Medical Compression Systems, which is developing a device to replace drugs in the prevention of blood clots in orthopedic surgery, has announced that the negotiations it previously reported for commercializing its product through a third party achieved no results. The company is therefore in touch with a number of parties for its sale for a few million dollars. The company share jumped 14% today, pushing its market cap up to NIS 10.2 million. The main shareholders in Medical Compression are Accelmed, a company owned by Dr. Uri Geiger and Mori Arkin that invests in medical device companies (34%); Yelin Lapidot (16%), Pontifax (9%), Nissan Medical Industries Ltd. (TASE: NISA) (5.3%); and Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) (4.8%).
While the sale of the company at the price mentioned constitutes a premium on its current market cap, it comes as a great disappointment in comparison with the expectations of it and the values at which it was traded in the past. The company share lost 60% of its value in the past year alone, and 98% since March 2014, even taking today's rise into account.
Medical Compression developed and brought to market a device that successfully prevented surgical embolisms. A comprehensive clinical trial demonstrated that the product was superior to a drug and had no side effects. The company reached peak revenue of almost $10 million a year, and its product was installed at leading hospitals. Medical Compression has raised more than NIS 100 million since being listed on the stock exchange. The company's downfall resulted from a delay in obtaining insurance reimbursement for use of the product in hospitals.
Published by Globes [online], Israel business news - www.globes-online.com - on January 2, 2017
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