InsuLine Medical Ltd. (TASE: INSL), which is developing the InsuPatch and InsuPad for insulin pumps and insulin injections, respectively, announced on Monday that it plans to raise NIS 10 million in a rights issue at NIS 2.25 per share, an 8% discount on yesterday's opening price. Insuline's share price rose 1.4% by early afternoon today to NIS 2.47, giving a market cap of NIS 235 million, after falling 0.3% yesterday.
Insuline's major shareholders have said that they will participate in the issue in full. Israel's Pontifax and Wanaka Capital Partners of the US, as well as private investor Ehud Gilboa, which together own 31% of the company will at a minimum exercise their full rights.
"The company had NIS 5 million in cash at the end of September 2013. We're growing and we intend to expand beyond our first market where we recently began operating, the German market. We need capital for both production and the marketing of our products in this and other markets," Insuline president and CEO Ron Nagar told "Globes". "We also have an open credit line with Yorkville Capital, which we've already used twice, but we now realize that it would be better to raise a large amount of capital from our current shareholders."
"Globes": You've previously said that you probably would not have to hold another substantial offering after the start of sales.
Nagar: "We said things along those lines before we signed the distribution agreement with Johnson & Johnson German subsidiary, LifeScan, which distributes our products. Following this distribution agreement, our needs in terms of production and marketing have grown, which is why we're holding the issue."
What's the current status of your InsuPad product in Germany?
"The product is marketed at pharmacies, and can be bought out of pocket or through indemnification from Barmer GEK Health Insurance, with which we have an agreement. Other insurers are already indemnifying their customers for the product. We hope that we'll soon be registered in Germany's catalogue of medical products, which means that all insurers will have to indemnify their customers for use of the product."
Your financial reports state that if you're not registered in the catalogue by the end of January, LifeScan has the right to cancel the agreement with you.
"Correct. If we're not registered by January, they have the right to decide by March to cancel the agreement, but they definitely are not required to do so. Registration in the catalogue in the advanced stage; it's mostly a matter of bureaucracy. We feel that we've done everything necessary to be registered, we've met all the requirements by the decision-makers for this matter, and the fact that we're supported by Johnson & Johnson and by Barmer, highly respected local parties, should help us. Approval usually comes within six weeks to six months, and we're close to the six-month limit, but it should be remembered that we're talking about an innovative product."
What's the condition of your sales in Germany?
"We'll soon receive an update about the sales from LifeScan and then we'll make our first announcement, because it will be possible to see whether we've met our targets. Afterwards, I believe that we'll make one announcement per quarter."
Published by Globes [online], Israel business news - www.globes-online.com - on January 7, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014