Red wine is the answer to the "French Paradox" - the fact that the French have a fatty, high-calorie, high-cholesterol diet, but low cholesterol levels compared to other nations, and suffer fewer heart attacks. Red wine helps prevent heart attacks, thanks to a number of substances found in red grapes.
The 'French Paradox" also has an Israeli angle - Zaki Rakib, a communications entrepreneur who first made headlines as founder of Terayon (which, at its peak, traded on the Nasdaq at a market cap of $8.6 billion and was eventually sold to Motorola for $140 million). Rakib tried his luck in publishing as well, and invested in the Israeli newspaper Ma’ariv for a short time. Later, he founded a mobile telephony company in Brazil with finance mogul George Soros. For the past decade, Rakib has been a founder, investor, and very active chairman of BioHarvest (formerly Fruitura), which produces a red-grape extract. These days, Rakib spends most of his time at the company, of which he holds 50%.
“Our product makes it possible to get all the benefits of a thousand grapes, the equivalent of two bottles of wine, in a single teaspoon, with no sugar, and no alcohol,” he explains.
A Volcani Center development
Rakib explains that when he left Terayon in 2004, he told himself that he had already left his mark on the communications field, and the time had come for a new direction. “I knew that I wanted to do something related to wellness, and I knew also that I wanted to find the answers in nature. This is a lab that has been operating for 5,000, or a few billion years, depending who you ask, to bring us the best products. Just as our bodies learned to consume water and not hydrogen and oxygen separately, the other healthful materials in nature have developed, and we have developed with them, so that the different parts have a synergy that provides us with the best effect.”
Rakib brought his relative and friend, former Bio-Technology General senior executive and Bio-Tech Capital Venture co-founder and managing partner Dr. Yochi Hagay, on board. Bio-Tech Capital Venture examined many investment opportunities in the field in Israel, and finally decided to invest in the current development, from the Volcani Center Agricultural Research Organization. The two have not invested in any other companies since, and have decided to focus on BioHarvest. Hagay became CEO, and Rakib the Chairman.
“The effects of resveratrol, one of the active ingredients found in grapes and in wine, have already been researched thoroughly and proven. The problem with consuming resveratrol from grapes or from wine is that a very large quantity is needed for it to be effective. On the other hand, food additives based on resveratrol alone do exist, both natural and synthetic. For example, SmithKline Beecham (now GlaxoSmithKline) bough a synthetic resveratrol product, with a slightly different composition, so it could be patented, for $700 million, and it is still in development.
“But we believe, and research shows, that there is a synergy between different parts of the plant, and therefore the effect of extract from a whole grape, which has more than a hundred active components that affect the heart, is much more successful than resveratrol extract alone. And we have shown that, through this synergy, we can reach similar effects with much lower doses of resveratrol, and our product isalso much tastier.”
Without a single vine leaf
BioHarvest is not based on grapes alone. The company has unique agricultural technology, some of which is kept secret. At this stage, the company grows grapes in the lab without even one whole grape, or grape leaf, to say nothing of soil. The company uses a form of hydroponic farming - where plants are grown in water alone, and all the raw materials the plant needs are added to the water, in order to gain full control of the process. But BioHarvest takes this a step further, and basically makes it possible for a single cell to multiply inside large bags. This is still a natural product, not a synthetic one, as each such cell contains everything that is in a regular cell in a real grape. Working in this manner creates increased uniformity, and also a shorter life cycle - three weeks for a grape instead of the year it takes using conventional agriculture.
These grapes are dehydrated to create a powder that is the current product, called Vinya. The product has been through a number of clinical trials, which make it possible for the company to make the three claims that appear on the package: This product promotes healthy blood circulation, supports blood pressure already within the normal range, and helps promote antioxidant activity, which supports healthy arteries. The combination of these three advantages is intended to help prevent heart disease.
Hagay: “In a clinical trial that we carried out at Ichilov Hospital, which was published in a scientific journal, we showed that in 50 people with blood pressure on the high-end of the normal range, the product reduced diastolic blood pressure, improved blood vessel function, and prevented lipid oxidation. In another trial, on athletes, we also saw a reduction in blood pressure.”
The product has been approved for marketing not as a drug, but as a food product that is “Generally Recognized as Safe” (GRAS). Despite the fact that it is not considered a drug, the moment the company prints claims regarding the health benefits of its product on its packaging, it must show clinical trials that support the claims, and receive US Food and Drug Administration (FDA) approval. Following a review of the clinical trials, the FDA approved the health claims for printing on the packages.
The product is being launched first in the US. The company’s business model will be based on online sales. Each monthly package of the product will be sold for $120 ($4/day), with a subscription plan. The company is preparing a social network campaign and a PR campaign in the US. Rakib - who has set most of his other business aside - will lead the marketing team in the US. At this stage, it won’t be possible to buy the product in Israel, as it is not approved for individual use, but only as a food supplement.
In the past, the company did consider developing the product as a dietary supplement. It even had a joint product with one of the major food companies. But the company ultimately decided that it is better to operate independently, at least for now.
“People who care about their health”
BioHarvest CFO and SVP Eli Mor explained: “Despite the fact that we succeeded in developing many products containing our extract - yogurt, chocolate, coffee, chewing gums - we eventually saw that developing a product for a food company is a long process, and, on the other hand, if you want to just launch a product with a food company, you have to build a production facility for very large quantities, and this is before you have any revenue. Also, when you’re manufacturing food for the public, the pricing has to be limited. We said, why not leverage our small size, and sell only to a sophisticated audience that really understands the benefits of our product. The product is not cheap, and it is intended for people who care about their health.”
The food additive market is extremely competitive and swamped. You have competitors who have extensive resources, that make the same health claims you do, even if they haven’t proven them.
Mor: “It’s true, but we believe that with time, consumers begin seeking products that are more grounded in science - particularly the sophisticated consumer whom we are targeting. The regulatory authorities today also demand more from companies that manufacture plant-based additives, and in some cases, take them out of the game. This development is causing the pharmaceutical companies, who for a long time tried to oppose this field, to begin to warm up to and become interested in it.”
Rakib: “The world of dietary supplements is called ‘expensive urine’ today, because many products are not even absorbed by the body and are just flushed out immediately in the urine. I believe that people are beginning to see the differences between the significant products and the junk.”
Rakib, Canada’s Greensway Fund, and other private investors have invested $18 million in the company so far. “All of our investors use our product regularly,” says Rakib, “They can’t go without it at this point. When their product is running out, they pick up the phone immediately. Hagay adds: “People really feel the difference, which is a rare thing for a dietary supplement that is intended for prevention.”
Mor: “In parallel to the launch, we are today in the process of raising $10 million from private sources, $5 million by the end of February. After the private placement, we will list our company and become a public company.”
Rakib sees a big future for the company. “I don’t want to sell it. I think it can be a significant company in Israel, and can make it possible to create extracts from any sort of food that has something healthy in it, such as olives or pomegranates. Right now, our goal is to create extracts with no calories, and in the future, maybe with calories, for a logistically simple method of marketing of nutrient-rich powder to third-world countries.”
Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2015
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