The plans of Israeli biopharmaceutical company Medgenics Ltd. (AIM:MEDG) for raising capital on the primary market are somewhat different from most Israeli biomed companies. Medgenics was the first, and so far the only, Israeli biomed company to hold an IPO on London’s Alternative Investment Market (AIM). It raised $6.6 million at ₤0.10 per share, and has ever since struggled with its cash burn rate, and nearly faced liquidity distress a year ago.
Medgenics develops protein-based biopump implants made from the patient's own tissue to produce and deliver the active protein steadily over a sustained period to treat the targeted disease.
Medgenics president and CEO Dr. Andrew Pearlman founded the company. Medgenics has 18 employees and had $1.4 million in cash at the end of June, which is why it is seeking to hold an offering.
Last week, Medgenics filed a draft prospectus with the US Securities and Exchange Commission (SEC) for an offering on the New York Stock Exchange. The company is seeking to raise $19 million, but did not disclose the proposed company value or the structure of the offering. Maxim Group and Roth Capital are the underwriters.
Medgenics' share price closed at ₤0.092 in London on Friday, giving a market cap of ₤14.7 million. Its current market cap is 8% less than its IPO value, but 68% above its low point six months ago.
Medgenics seems to be getting in over its head by trying to list on the NYSE, rather than on Nasdaq, like most of its Israeli peers. The company is still basically a start-up, and the primary market is currently flooded with companies like Medgenics that are trying to go public or become dual-listed.
Medgenics' attempt to list in New York is quite an ambition. Earlier this month, the company reported success in the Phase I/II clinical trial of its Epodure biopump product for the treatment of anemia. The company is scheduled to announce the results at the annual convention of the American Society of Nephrology later this week. Last week, the company received a $244,479 grant from the US Internal Revenue Service's Qualifying Therapeutic Discovery Project (QTDP) program. The company will use the grant to further the development of its core biopump technology.
Published by Globes [online], Israel business news - www.globes-online.com - on November 14, 2010
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