Medical device company Topspin Medical Inc. (TASE:TOPMD) said yesterday that it would begin human trials of the prototype of its urological device. The two-line notification to the TASE contained little in the way of specific details, but it would appear that this is a preliminary trial of a product that has been under development until now.
TopSpin has been struggling to stay afloat following its recent decision to abandon its flagship product after realizing it had failed both technologically and commercially. As a result, it was on the point of being dissolved by its bondholders, with whom it managed to reach a last minute settlement. This begs the question as to why the company chose to make its laconic announcement on day when the market was closed. It may be connected to the fact that trading in its share over the last ten days has been brisk and somewhat erratic. The share has soared 20-30% on each of the trading days from July 29 through August 4, on a volume which at its peak reached NIS 6.1 million, without any company announcements that would account for this.
On August 3, former TopSpin CEO Erez Golan sold shares in the company for a total of NIS 473,000, and CFO Eyal Kolka sold NIS 54,000 worth of shares. Kolka forewent most of his salary as part of the deal with the bondholders, in order to prevent the company's dissolution. TopSpin's share fell 32% after they sold their shares.
TopSpin may be worried that if it celebrates the launch of the clinical trial, suspicion might arise the announcement of the leak was the cause for the jump in the share price, and that Golan had insider knowledge.
This may not be the case, however, since there are other market players with an interest in boosting TopSpin's share price, such as bondholders, who are due to convert their bonds into shares in a few days. The conversion will likely create an overhang that will drag the share down, and some bondholders may want the drop to begin at a higher level.
TopSpin declined to comment on the report or provide additional information about the clinical trial, such as where it is taking place and how many patients will be included. The company says that it is keeping a low profile until the bondholders' arrangement is finalized and the company starts down a new road.
Published by Globes [online], Israel business news - www.globes-online.com - on August 11, 2008
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