Endoscopy device co Medigus files for TASE IPO

The company seeks to raise $10 million. Poalim IBI Underwriting and Investments will lead the issue.

Medigus Ltd., which has developed an endoscopic system for the treatment of Gastroesophageal Reflux Disease (GERD), has filed a draft prospectus for an IPO on the Tel Aviv Stock Exchange (TASE). The company plans to raise $10 million. Poalim IBI Underwriting and Investments Ltd. (TASE:PIU) will lead the issue

Medigus did not confirm that it had filed a prospectus, but said that it was examining a number of ways of raising money, one of which was an IPO.

Poalim IBI is apparently keeping its promise to continue leading issues for life science companies on the TASE. In December 2005, Poalim IBI CEO Eliav Bar-David promised to complete at least five issues during 2006. Two companies have already filed prospectuses in January: MCS Medical Compression Systems (DNB) Ltd., which makes a device for treating blood clots, and now Medigus.

Medigus was founded in 2000 by a group of researchers headed by CEO Dr. Elazer Sonnenschein, an electronics expert who previously held senior positions at Green Software House and Divecom Ultrasound Communication. Sonnenschein hired former income tax commissioner Yair Rabinovich as chairman. Rabinovich, one of the first investors in the company, organized a group of private investors, including Osem International shareholder and managing director Gad Propper and television emcee Nissim Mishal.

Medigus has raised several million dollars to date from Israel Healthcare Ventures Ltd., ProSeed Venture Capital Fund, Delta Ventures, Ofer Hi Tech Ltd., Biocom Fund, Dexxon, Johnson & Johnson Development Corp., and private investors. The company held its last financing round in 2003. “Globes” reported at the time that the company raised $4 million at a company value of $21 million, after money. However, Sonnenschein said yesterday that the round was smaller.

Medigus recently completed animal trials and filed protocols with the US Food and Drug Administration (FDA) for conducting human clinical trials. The company has received indications that the clinical trials will be under the abbreviated K510 track for medical devices. This means that if all goes well, the company’s endoscopic system will reach the market by the end of 2006.

“Globes”: Why are you considering an IPO at this stage?

Sonnenschein: “An IPO, if held, is intended to raise money, not to be an exit. We’re examining a number of alternatives for raising money for developing a marketing network for our first product, and for the development of additional products. At this time, we’re examining the significance of each alternative. A public company is more exposed to competitors, and stock exchange matters require administrative attention. The advantage over raising money from venture capital funds is that the valuation that can be obtained is usually closer to the real potential of the product. Funds understand the potential, but aren’t always prepared to pay.”

Published by Globes [online], Israel business news - www.globes.co.il - on January 26, 2006

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