TopSpin Medical is raising NIS 36.1 million in an IPO on the Tel Aviv Stock Exchange at a company value of NIS 126 million before money (NIS 162 million after money). The chief underwriters are Poalim IBI Underwriting and Investments (TASE: PIU), Altshuler Shaham, and Rosario Capital the same underwriters as in last week’s IPO of biotechnology company Kamada.
Kamada and TopSpin are completely different. Kamada is a long-standing company that markets generic drugs, and already has a stable base of sales and customers. TopSpin’s completely new technology is designed for a market that has no competition yet. The company has no sales, and has not yet obtained authorization to market its product.
In the IPO, scheduled for September 1, TopSpin will offer 38,000 packages of 1,000 shares with a nominal value of $0.001 each and 600 options with a dollar-linked strike price of NIS 1.10, exercisable until February 28, 2008. The price of a package is NIS 950. Investment institutions have already placed orders for 39% of the issue.
Parties at interest in the company, advisors, and shareholders, including Pitango Venture Capital, Giza Venture Capital, Johnson & Johnson Development Corporation, Israel Seed Partners, chairperson Michael Berman, Platinum Neurone Ventures, have undertaken to buy 34% of the issue. TopSpin Medical president and CEO Erez Golan, a physicist, will receive a NIS 523,000 bonus when the issue is completed.
TopSpin’s flagship product is an intra-vascular MRI (magnetic resonance imaging) catheter for the coronary arteries. It provides information about obstructions to blood flow that create a high risk of heart attack and stroke by detecting the chemical characteristics of tissue components.
The product is the first of an entire product line being developed by the company. All these products are based on technology for miniaturizing MRI systems. TopSpin aims to reduce these systems, which currently take up an entire room, to a size small enough to be inserted within the body. The company plans to expand current applications of MRI technology to diagnosing the composition of different tissue in the body, such as malignant tumors and imaging of peripheral arteries
In 2003, the company developed a prototype of its first product, and conducted clinical trials on patients in Europe in late 2004 in order to test the device’s safety. A Phase II clinical trial began in 2005, and the company also began developing a version of the device for commercial production.
The company’s success depends on obtaining US Food and Drug Administration (FDA) authorization and European Union authorization (CE Mark) to market its products. This will require at least two additional sets of clinical trials. These trials are slated for completion in late 2006, and the company believes that it will be able to begin marketing in early 2007, if authorization is obtained.
TopSpin is registered in Delaware, and its development center is in Lod. Golan founded the company in 1999, and it subsequently raised $20 million in two financing rounds from Pitango, Giza, Johnson & Johnson Development, Israel Seed, Platinum Neurone, Peregrine Ventures, and IIRF.
Following the IPO, TopSpin will have the following shareholders (undiluted): Golan 7.91%, Berman 0.1%, Johnson & Johnson Development 11.3%, Pitango 15.8%, Giza 12.4%, and Israel Seed 14.1%.
Two additional shareholders are former Minister for Economic Affairs at the Israel Embassy in Washington Pinchas Dror and former Israel Chemicals CEO and Ministry of Industry, Trade, and Labor director general Yoram Ziv. They were the first investors in the company, through DZ Israel Associates, which they jointly own.
TopSpin’s financial statements show a NIS 19.3 million operating loss in 2004, including NIS 12.2 million in R&D expenses.
Published by Globes [online] - www.globes.co.il - on August 29, 2005