Israeli drug company Can-Fite BioPharma Ltd. (TASE:CFBI; NYSE American: CANF), managed by CEO Prof. Pnina Fishman, has filed a NIS 40 million lawsuit against Capital Point, a holding company, in the Central District Court. Can-Fite is asking the court to halt Capital Point's attempt at a hostile takeover of Can-Fite and its cash.
The attempted takeover follows an 85% dive in Can-Fite's share price since the beginning of the year, pushing the company's market cap down to NIS 35 million and making it the worst-performing share on the Tel Aviv Stock Exchange (TASE) during this period. A month ago, Can-Fite raised $6 million, which contributed to the share's plunge and created an incentive for a hostile takeover.
Can-Fite is a veteran Israeli biotech company that develops drugs for treatment of inflammatory diseases and cancer. The company has several products in advanced trials, but previously failed in several large and costly trials of drugs based on the same active ingredient and operating mechanism. Can-Fite has no controlling shareholder.
Capital Point is an investment company whose main successes were NeuroDerm, sold for $1 billion, and ConTIPI Medical, sold for $90 million. Capital Point, whose main shareholders are Shir Roichman and Yehuda Kahane, is listed on the TASE at a NIS 60 million market cap.
The hostile takeover attempt began last month, following Can-Fite's financing round. After buying 5% of Can-Fite's stock, Capital Point wrote a letter demanding an immediate general shareholders meeting for the purpose of replacing Can-Fite's board of directors. Can-Fite refused, saying that its meetings take place only once a year, in December. Those familiar with Can-Fite were not surprised - Can-Fite has been Fishman's pet project for over 20 years, and it appears that she will not give it up lightly.
In its lawsuit, Can-Fite states, "The claimant's money is intended for financing and completing clinical trials. It is not supposed to pay for games in the capital market, as the respondents are planning, and is not designated for irrelevant purposes." Can-Fite added, "The capital market recognizes and is aware of the actions of the respondents, whose main business is making quick profits through attempts to take over companies, as well as activity involving stock exchange shells and other dubious capital market activity."
Can-Fit's more serious accusation involving Capital Point is that the latter makes false reports to the TASE. Can-Fit cites a case in which Capital Point had to pay financial penalties for non-disclosure of a company's value. It is further alleges that the fact that Capital Point's letter to Can-Fit does not disclose its plan to take it over constitutes a breach of its reporting duty to the US Securities and Exchange Commission (SEC).
Published by Globes, Israel business news - en.globes.co.il - on June 20, 2019
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