Israeli medical devices company Exalenz Bioscience Ltd. (TASE:EXEN) has begun talks with US underwriters about a Nasdaq IPO.
Based in Modi'in, Exalenz is a biotechnology company that develops and manufactures non-invasive diagnostic medical devices for gastrointestinal and liver conditions. The company has a market cap of NIS 181 million ($50.3 million). Israeli medical device and biotech investor Mori Arkin who has a 77% stake in Exalenz said he hopes to achieve a value "like other companies in the field," that is to say $200-300 million.
Arkin said, "The TASE doesn't credit the company with the true value that we believe it is worth. So we've published a forward looking forecast that we hope is persuasive. If the price stays low, we will consider an offer to purchase in order to make the company private before the offering, so that the price in Tel Aviv won't weigh us down."
Exalenz Bioscience has developed a diagnostic medical device for Helicobacter pylori, bacteria usually found in the stomach that can lead to ulcers and even stomach cancer. The company was established in 2006 as a spin off from Dr. Uri Geiger's Oridion. He continues to serve as the company's chairman.
Since 2007, when Arkin invested in the company, Exalenz's market cap has not risen, while revenue has remained at just several million shekels per year. From time to time, the company has suffered a lack of cash and Arkin has been keeping Exalenz afloat by investing about NIS 100 million to date.
In the past few months, there have been several breakthrough events. Revenue is expected to double between 2017 and 2018 and by 2019 annual revenue from the H pylori product alone should be over $25 million. The company should have a cash flow from operations by 2018. This will be major financial progress. In the current quarter gross profit is almost $1 million with a net loss of $1.6 million.
Arkin said, "I continued investing in the company over the years even though it was not growing because the US represents an anomaly. Worldwide the inaccurate blood tests for this H. pylori bacteria have been replaced by an inhalation device, which is much more suitable for monitoring this illness. Finally, it is happening in the US. Insurers have stopped paying for blood tests and have withdrawn them from doctors' guidance instructions. The market is finally paying for inhalation tests and we are ready with the best device in the field. The doctors association in this field has also issued a decision that patients complaining of chronic stomach aches must undergo this test after they have understood the role of the bacteria in the development of cancer."
The US H pylori inhalation diagnostics market is currently worth several hundred million dollars annually and is controlled by Quest Diagnostics, the second largest diagnostics company in the US. Arkin believes that Exalenz can become the leader in this field.
Exalenz is also developing a diagnostic product for fatty liver, which will soon undergo Phase III trials funded by a major pharmaceutical firm.
Arkin said, "This product isn't even priced at all in our products pipeline but it is a significant dream. As soon as we have a product on the market for NASH (Non-Alcoholic Fatty Liver Disease) we will need to monitor the influence of the drug on every patient."
Arkin hopes that this drug will be on the market a little after 2020.
Published by Globes [online], Israel business news - www.globes-online.com - on August 13, 2017
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