Biological drug development services company ProCognia (Israel) Ltd. (TASE:PRCG) is laying off staff and reassessing future operations. ProCognia held an IPO in 2007, and raised NIS 43 million at a company value of NIS 90 million, after cash. Today the company has a market cap of just NIS 5 million. The company’s share price has not reacted to the announcement yet.
Tzahi Sultan and Nir Peleg’s Solog Group holds 29% of the company. This has not been the best year for Sultan, whose main market activity is a partnership in Modiin Energy LP (TASE:MDIN.L), which slumped 50% due to drilling delays and failures in its target geological strata.
Solog acquired 30% of ProCognia outside the market in January, 2011. When that deal was announced, ProCognia’s stock rose 34% (a phenomenon dubbed “The Sultan Effect”), and within two weeks rose by 120%, to a market cap of NIS 24 million. It is possible that the market believed at the time that Sultan would bring other activities to ProCognia, but he decided to maintain the existing activities.
Since then ProCognia has undergone two strategic changes but revenue has not grown significantly. In the first nine months of 2013, the company reported NIS 3.1 million revenue, down 23% from the corresponding period of 2012. A plan to merge the company with another biomed operation failed. Now the company is considering its future.
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2014
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