D Medical Industries Ltd. (Nasdaq: DMED); TASE:DMDC) will sell its entire 57.5% stake in stock market shell NextGen Biomed Ltd. (TASE: NXGN), which it acquired in late 2010 in order to merge it with D Medical subsidiary Sindolor Ltd.
Yesterday, NextGen announced that Sindolor, its main holding that is developing a reduced pain drug delivery system, had reached the end of the road. D Medical had wanted to invest in the company together with its minority shareholders, who balked at the prospect and decided to close the company. An analysis of the intravenous drug delivery market found that the company's technology was only relevant in places where it could charge a premium for reduced pain.
The company sought two ways to market its product in order to charge this premium: collaboration with pharmaceutical companies in order to give its products an edge, which never materialized; and direct marketing to consumers, for which NextGen realized that it lacked the necessary resources.
D Medical aquired NextGen and merged it with Sindolor in order to focus on its diabetes treatments and devices companies. D Medical planned for NextGen to acquire other activities that were synergetic with Sindolor's business, at which point it would gradually divest NextGen.
In November 2010, there was a plan for NextGen to acquire to nutritional medical companies founded by Dr. Asher Shmulovich, but the plan never materialized and he will apparently merge them with stock market shell Topspin Medical Inc. (TASE:TOPMD).
D Medical's controlling shareholders, Zeev Bronfeld and Meni Mor, have stakes in a range of public biomed companies, including Biocell Ltd. (TASE: BCEL) shareholder Protalix Biotherapeutics Inc. (AMEX:PLX; TASE: PLX), Biomedix Incubator Ltd. (TASE:BMDX), and DNA Biomedical Solutions Ltd. (TASE: DNA). They clearly do not need another stock market shell.
D Medical's share price fell 0.3% at the opening on Nasdaq to $3.81, giving a market cap of $29 million and fell 3.9% on the TASE to NIS 13.45. NextGen's share price rose 6.7% to NIS 0.064, giving a market cap of NIS 11 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2011
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