
ZICHRON YAAKOV, Israel – The Israeli stock exchange has been abuzz with medical technologies of late.
ProSeed Venture Capital Fund (ProSeed), which isspecializing in early-stage medical technology, completed its first financing round on the Tel Aviv Stock Exchange (TASE) on Feb. 27, raising its target NIS 8 million. In the end, the demand topped NIS 9 million.
Founded in 1999, ProSeed filed the prospectus to raise the funds in shares and bonds. The issue was led by a consortium of underwriters headed by Clal Finance Underwriting and Rosario Capital, Altshuler Shaham Management Underwriters & Investments, and Excellence Nessua Underwriting.
More than half of the 13 start-ups in ProSeed's current portfolio are in medical devices and since May 2003 the venture firm also has had a 21% holding in the Technion Entrepreneurial Incubator (TEIC; Haifa), along with three other major venture capital funds – Vertex Venture Capital Israel, Shalom Equity Fund and Vitalife – and with the Technion Research and Development Foundation (TRDF), the technology transfer organization of the founding Technion-Israel Institute of Technology .
CEO Eran Davidson said, “We intend to continue operating the incubator in its current format. It will be managed as a venture capital fund with the aim of bringing to market the best entrepreneurs and managers. The partners in managing the incubator – Vertex Venture Capital Israel, ProSeed, Shalom Equity Fund, Vitalife and an international company – will make seed investments in the framework of the incubator and will found new companies.“
He added that he believes the seed investments made at the moment “are the best ever, since the industry has accumulated knowledge and experience which is now being leveraged.“
The device companies include MediGus (Omer, Israel), which has developed an endoscopy system for treating gastroesophageal reflux disease (GERD) and also recently filed a prospectus for an IPO on the Tel Aviv exchange; TK Signal , which is developing radioactive molecules for diagnosing and treating cancer; Mazor Surgical Devices (formerly Mazor Robotics ), which is marketing its miniature robotic guidance systems for spinal procedures; and F.D. Cardio has invented a unique technology platform to enable facilitated catheter maneuverability by surgeons in interventional cardiology, interventional neurology to treat currently unreachable blood vessel lesions/sites.
ProSeed has not completed an exit to date, but Medigus may be its first.
After raising NIS 57 million in a private placement in 2000 ProSeed has posted operating losses in the past three years. It made a net profit of NIS 513,000 in the first nine months of 2005, mostly from financing revenue.
ProSeed's principal shareholders are Landlan Investments (wholly owned by the Landau and Rotlevy families); Gmul Investment; Candel & Partners, aFinno, which is controlled by Alan Green, and Goren Capital Group, which is controlled by Shmuel Gortler.
Medigus readies its IPO
While Proseed raised NIS 8 million, its portfolio company, Medigus, filed for an IPO on the Tel Aviv exchange, hoping to raise NIS 32 million in shares and options (slightly less than the $8 million to $10 million the company had cited in its draft prospectus).
The public issue will be held today, while the institutional tender already drew commitments to acquire 80% of the stock and options to be issued.
The issue also is underwritten by Poalim IBI Underwriting and Investments, and by Altshuler Shaham Management Underwriters, Menorah Underwriting and Rosario Capital.
Medigus was founded in 2000 by CEO Elazar Sonnenschein, an award-winning engineer, with chairman Yair Rabinowitch, former income tax commissioner, also an investor. Other investors include Osem International Managing Director Gad Propper and television journalist Nissim Mishal. The company has raised $5.7 million in investment to date at a company valuation of $16.7 million, from venture capital firms Israel Healthcare Ventures, Biocom Fund, ProSeed, Johnson & Johnson Development Corp., pharmaceutical company Dexxon (formerly Perio Products ; Jerusalem, Israel) and Ofer Brothers.
BioView gets FDA approval, launches IPO
Earlier this year, BioView (Rehovot, Israel), which has an automated diagnostic system for cancerous cells in blood and urine samples, filed an IPO on the Tel Aviv Stock Exchange. Co-founded in 2000 by President and CEO Opher Shapira and vice president of product development Yuval Harari, the company had raised $6 million in venture capital mainly from Orbotech Ventures, Marathon Venture Capital Fund, and Gilbridge Holdings.
With FDA approval for the system in September 2003, Bioview sold several million dollars worth of its diagnostic system, which includes a photomicroscope equipped with an automated scanner to examine the sample, identify and mark cells whose cancerous cells. Automation is more efficient and accurate, as well as cost effective, by reducing human technicians as well as human error.
MCS suspends planned IPO
Some companies rush into an IPO to raise funds, but later regret the loss of control and the bureaucracy that comes with becoming a public company. Medical Com-pression Systems (MCS; Or Akiva, Israel)Chairman Hezi Nissan told Medical Device Daily that MCS suspended a planned IPO on the Tel Aviv Stock Exchange. He said that he agreed with CEO Adi Dagan about concentrating on fulfilling a new major contract with a high-profile hospital in the U.S. that meant installing devices that would generate several hundreds of thousands of dollars in one year.
MCS manufactures families of non-invasive devices that provide “previously unmet blood circulation solutions.“
Nissan, who owns a controlling 47% share in the company, said that he realized that it was more important to fulfill the contract at hand rather than rush into an IPO. “Our uniquely crafted devices are our best advertising,“ he said.
MCS had filed a draft prospectus for the issue, with Poalim IBI Underwriting and Investments and Apex Underwriting Ltd. as underwriters, but not with the TASE. Since the beginning of 2005, MCS is the second medical technology company that already had FDA regulatory approval and initial sales before it filed on the Tel Aviv exchange.
“We are looking at changing the landscape of the multi-billion-dollar vascular, cardiac and orthopedic arenas with our Compression Therapy platform technology,“ Dagan told MDD. He founded the company in 1997 with Chief Technology Officer Jacob Barak.
Dagan referred to the company's products as “the world's first palm-sized, wearable pneumatic compression therapy systems to reduce the risk of deep vein thrombosis in patients after surgery.“ The systems include a miniature smart pump and inflatable sleeves worn on the patient's legs that allow controlled pressure to be applied, considerably increasing compliance on a 24/7 basis.
MCS has raised $5 million in prior financing rounds, most of which were provided by Nissan Medical Industries (Tel Aviv), a publicly traded Israeli company founded in 1984 that specializes in surgical dressings.
Dagan added, “This American contract changes our positioning in the market and we want to carefully decide on our next moves. There is no loss connected with the postponement of the IPO.“