InSightec Image Guided Treatment Ltd., a unit of Elbit Imaging Ltd. (Nasdaq: EMITF; TASE: EMIT) held through Elbit Medical Technologies Ltd. (TASE:EMTC), today closed a $31 million financing round, led by GE Healthcare, which invested $27.5 million. Elbit Medical and Medtech Advisors also participated in the round. Insightec, which develops non-invasive MRI guided focused ultrasound surgical devices, has raised $42 million so far this year from these three investors.
Elbit Medical said that it will report a substantial capital gain on the investment, which market sources estimate at hundreds of millions of shekels. Elbit Medical's stake in InSightec falls to 48%, following the closing of the financing, and consequently it will no longer have the right to appoint the majority of InSightec's directors and it will cease to consolidate InSightec's financials in its financial reports.
Elbit Medical or a third party agreed upon by GE Medical will have the right to buy all GE Medical's preferred shares in InSightec that were purchased for $22.5 million in cash by GE.
"Thanks to this investment by GE in InSightec, the two companies that Elbit Imaging holds - InSightec and Gamida Cell Ltd. - will need no new financing for the next three years," Elbit Imaging president and CEO Mordechay Zisser told "Globes". "The life sciences field was one of the main areas where Elbit Imaging bled cash, and that is now over."
Elbit Imaging has invested $175 million in InSightec and Gamida Cell. Elbit Medical will not need to raise capital either in the near future, although it filed a shelf prospectus for this purpose a few months.
"For the first time, this year InSightec became a real commercial company, selling products through GE's well-oiled global marketing network," said Zisser. "The company achieved double-digit growth in the first half of the year, compared with the corresponding half of last year (when it had $7.5 million revenue - G.W.), and we expect stronger growth in 2013. I believe that within three years, InSightec will be profitable."
As for Gamida Cell, which is developing a cancer treatment based on umbilical cord stem cell implants, StemEx, Zisser says, "I am almost certain that the company will obtain marketing approval in 2013."
The prediction belies the US Food and Drug Administration (FDA) decision to raise the threshold for comparing the clinical trial results of StemEx. Gamida Cell is collaborating with Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) on StemEx, but Teva will apparently not market it. "We have had calls from several companies interested in marketing the product, and Gamida Cell may market it independently," says Zisser. "I am proud of the honor to support these two ventures, but it comes with a price. We're constantly reporting losses, and the balance sheet is in poor shape. But everything will eventually work out."
Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2012
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