Two Israeli biomed companies, Medigus Ltd. (TASE:MDGS) and BioBlast Pharma Ltd.(Nasdaq:ORPN), have published prospectuses for secondary offerings. Medigus, which is developing a device for treating severe heartburn in place of surgery and other devices based on miniature cameras it has developed, has announced that it plans to raise up to $7.5 million in a round led by the Rodman and Renshaw investment bank.
Medigus's previous offerings were much smaller. The company raised $1.47 million in September at $1.14 per American Depositary Share (ADS) (an ADS follows the share of a company listed on the Tel Aviv Stock Exchange (TASE)) in a US public offering, and held a private placement in January at $0.67 per ADS.
The company's ADS is currently traded at $0.63, reflecting a market cap of only $7 million, following a 50% rise in its share price, probably due the company having received approval to begin a clinical trial in China and meetings with investors in advance of the offering. The company market cap has plummeted 70% over the past year.
In addition to its dwindling value, Medigus also suffers from cash flow problems. The company recently received a notice from Nasdaq saying that it must maintain a $1 price for its ADS (compared with $0.63 at present) in order to keep its Nasdaq listing. The company must meet this condition for 10 days within 180 days. The company made management changes in January in order to reduce its cash burn rate. The company's revenue in the first nine months of 2016 totaled $496,000, up 24% compared with the corresponding period in 2015. The company has $4 million in cash.
BioBlast has lost 90% of its value since its offering
BioBlast, which develops drugs for treating orphan diseases, has not yet published the amount it wants to raise, but it is limited by its $18.7 million market cap. Since the company's IPO in 2014, in which it raised $35 million at a company value of $156 million, the company share has lost 90% of its value.
BioBlast was founded by Dr. Dalia Megiddo and biomed investor Udi Gilboa, the same team that brought Alcobra Pharmaceuticals Ltd. (Nasdaq: ADHD) to the stock exchange, where its share price also declined dramatically following the company's IPO, following the failure of two clinical trials. BioBlast's clinical trial was not an extreme failure, but it appears that the market has gradually lost interest in the company and its business.
The company's leader is still executive chairman Fredric Price, a senior biotech figure previously known for his success in saving companies that have lost direction and raising substantial amounts of money for them. At last notice, however, he has not yet repeated this success at BioBlast.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 27, 2017
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