In recent years, Israeli life sciences start-ups have sought to raise capital from Japanese investors. Can-Fite BioPharma Ltd. (TASE:CFBI) and QBI Quark Biotech Inc. have both signed limited distribution contracts with Japanese pharmaceutical companies for cash down payments and additional investment on the basis of meeting milestones at fairly early stages.
It turns out that this is a two-way street. While Israeli companies have become aware of the Japanese market, some Japanese companies are discovering Israel as a source of financing in the life sciences. Japanese liposonal drug development start-up Oxygenix Co. Ltd. is seeking Israeli venture capital investment, and its representatives are visiting Israel to make capital investment and cooperation agreements. The company wants to raise $40 million.
“We believe in Israel’s venture capital industry, and in Israeli pharmaceutical companies,” says Oxygenix chairman and CEO Eugene S. Takagi. Takagi is considered a top figure in Japan’s venture capital and biomedical industries. “Israel is a very innovative country, but has a small market, and must therefore turn to the world. Israeli investors have excellent international ties, especially in the US. We’re interested in collaborating with Israeli companies, both funds and drug companies that are at a more advanced stage than ourselves, in order to obtain the assistance of these ties.”
Takagi notes that Japan has many sources of finance, and the wish to establish ties with Israeli funds and companies is not driven by a need for outside capital, but because of the Israelis’ strategic ties. Harel-Hertz Investment House Ltd., a boutique investment house with ties to the Japanese market, is arranging Oxygenix’s connections with Israeli companies.
Oxygenix is Takagi’s first independent venture. He is the scion of a family that owns a private drug development company and founded Japan’s first venture capital fund for the life sciences. Oxygenix was founded in 2002 on the basis of more than ten years of university research to develop a method for delivering oxygen to tissues.
The company’s liposome formulation technology can replace hemoglobin transfusions for the supply of oxygen. The product does not replace hemoglobin’s other functions, such as the delivery of nutrients to tissues and combating infections. The company's product is a human hemoglobin molecule (the component in the blood that circulates oxygen), wrapped in an envelope of lipids (fatty molecules). The product's main advantage is its resistance it can survive for two years at room temperature, as opposed to a blood sample which survives for six weeks only and must be refrigerated. Another advantage is that the size of this hemoglobin molecule accrual amounts to one third of the size of a blood cell, which means it can also pass through the blood brain barrier, thus improving the availability of oxygen to the brain, compared with that of a regular blood transfusion.
Several companies have already attempted to register hemoglobin-based products for use in oxygen circulation, although so far none of these companies have as yet received US Food and Drug Administration (FDA) approval. Oxygenix's product is still in the early stage, after successfully completing animal trials, including on large animals. The company has not filed any applications with the US Food and Drug Administration (FDA). It has received $35 million in financing for its activity to date.
"We would like the upcoming raising of finance to be our last before our IPO in 2008 or at the beginning of 2009," says Oxygenics adviser Koji Morihiro. He stresses that the current product is one of many that the company is capable of developing. "Hemoglobin is a molecule which is not easy at all to wrap in fatty envelope. If we managed to wrap it, we can wrap just about any substance that we wish to prevent from metabolizing in the body."
Published by Globes [online], Israel business news - www.globes.co.il - on April 12, 2007
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