FlowSense is a newcomer to the Tel Aviv Stock Exchange, via a merger with stock-market shell Dorot.
Two months after the merger, the merged company is trade at a market cap of NIS 92 million. Last Wednesday, FlowSense (which is still traded under the name Dorot) filed a draft prospectus for raising further capital on the Tel Aviv Stock Exchange, after a NIS 4.2 million private placement as part of the merger with Dorot.
The main shareholders in the company are investment and consultancy company Trendlines (which owns the Misgav and Mofet B'Yehuda technology incubators), the Zitelman Group, Inc. (a veteran investor in Trendlines and in companies that graduate from its incubators), a private investor by the name of Shraga Karpfen, and Zeev Bronfeld (who invested because of his links with Trendlines).
FlowSense seeks to turn a base material into gold in its case, urine. Measuring urine output is of huge medical importance, but no-one likes coming into close contact with urine. FlowSense is trying to ensure that as few doctors and nurses as possible will have to handle urine as such, and it hopes at the same time to improve the situation of patients with kidney injuries, and to save money and manpower in hospitals.
"The product does not require US Food and Drug Administration approval, because it does not come into contact with the body," says FlowSense CEO Robert Bash. "It does not need to be recognized by the insurance companies, because it is intended for use in accident and emergency rooms and on intensive care wards, where the insurance refund is received by the hospital per patient, according to his or her injury or illness, and not as a refund for specific procedures."
The product is currently on sale in Israel, and has been installed beside 100 beds in several hospitals. The company shortly intends to storm the European market, and then gradually to enter the market most important to it, the US, at first through direct market, and later on through a distributor.
Urine flow is an indicator used in all intensive care departments. At present, measurement in manual: once an hour, a nurse takes the catheter bag and estimates the urine level according to the scale marks on the bag.
"Measuring this way has many limitations," says Bash. "It is not continuous, not accurate, and manual recording leaves a lot of scope for error. Many companies, several Israel ones among them, have tried to bring to market a product for automatic urine flow measurement, but have failed on the technological level. The only one that has succeeded is Bard, but its product is big and costly."
FlowSense's technology first of all turns the urine into drops of uniform size, and then counts them as they fall into the bag, by optical means. Trendlines chairman Todd Dollinger notes that FlowSense was founded on the basis of technology from Med Dynamics. "We intend for the company to grow, including through external growth," he says. The plan is apparently to acquire more technologies for marketing using the company as a platform.
Why did you merge with a stock market shell?
"We wanted access to capital, but we don’t need NIS 30 million, which is the minimum amount that can be raised in an offering in Tel Aviv," CFO Ronen Koyfman explains.
Bash has already been through several important cross roads in the Israeli biomed industry. He was a partner in the Nitzanim and Infinity funds, and later joined serial entrepreneur Asher Shmulewitz, now an investor in Topspin Medical Inc. (TASE:TOPMD), to develop a stent for treating cerebral aneurysms.
Bash went on to join a group of entrepreneurs who founded X-Technologies, which was sold to Guidant, and together with them founded YMed, in California, which developed a treatment for bifurcated arteries. Among the investors in YMed was the late Aharon Shaked, one of the owners of 888 Holding plc (LSE:888). The company was sold to Bard, now a FlowSense competitor, about a year ago, for $35 million, with potential for further milestone payments, after a much smaller sum was invested in it.
Published by Globes [online], Israel business news - www.globes-online.com - on October 17, 2010
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