Shareholer Teuza CEO Avi Kerbs hopes that the cutbacks will not affect activity in Israel.
Bioness Ltd. will greatly reduce its activity by the end of this year, states Teuza - A Fairchild Technology Venture Ltd. (TASE:TUZA), which owns 4.5% of the medical device company, in its financial report for the second quarter of 2011. Bioness has 137 employees in the US and 87 in Israel.
Teuza president and CEO Avi Kerbs hopes that the cutbacks will not affect activity in Israel. "Costs in Israel are not high, so we do not intend to greatly reduce operations. There is always a risk that a decision will be made to move operations to the Far East, but there are no such plans at the moment. We have a contract with the Office of the Chief Scientist," he told "Globes".
Bioness develops products that use electrical stimulation to help people suffering from stroke, multiple sclerosis, traumatic brain injury, cerebral palsy, and spinal cord injury to regain mobility.
Tueza has an option to sell its 1.5% of Bioness to MannKind Corporation (Nasdaq: MNKD) for $3.3 million, at a company value of $220 million. Kerbs said, "Such a sale seems logical in the current market climate, but we have time." Teuza has already sold 1.5% of Bioness at a company value of $200 million.
Bioness has had $20 million in annual turnover for several years, but it has not been able to exceed this amount, and its annual expenses have been $30 million. Mannkind, controlled by Alfred Mann has provided owner's loans to cover the expenses.
"Bioness urgently needs to improve management of its sales network," says Kerbs. "It also must obtain insurance indemnification for its products, which cost $6,000. The company believes that it can obtain indemnification through public relations, but the Americans want proof that the products save money in rehabilitation. We are now considering a clinical trial to prove this."
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011
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