Biomed investment company Clal Biotechnology Industries Ltd. (TASE: CBI) today announced the appointment of Ofer Gonen, who has been acting CEO of the company for the past year, as permanent CEO. Clal Biotechnology also announced the acquisition of Ataxion Therapeutics, which has developed a new technology for treatment of ataxia, a movement disorder caused by brain damage, by Luc Therapeutics, Clal Biotechnology's portfolio company. Both Luc and Ataxion are US companies.
This is Clal Biotechnology's second announcement in the past two days, after yesterday's announcement that it was increasing its holding in Gamida Cell at Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) expense, and that Teva was increasing its investment in Clal Biotechnology itself. The Clal Biotechnology share price has climbed 21% this year, pushing the company's market cap up to NIS 408 million.
Luc Therapeutics operates in the brain science sector, and Clal Biotechnology will own a 20-24% stake in the company following the deal, depending on conditions relating to the date on which the deal is closed. Ataxion's activity will be merged into Luc, including the product for treatment of ataxia and a team from the company, among them scientific and business development personnel.
Venture capital fund Atlas Venture, which led the merger, is currently a shareholder in both Luc and Ataxion. Atlas and other investors will invest an estimated $10 million, some of which will be paid to Ataxion's existing shareholders (who will receive cash and Luc shares), and some of which will be invested in Luc. Other shareholders in Luc include Novartis, which has an agreement with the company to develop a product for treatment of depression, and European company Siniona, which specializes in the brain.
Ofer Gonen appointed permanent CEO of Clal Biotechnology
Clal Biotechnology said that Luc operates in brain science, one of the hottest biomedical segments. In contrast to cancer treatment, there have been no important breakthroughs in brain science in recent years, and the segment is therefore a little less competitive (although it is more scientifically risky). In the belief that the offerings market is likely to develop in the next two years, Luc wanted to bring another company into it for the purpose of creating a flow of announcements appropriate for a company considering a public offering.
Luc has an agreement with Novartis, including milestones up to a total of over $300 million. The company today announced that one of these milestones is likely to be fulfilled by the third quarter of this year, yielding the company an estimated $10 million or more. If and when Novartis makes this investment, it will give Luc a $75 million company value.
Gonen, who has been acting CEO of Clal Biotechnology since November 2015, is now being appointed permanently to the job. The company consolidated its US business during this period, beginning with the merger into itself of companies formerly owned by Len Blavatnik, who indirectly controls Clal Biotechnology. Clal Biotechnology continued the expansion of these companies, and is examining other companies in the Boston area. Clal Biotechnology also hired senior US biotech industry figure Dr. Julian Adams to manage its business in Boston. Clal Biotechnology's portfolio companies also raised $130 million during this period (including a $10 million investment by Clal Biotechnology itself), and $40 millon more raised with non-diluting financing through business partnerships.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 7, 2017
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