Exalenz Bioscience raises NIS 28m in rights issue

Exalenz Bioscience Ltd. (TASE:EXEN) completed on Wednesday a rights issue in which it raised NIS 28 million on the basis of a shelf prospectus. Mori Arkin, who owned 56% of the company before the issue, and Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), which owned 13%, both participated. The company has developed the BreathID device for diagnosis diseases of the digestive tract from a patient's breath.

Exalenz raised less than its NIS 30 million target, but more than the NIS 25 minimum, below which it would not have carried out the rights issue. Given that the amount raised was more than the amounts raised by other medical devices companies lately, the issue can be considered a success.

The shares were issued at NIS 0.23 per share, and at an effective price of NIS 0.14 per share, a 42% discount on Wednesday's opening price. The share price fell 6.4% by mid-afternoon on the TASE today to NIS 0.19, after falling 15.8% yesterday.

Arkin had promised in advance to invest NIS 10 million worth of shares, 34% of the rights issue.

This was Exalenz's first offering since it unsuccessfully tried to raise NIS 25 million in 2011. Its inability to raise capital resulted in a scaling back of business, and an 80% drop in its share price over 18 months between that failure and the announcement of restructuring two months ago. The share price has rebounded since the appointment of a new CEO, the switch to direct sales, and the launch of the BreathID hp next-generation product for the diagnosis of H. Pylori bacteria in the digestive tract, a major cause of gastric ulcers.

Optimism about Exalenz was also helped by favorable guidance about repayments to the Office of the Chief Scientist, including in the company's financial report. The company predicts NIS 15 million revenue in 2013, and NIS 42 million in 2014, following the switch to direct sales. The company posted NIS 2.6 million revenue in the first quarter of 2013, down 19% on the corresponding quarter in 2012, after posting NIS 13 million revenue in 2012 as a whole.

A source who participated in the road show said that the company stated that this rights issue would probably be the last before the company breaks even. It posted a net loss of NIS 8.3 million for the first quarter, after a loss of NIS 27 million in 2012.

Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2013