Protalix Biotherapeutics Inc. (AMEX:PLX) has raised $50 million at a company value of $328 million in an offering of ten million shares at $5 per share. The offering is a major disappointment to anyone who has monitored the company in recent months because the company’s market cap prior to the offering was seven times this amount.
Investors knew that Protalix would not hold the offering at a value of $3.7 billion, but they had hoped for a value of between $800 million and $1 billion. In the end, the company could not even meet the lowered expectations of $500 million value.
Protalix was able to issue twice the number of shares originally planned, and has given the underwriters a green shoe option on 1.5 million more shares. Even though there was heavy demand for the share, the price was far below expectations. Shareholders planning an offer for sale alongside the offering will probably forego the idea for now; Biocell Ltd. (TASE: BCEL), which owns 22% of the company, made no mention of an offer for sale in its notice to the TASE today.
Most of Protalix’s original shareholders have made handsome profits on their investments, although most of their shares are still vested. Philip Frost, who invested in the company at a value of $110 million, is making a three-fold paper profit on his $17 million investment. Pontifax Fund, which owned 4.6% of Protalix before the offering, Biocell, Marathon Venture Capital Fund (TASE: MARA) (a 10% holding in the company), and Technorov Holdings Ltd., with 9.4%, will make a ten-fold return on most of their holdings.
Protalix president and CEO David Aviezer, with a holding of 1.7%; Yosef Shaltiel, with 4.8%; chairman Eli Hurvitz, with 8.8%; and founder Zeev Bronfeld, with 22%, can also be pleased today.
Nevertheless, a study of the market dynamics that preceded Protalix’s offering, shows that the market believes that $328 million is fair value for a company in Protalix’s condition. The company has a biosimilar product, which is undergoing Phase III clinical trials, intended for a niche market where there is already one competitor. The company also has a good platform for the development of more drugs, and management with a proven track record.
In the face of disappointment, the offering is still the largest exit by a biomedical company this year, and a fine achievement for the company from Kiryat Shmona that invented pioneering technology and survived all of northern Israel’s economic crises of the past decade and even a katyusha strike on its laboratory.
Published by Globes [online], Israel business news - www.globes.co.il - on October 25, 2007
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