InsuLine Medical Ltd. (TASE: INSL), which has developed a device that expedites the absorption of insulin in diabetes patients, has raised NIS 5.6 million from the Pontifax fund. The investment is at a price of NIS 0.55 per share, representing a discount of 13% on this morning's opening market price. For each 4.5 shares allocated to Pontifax, it has also received an option at an exercise price of NIS 0.74. After the allocation, Pontifax will hold 13% of InsuLine.
InsuLine's share price rose 3% today, to give the company a market cap of NIS 46 million. Yesterday, the share price rose 8%.
InsuLine, which is headed by Ron Nagar, has a product that improves the absorption of insulin administered through a pump (InsuPatch), and a similar product for improving the absorption of insulin injected by needle (InsuPad). The insulin pump market is smaller than the injection market, and is mainly concentrated in the US.
The shares bought by Pontifax will be locked up for two years. "It's rare that a private placement is locked up for two years. The lock-up period is generally about six months," says Dr. Zeev Zack, a partner in Rosario Capital, which took part in InsuLine's IPO in 2010, and led a recent rights issue by the company.
InsuLine is currently conducting a trial for registration of its InsuPatch product with the US Food and Drug Administration (FDA). The trial is expected to end shortly.
The company has approval for selling its products in Europe, and it is negotiating insurance cover for sales of InsuPad there. It also has an agreement with a German insurer, Barmer, under which the product will be given cover subject to its meeting marketing trial targets. The company hopes to conclude the trial within eight months. Roche, which partners Pontifax in investments in Israel, carried out a trial for the InsuPatch product in 2009. The trial was successful, but did not lead to an agreement, but the two companies have maintained contact. It is probable that Pontifax made its investment after consulting Roche about the trial results.
Since InsuLine was floated in August 2010, its share price has fallen 18%. It was ready for sales in Germany at the time of the flotation, but has not in fact made sales. Sources familiar with the company said that it preferred to build a base of insurance cover before starting to sell.
Published by Globes [online], Israel business news - www.globes-online.com - on April 30, 2012
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