In a presentation published by holding company Clal Biotechnology Industries Ltd. (TASE: CBI) at an investors conference, the company revealed that it was planning offerings for four of its portfolio companies: Gamida Cell and BioCancell Therapeutics Ltd. (TASE:BICL), which operate in Israel, and Luc and Neon, which operate out of Boston. The Israeli companies are expected to hold offerings in 2017, while the two US companies are slated to hold their offerings in 2018.
Other than Luc, which develops drugs for treating brain diseases, the companies are all developing cancer drugs. The Clal Biotechnology share was up 7% yesterday, following the publication of the presentation, and went back down 2% today, leaving the company with a NIS 443 market cap.
The four IPO candidates have all conducted financing rounds in recent months likely to indicate their value. Clal Biotechnology will probably attempt to obtain a substantial premium on the value of these companies if and when it takes them to the stock exchange. Luc, in which Clal Biotechnology has a 24% stake, has signed an agreement with Novartis allowing the latter to invest in Luc in the coming months at a $75 million company value. Neon, in which Clal Biotechnology has a 5% holding, recently raised $70 million at a company value of $125 million. BioCancell's market cap on the TASE is $30 million, and Clal Biotechnology's stake in the company is 27%. Clal Biotechnology bought Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) shares in Gamida Cell a month ago at a $120 million company value (the price was paid in Clal Biotechnology shares). Clal Biotechnology now owns 24% of Gamida Cell.
Adams and the Boston connections
Actually, the presentation reveals the "New Clal Biotechnology" under the management of CEO Ofer Gonen and president and CSO Dr. Julian Adams, who manages the company's business in the US. The new company is more focused on cancer and neurological diseases, and stresses its business in the US, in contrast to its previous incarnation, in which Clal Biotechnology invested exclusively in ventures in Israel. Adams told "Globes," "The innovation at Clal Biotechnology is stunning, and that's what led me to join. When the science is strong, it means that the future is very clear, but the question is how to get from the science to a product. As someone who previously developed a number of drugs that reached the market, I had to learn this for myself. I hope that I'll be a good bridge to the capital markets, because an unending amount of money has to be raised for these companies, both for obtaining approval for the drugs and for marketing."
"Globes": How will the new Clal Biotechnology be built?
Adams: "We'll do as much outsourcing as possible. That's not happening just at Clal Biotechnology; I'd also do it at a US company. I see no logic in a high overhead in addition to the expensive clinical trials. We'll look for investments everywhere, but we'll concentrate on Boston, because I have a lot of connections there, and on Israel, because here Clal Biotechnology has a lot of connections.
"We'll be both a leading shareholder and a minority shareholder. In companies that are alone in their fields, we'll try to be the biggest shareholder. In companies operating in sectors in which competition is intense, we don't want to be the biggest shareholder, because it's too risky. If you have something special, however, and you're sure of it, that's the place to take a chance."
What is the optimal amount of money for Clal Biotechnology?
"$1 billion, several billion dollars, so that we can make the best deals. This will happen if some of the companies are very successful. My models are funds like Third Rock Ventures, Atlas Ventures, and OrbiMed Advisors LLC. We'll focus on cancer, neurology, and cardiology if we see good opportunities."
Clal Biotechnology currently has NIS 177 million in cash, and has no intention of making an offering itself in the near future. Other significant companies in Clal Biotechnologies' pipeline include MediWound Ltd. (Nasdaq:MDWD), with a $140 million market cap, which is waiting for the results of its trial in the treatment of wounds, US company Vedantra Precision Immunity, and the Anatomy investment fund.
Published by Globes [online], Israel Business News - www.globes-online.com - on April 3, 2017
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