Moshe (Mori) Arkin, founder of Agis and deputy chairman of Perrigo Co. (Agis Industries) (Nasdaq:PRGO; TASE:PRGO) has made an investment that could make waves in the local biomedical market. Sources inform ''Globes'' that he has invested $15 million for a substantial stake in wound treatment start-up HealOr Ltd. The company raised $8 million in its second financing round just under a year ago from Pitango Venture Capital and a number of private investors, from which it previously raised $4 million, and a further $1.5 million from the Ministry of Industry, Trade and Labor.
Chronic wounds do not heal naturally over time and can even result in gangrene setting in, necessitating the amputation of the limb in question. Chronic wounds can develop as a result of diabetes, trauma or cardiovascular disease. The partial solutions now available have a market worth around $10 billion, despite the absence of an effective method for treating such wounds.
Among the Israeli companies active in this field in Israel are LifeWave Hi-Tech Medical Devices Ltd. (TASE:LIFE) and Polyheal Ltd., both of which are currently conducting clinical trials. Arkin had selection of quality companies to choose from, and he apparently believes that HeaOr's prospects look promising.
HealOr's drug is a combination of two ingredients, each of which plays a role at a different stage in the healing process. One facilitates rapid closure of the wound and the other helps reconstruct tissue aesthetically.
HealOr's founder, Dr. Tamar Tenenbaum, began work on the development of HealOr's drug while studying at university, and later received a grant from Johnson & Johnson Inc. (NYSE: JNJ) to adapt it for industrial use. HealOr carried out Phase I and Phase II clinical trials in July 2006, the results of which were promising. It is understood to be planning to file for US Food and Drug Administration (FDA) approval to begin more extensive trials during the current quarter. "The FDA has ruled that drugs for chronic wound are a priority for the market and will therefore approve them under an abbreviated procedure, like cancer drugs," Tenenbaum told "Globes."
HealOr was unknown when Pitango took a risk and invested in it almost on its own. The biomedical industry attaches considerable importance to the "handing over of the torch" model where investors with differing commitments take turns to lead the company through the various stages. However, in practice venture capital funds often have to support the company themselves for most of its life in the absence of any investors with adequate resources that could join the company once it commences clinical trials or has its first sales. While the technological risk may be diminished by the time the company reaches these stages, it still needs a sizable injection of finance and the uncertainty surrounding the possibility of regulatory approval remains high.
Arkin may be emerging as an investor who can take Israel's biomedical industry forward. Having made NIS 800 million in cash on the mega exit in Perrigo, he has plenty of spare cash for investments. He recently acquired 15% of breath diagnostic company Exalenz Bioscience Ltd. (TASE:EXEN), and became its chairman. He has also invested $15 million in life science hedge fund Sphera Fund GP Ltd., and has invested in Eli Hurvitz's healthcare investment fund, Pontifax Ltd. as well as investing directly in one of its portfolio companies CollPlant Ltd.. He is also believed to have made a minor investment in microRNA gene research company Rosetta Genomics Ltd. (Nasdaq:ROSG). These investments are apparently just the tip of the iceberg of Arkin's investments in the local and international biomed industry.
Published by Globes [online], Israel business news - www.globes-online.com - on September 9, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008