Bioness Inc., controlled by Alfred E. Mann, yesterday acquired NESS-Neuromuscular Electrical Stimulation Systems Ltd. at a value of $75 million in cash and stock. Mann holds 21% of Teuza - A Fairchild Technology Venture Ltd. (TASE:TUZA), which in turn holds 40% of NESS, so the deal is an internal game to a certain degree. NESS's other shareholders are Johnson and Johnson Development Corporation, GlenRock Israel, Life Science Partners, Dow Corporate Venture Capital, ABN Amro Capital, Israel-United States Binational Industrial Research and Development Foundation (BIRD-F), and BG Technologies and Applications (the technology transfer company of Ben Gurion University of the Negev).
NESS's shareholders will receive $28 million in cash, and shares worth $47 million, 30% of the consolidated company. Bioness will now comprise NESS's activity, which will generate $12 million in revenue this year; wireless chips for transmitting communications between various internal organs, which are being developed by another Mann group company and which have begun preliminary clinical trials; and other activity in pain control through electrical appliances, which Mann undertook to incorporate in the company. He also undertook to invest a further $40 million in NESS.
NESS has always been an ambitious project. The company's product, NESS L300, stimulates nerves in paralyzed feet in a manner that imitates the stimulus that should have come from the brain. The device has been approved by the US Food and Drug Administration (FDA), but the size of the market for the product will depend entirely on coverage from health insurers.
Teuza was founded in 1991 as a publicly-traded venture capital fund, and it currently has a market cap of NIS 130 million. This is the fund's most impressive exit in recent years. In 2000 it was a partner in the sale of WaveAccess to Lucent for $60 million, and the flotation of Nova Measuring Instruments Ltd. (Nasdaq:NVMI; TASE:NVMI) at what now seems a fantastic $300 million value.
Published by Globes [online], Israel business news - www.globes.co.il - on June 18, 2007
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