Drug development company Kamada Ltd. (TASE: KMDA), which produces and sells a treatment in the US for congenital emphysema, and which is considered one of the most stable and successful biomed companies on the Tel Aviv Stock Exchange, is planning an offering on Nasdaq, "Globes" has learned.
Underwriters have not yet been chosen, and the financial terms of the offering have still not been set. The company was supposed to select underwriters this week, but the round of meetings has been held up because of Hurricane Sandy which has struck the east coast of the US. It appears that the company will seek to raise a sum in the tens of millions of dollars.
Kamada, which as far as is known has aroused great interest on the part of Wall Street investment banks, has a market cap on the Tel Aviv Stock Exchange of NIS 823 million ($211 million), which would appear to be a reasonable starting point for pricing its offering overseas.
The main shareholders in Kamada are Ralph Hahn (16.7%) and Leon Recanati (12%), who have been associated with the company since it was founded in 1991. Together with CEO David Tsur, the two led the switch by Kamada from a company producing proteins mainly sold in the Third World, to a company with value added products sold in the tens of millions of dollars in the developed world. Other shareholders are The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) (6%), Excellence Investments Ltd. (TASE: EXCE) (4.3%), and Clal (4.7%). Tsur owns 2.7%.
In order to finance this switch, Kamada held an IPO in Tel Aviv in 2005, in fact starting a wave of biomed IPOs, and this sector now numbers about 50 companies. Since its IPO, Kamada has yielded a multi-fold return to its investors.
According to figures from investment bank BMO, eight offerings by drug and biotech companies have taken place on the US market in 2012, but only three succeeded in passing the $200 million valuation mark. None of these companies, however, was at the sales stage, most of them being at the stage of phase III clinical trials or just before product launch.
Kamada, by contrast, has sales in the US of its ATT infusion product, jointly with US company Baxter. This is a niche market with competitors, but the company has succeeded in growing nicely. It had sales of NIS 130 million in the first half of 2012, compared with NIS 85 million in the first half of 2011.
Kamada is waiting for a significant event in the coming year: trial results for ATT by inhalation, which is for the same niche market but is without competitors for its administration method. It is currently positioned as the company's leading product. In its pipeline are a product for treating diabetes, about to undergo phase II trials and a big dream for the company.
Since the offering by D Medical Industries Ltd. (Nasdaq: DMED); TASE:DMED) in 2010, Kamada is the first Israeli biomed company to attempt an offering on Nasdaq. D-Medical raised $12 million out of the $25 million it hoped to raise, and it was delisted within two years.
More substantial offerings by Israeli biomed companies in the past five years were those of Omrix and Rosetta Genomics Ltd. (Nasdaq:ROSG) in 2007. Omrix is considered a success story. It made its offering at a valuation of $143 million (it initially wanted $230 million), climbed to a peak of $600 million, and was ultimately sold to Johnson & Johnson for $438 million.
Rosetta Genomics' flotation was less exciting. It took place at a valuation of $73 million, after the company postponed it time after time because of the valuation. Rosetta Genomics changed direction from drugs to diagnostics, tried several marketing and distribution models, and nearly went bankrupt. It has recovered somewhat this year, and now has a market cap of $12 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2012
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