Can-Fite BioPharma Ltd. (TASE:CFBI) is joining the list of Israeli biomed companies merging with stock market shells on Wall Street. Can-Fite is following in the footsteps of InspireMD Ltd. (Bulletin Board: NPSR) and Trendlines International Ltd. portfolio company Immunovative Therapies Ltd., which has an memorandum of understanding for a reverse merger of its US unit Immunovative Clinical Research Inc with Novo Energies Corp. (Bulletin Board: NVNC).
For the purpose of the reverse merger, Can-Fite will spin off its ophthalmology business, which will be acquired by Denali Concrete Management Inc. (Bulletin Board: DCMG), a stock market shell with a market cap of $2.8 million. Can-Fite will become the controlling shareholder in Denali, which will raise an additional $5 million in an offering.
Can-Fite's ophthalmology activity is based on one molecule - CF101 - which is undergoing three clinical trials: a Phase III trial for dry-eye syndrome, a Phase II trial for glaucoma, and it is about to begin a Phase II trial for uveitis. CF101, an anti-inflammatory treatment, is also undergoing trials for psoriasis and rheumatoid arthritis.
Can-Fite CEO Pnina Fishman told "Globes", "Ophthalmology investors are very focused. We believe that we'll get a higher value on US markets for products in advanced clinical trials."
Fishman added that the secondary offering planned by Denali will be sufficient to finance the clinical trial for dry-eye syndrome and to move forward on the other two trials. "Under US Food and Drug Administration (FDA) protocols, we only have to recruit 500 patients for the dry-eye syndrome trial," she said.
Can-Fite will continue to own CF101 for the treatment of psoriasis, which is undergoing a Phase IIb clinical trial, and for the treatment of rheumatoid arthritis, which is undergoing a Phase IIa clinical trial, as well as CF102 for the treatment of liver cancer and hepatitis C.
In the past, Israeli companies that carried out reverse mergers with Bulletin Board shells failed to grab the attention of investors, create value, or reach substantial trading volumes in the share. Exceptions are Protalix Biotherapeutics Inc. (AMEX:PLX; TASE: PLX) and Prolor Biotech Inc. (AMEX: PBTH; TASE: PBTH), both of which were backed by Philip Frost, now the chairman of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), as well as Pluristem Therapeutics Ltd. (Nasdaq:PSTI; DAX: PJT: PLTR).
Can-Fite believes that the planned offering will create value for investors and boost the company's exposure. A $5 million offering will be enough to apply for a listing on Nasdaq, where the company will be able to hold larger offerings, possibly after receiving the results of the clinical trials or after signing a commercialization agreement for CF101 for dry-eye syndrome.
Can-Fite's share price rose 1.1% by mid-afternoon to NIS 0.725, giving a market cap of NIS 167 million.
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2011
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