Cardio-imaging start-up Arineta Ltd. is the current project of healthcare investor Yossi Morik. Arineta has developed the first specialized Computed Tomography (CT) imaging system for the heart.
Morik made a few million dollars when Boston Scientific Corporation (NYSE: BSX) acquired US-Israeli stent maker Advanced Stent Technologies Inc. (AST), which he co-founded, for $100 million, in milestone payments. He made a few million more in bond trading, and went on to found more medical devices companies.
More than five years have passed since AST was sold. Morik, who left the company after a dispute with the product's inventor and other company shareholders, went on to reinvent himself, as is his wont. He was an investor in Medcon Ltd., which McKesson Corporation (NYSE: MCK) acquired for $105 million. He also assisted in the establishment of Expanded Orthopedics Ltd.
Following his military service in the IDF, Morik moved to Chicago. He did not make his fortune in either high-tech or biomed. In 1982-2001, he got rich from trading in bond derivatives, but quit when he felt the market got too hot.
In 1998, Morik met a doctor who told him about AST's unique stent, which divides and can be positioned in blood vessels that branch off. Other investors included Dr. Efi Gildor, who made his fortune when he sold Arbitrade Holdings LLC to Knight Capital Group Inc. (Nasdaq: NITE) for $460 million. Gildor first learned about stents when he invested in Medinol Ltd., controlled by chairman and CTO Kobi Richter, and his wife, CEO Dr. Judith Richter.
With no experience in cardiology, Morik spotted AST's potential. He says that he sees the same potential at Arineta. The circumstances behind Arineta's establishment are interesting. Morik relates about a meeting he had with Dr. Peter Fitzgerald, a well-known cardiologist with ties to Israeli medical devices companies, and currently a partner in Israeli VC fund, TriVentures. Fitzgerald told Morik that high-powered cardiology imaging would be fantastic.
Morik said, "I asked him, 'If you were to build such a product, where would you build it, and who would you build it with?' He said, 'Only in Haifa, and only with Dr. Ehud Dafni'. I knew Dafni well, his brother was the driver of my tank in the Yom Kippur War. He was one of the inventors of Elscint's multi-slice CT scanner. So I met him and offered to bring him into the business, which was going to be huge."
Arineta is a cardio-imaging company in a field with only a few competitors, including Israeli start-up Rcadia Medical Imaging Inc. For his part, Morik claims, "The company is ready for an exit at more than $100 million."
Current cardio-imaging is carried out by huge CT or MRI scanners in the same way as imaging of other organs. The problem is that the heart beats to rapidly for regular CT images, and to compensate, it is necessary to increase the radiation using a virtual catheterization technique.
Arineta's product is a specialized CT scanner for the heart. It is small, cheap, and can achieve high levels of accuracy at low radiation. It is also fast; able to scan the heart in an eighth of a second.
Morik claims, "The device is so cheap and safe that it can be offered as a scan test."
Dafni is CEO of Arineta. Its president, Dr. Joseph Pepper, was CEO of OEC Medical Systems Ltd., before it was sold to GE Healthcare.
Industry sources said that the device could not be built, but Dafni has a response. "What does that mean, 'impossible?' We're veterans of Elscint; of course it's possible."
Arineta still has to prove itself, and it will need to raise a lot of capital en route. $2 million has been invested in the device to date, and $5-6 million more will be needed to build a prototype, and $18 million for testing. "18 months ago, we were due to obtain a $14 million investment from an Israeli venture capital fund, but the deal fell through because of the economic crisis," says Morik.
Arineta's potential partners are big medical imaging equipment makers, such as GE Healthcare, Royal Philips Electronics NV (NYSE: PHG; Euronext: PHIA), or Siemens AG (NYSE: SI; XETRA: SIE). "We're offering a device, which can first of all cut test costs. This is problematic for partners, but it will eventually grow the market," says Morik. "The market currently amounts to almost $10 billion. Later, the device might also be used for imaging during surgical procedures, such as high-risk catheterizations or valve replacements. The market will continue to grow."
Morik adds, "I don’t lack for money. I have a method for trading, which means that I don’t have to work for the rest of my life. I did great things in the army and in the stock market. Now I'm ready to do something great in cardiology. If we moved the company to Chicago, I believe that we'd raise money more quickly, but I want to establish the company in Israel."
Published by Globes [online], Israel business news - www.globes-online.com - on January 4, 2010
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