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Israeli biomedical firms look back on a successful year on Wall Street. Are we bearing witness to “the new tech”? Will the net worth of these companies continue to climb in 2014? And how much clout does Israeli Biomed companies listed on the NASDAQ wield compared to foreign companies?
Shmuel Zysman, an attorney who founded and heads the major Tel Aviv law firm of Zysman, Aharoni, and Gayer, which has been responsible for overseeing many of the Israeli IPOs on NASDAQ, says: “These companies epitomize risk versus opportunity, but there is certainly a good chance that this is the next big thing.”
While hi-tech companies are still trying to position themselves favorably in the new global economy, that has taken root since the crisis of 2008, cleantech seems also to be the field of choice for investors lately. Judging by the large sums of fundraising on Wall Street, it seems that cleantech has been ahead of its time. Its tremendous success has now become a self-fulfilling prophecy.
Amidst the financial uncertainty worldwide, 2013 will be remembered as a strong year for Israeli biomed firms who listed on the NASDAQ. Kamada, Oramed, Alcobra, and Mazor Robotics are just some of the Israeli companies that have expanded globally and achieved success by taking advantage of the window of opportunity afforded them by the American capital market.
Altogether they raised nearly $300 million in capital last year. As of this writing, a number of companies are planning IPOs as well, among them Galmed, which is seeking $35 million; Bioblast, which is aiming for $38 million; and Mediwound, which is hoping to raise $75 million.
In American capital markets, biomed companies are referred to as “bio-tech.” Irrespective of the nomenclature, these companies are primarily involved with developing drugs that can diagnose illness or aid in agricultural production.
Judging by the number of IPOs listed successful on the NASDAQ by companies involved in the field over the course of 2013, it’s safe to say that biomed is the new “tech.”
Altogether there were nearly 50 IPOs by biomed companies in the US last year, which raised an aggregate total of $3 billion. With 2014 one third of the way through, there have already been 18 IPOs there which have raised an additional $1.2 billion. In the last year, the NASDAQ index measuring the performance of these companies has jumped by 77 percent, an impressive result compared to “just” 33 percent for the NASDAQ Composite.
“Last year was a very successful year for biomed companies listed on the NASDAQ, among them some well-known Israeli companies which we had the privilege of representing, ” said Oded Har-Even, a lawyer with ZAG/S&W in New York, which is a joint venture between the Boston based firm Sullivan & Worcester and Zysman, Aharoni, and Gayer. Har-Even is ZAG’s point man in New York, managing all of its activities there and he is a partner in the Tel Aviv firm as well.
“These companies continue to create value for investors, ” he said. “In my estimation, judging by the first quarter of 2014, this trend is likely to continue and receive a very positive boost in markets this coming year.”
As part of his duties at ZAG/S&W in New York, Har-Even has a first-hand look at the IPOs, whether representing the companies themselves or representing Aegis, one of the investment banks which has become a large player in the biomed IPO market there.
Among the companies that ZAG/S&W has assisted are Oramed, Alcobra, Mazor Robotics, SuperCom, and Micronet. The firm has handled many IPOs of Israeli and American companies in the U.S. capital market. In 2012, the firm also handled the fundraising efforts of Pluristem Therapeutics, enlisting $32 million. It also represented Aegis Capital Group, which served as Underwriter of Rosetta Genomics, a company whose IPO’d for $40 million.
Shmuel Zisman, the founder of ZAG/S&W, when asked to explain the continuing success of Israeli biomed firms listed on the NASDAQ said, “There’s tremendous productivity, extraordinary innovation, technological creativity, leadership and management structures that instituted a global vision from day one, ” he said of Israeli firms. “These are the ingredients for success that we have noticed among our clients.”
“This hasn’t changed, and we always discover a new dimension, ” he said. “We saw this in the hi-tech field, and today it’s biotech. There’s no reason to be surprised. There’s something very bold, innovative, and creative in the Israeli mind, and today Israeli biomed is what is happening when it comes to IPOs. There’s no doubt that we are seeing a wonderful year. The numbers are tremendous and they speak for themselves.”
“Compared to other foreign biomed companies, the Israeli companies come with a lower price tag, ” he said. “If an Israeli company and an American company offered the same product, the American brand would be much more expensive. That is why some of the speculative investors see Israeli firms as having far more potential because the upside is much bigger. Also, Israeli companies have a good reputation. The investors realize this, and they carefully consider every Israeli company that comes in.”
“The world of biotech needs a lot of money. The capital market in every country needs a tremendous amount of money in order to try and help. In the last 10 years, the amount of institutional money and funding from risk-management funds has dropped significantly. This is a worrying fact that should be a warning sign over the state of the market, and this could endanger scientific development.”
“The repercussions of this are global. So all of the critics who are complaining that the biomed companies are just rushing to get their shares traded on the stock exchange are expressing criticism that is unfounded, because the capital market is one of the few existing solutions today for these companies, enabling them to continue with research and development. It’s not a question of being an alternative. Today, it’s the only choice. As for stock markets, the best stock market is the NASDAQ. The market there is big, the big money is there, and if a company wants to succeed, that’s the place to do it.”