Kadimastem (TASE: KDST), which is developing a stem cell-based treatment for ALS (amyotrophic lateral sclerosis), fell 28% in one day last week following the announcement of an investment of NIS 5.3 million in the company by a controlling shareholder, Julien Ruggieri, who holds a 25% stake. The investment is in the form of a loan convertible to stock. The company said that the loan would be converted in the framework of a rights issue that it will shortly make at NIS 0.50 per share, aimed at raising NIS 23 million. Kadimastem's share price has fallen 60% in the past month and by 90% this year to date. The share price is also down 90% on the IPO price in 2013. The company's market cap currently stands at NIS 15 million.
Two further conditions that attach to the loan are that the exercise price of options held by the controlling shareholder on 7.6% of Kadimastem's stock will be cut to NIS 1.5, which is currently a long way out of the money, although only a few weeks ago the share price was above this level; and if Kadimastem's shares are listed on a foreign exchange, the controlling shareholder's shares will have priority for listing.
In July this year, Eynat Tsafrir, an independent director of Kadimastem, resigned, claiming that the company was in financial difficulties but was refusing to recognize the situation. The company said that it was not in difficulties, and that the controlling shareholders would underwrite its activity.
Among the controlling shareholders in Kadimastem are its CEO Yossi Ben-Yossef; its chief scientist Prof. Michel Revel; Avi Meizler; and Altshuler Shaham.
Published by Globes [online], Israel business news - www.globes-online.com - on November 13, 2017
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