BATM's Zvi Marom does battle with viruses

Zvi Marom  / Photo: Eyal Izhar, Globes

"Infectious diseases have been neglected in the belief that they only afflict developing countries."

The coronavirus pandemic comes at an interesting time for BATM Advanced Communications. Trading in the company's stock on the Tel Aviv Stock Exchange (TASE) was resumed in June 2019, only nine months ago, after it was listed exclusively on the London Stock Exchange (LSE) for three years, and the company already has exciting news for the public - it reports that it is close to developing a test for the virus.

During BATM's three-year absence from the TASE, the it more than doubled its market cap, which has now reached NIS 910 million. Its share price is dead level with the price in June 2019, while the market in general has been in a tailspin. The reason is probably the recently announcement of its development of a coronavirus diagnostic kit, which gave the share price a 15% boost in two day.

BATM's recently published 2019 financial statements were also satisfactory, with a slight increase in revenue to $123 million and a $3.2 million profit on the year. BATM also recently announced a $30 million financing round for Ador, its subsidiary, which is in the red-hot laboratory testing sector.

Combining cybersecurity with medicine

BATM founder and CEO Dr. Zvi Marom is a colorful character very familiar to followers of the local market. Marom founded BATM in 1992 as a communications company. When the market shifted in 2008-2009, following changes in communications protocols and dwindling added value for telecommunications products, Marom moved some of the company's activity into other spheres. One, cybersecurity, was logical; the other, the medical sector, was less predictable.

Medicine is not new for Marom; he holds an MD degree. He spotted an opportunity in the sector at the time. Convincing investors that this was a good idea was a little more difficult, but as time went on, they saw that BATM was recouping in medical devices the revenue it lost in telecommunications. Medical devices now account for more than half of BATM's revenue.

"Globes": What brought you back to being listed on the TASE?

Marom: "The decision to be delisted was taken because the TASE failed to keep its promises to facilitate compatibility between it and the LSE. After these promises were fulfilled, we came back. It's important for me to be listed on the TASE, because in my vision, the TASE can be a small local version of Nasdaq for young companies from all over the world. I hope this happens."

What caused the rise in the company's value during the period of your absence from the TASE?

"We're reaping the benefits of investments from nine years ago, and what we're working on now is for ten years from now. We're achieving great success with our cyber packages now being sold for protection systems, but which are also expected to reach the private market as well. In communications networks, we have strategic agreements, even Intel recommends us - and that will affect us in the coming years. The Home Front Command's entire warning system, which has proved itself, is built on us. Furthermore, we have a lean operating set-up - we don't have all sorts of luxuries.

"Now we also have a set of diagnostic products that could be relevant for the Israeli public. Nine years ago, we started developing diagnostic kits for infectious diseases. Our diagnostic laboratories also work on cancer, but development is only for infectious diseases. This caused many raised eyebrows among investors at the time. It wasn't in fashion. Everyone developed cancer diagnostic tools for personalized medicine, which are very useful for drug companies' profit line.

"Infectious diseases have been neglected. They said that it was a business for developing countries, where people are destined to die, and that such investment was a matter for philanthropic foundations, such as Bill Gates's and others. They said that there was no way to make money from it. I was strongly opposed to this, and I think that it's now clear how much infectious diseases can disrupt life and the economy in developed countries.

"It's true that most of our sales are to developing countries, and so our profit margins are low, but the demand in the developed countries for what we did is now going through the roof."

In other spheres besides coronavirus?

"Of course. After traffic accidents, the leading cause of death among young people in the UK is sepsis, which is a response by the body to infection. It's no secret that people in the developed countries are not only dying from epidemics, but also from various acquired infections, mainly in hospitals, such as infections following transplants and infections contracted during hospitalization, for example. The past 100 years, in which infectious diseases weren't humanity's leading affliction, are a long time for one person. For the population of viruses and bacteria, however, this is hardly a wrinkle."

"A terrible shortage of tests"

Talking about the coronavirus, Marom says, "We've been looking at this virus, which is from an RNA family, for a long time. I call these viruses a giraffe because of what King Louis XIV said when they brought the first giraffe ever seen outside Africa to the royal gardens at Versailles. He looked and looked, and finally decreed, 'There is no such animal.' According to science, RNA viruses also shouldn't exist, but they do, and we have known them in the form of the SARS and MERS viruses. We knew there would be more. At BATM, we prepared for this."

Will your test make it possible to accurately identify the coronavirus pathogen?

"For any person sneezing in a clinic, we can detect within 20 minutes whether he or she has flu, coronavirus, pneumonia, or something less fashionable.

"There are now tests on the market that are worthless. I don't call it a swindle, but there are bad tests. We were in touch with the Chinese from the beginning, and we constantly checked all of their tests, and suggested bringing these tests to Israel. We didn't want them to think that we were profiteering from the pandemic, so we didn't do any kind of importing by ourselves; we simply referred the Ministry of Health to the source of the tests in China that we were in touch with.

"At the same time, we're now producing tests in Italy, which in my humble opinion are excellent. The bad news is that at the moment there is a terrible worldwide shortage of tests, including in Israel."

What does a shortage of tests mean? In what material is there a shortage?

"In order to obtain a definite identification, you need both special raw materials and time to grow the antibodies in animals. What we lack the most is time. I believe that we can come up with very high-quality tests in Israel in a short time - two or three weeks. I believe we can eventually get enough tests, with no shortage."

Will you export them overseas?

"I manufacture overseas, but my priority right now is Israel, and I want government agencies to produce this according to our know-how, and we'll go on to other things. If there are good tests, they won't have to put so many people in isolation, and the Israeli economy will be saved."

But this looks like the big chance that you have always been waiting for, when no one believed in infectious diseases. Won't you take advantage of it?

"No, we want to contribute our share to addressing this difficult affliction. It's impossible to start building factories here. Our business is infectious diseases, and it will stay that way, regardless of this specific problem, from which I want to profit as little as possible. I hope to continue profiting from AIDS, Human Papilloma Virus (HPV), syphilis, and jaundice. We make a living, thank God.

"Coronavirus is a really bad virus. It's not a Kinder Surprise Egg; it's a frightening surprise clown. We're a month before Passover now, which is a story of plagues. What are plagues? Epidemics. I hope that we don't become another chapter in a Passover Haggadah 1,000 years from now."

You have said before that a coronavirus test should be conducted at the airport. That did not happen, and we are now seeing the result.

"If we succeed in administering rapid tests with a short time at the airport, we may be able to lift the aviation blockade on Israel, at least for certain countries. It's true that the next day we may suddenly discover that someone tested is positive, so in higher-risk cases, we may have to test more frequently, but not only in a central laboratory; perhaps we'll transfer these tests to local laboratories. At present, with the type of test being administrated at Sheba Medical Center, this is impossible. We have to learn from the mistakes made by other countries."

What mistakes, for example?

"Some countries made a mistake with the speed at which they instituted isolation. Others did not handle pathogenic waste well enough."

Marom is known as a personal friend of Benjamin Netanyahu, as someone who has the prime minister's ear.

How do you recommend the government should prepare?

"As soon as Netanyahu realized what he was up against, he started spur the entire civil service and all of the politicians, and they're all moving quickly - something that doesn't always happen in our civil service. A lot of things still have to be done, but I hope that now that things have started to move, they will start doing them, including dealing with the small businesses sector.

"Look what's happening in Iran, and this supports what I always say, that if you have a crap regime, you can't have a good life. It will always get to you at some point, and you should be more worried about your government than about your enemies."

Published by Globes, Israel business news - - on March 15, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Zvi Marom  / Photo: Eyal Izhar, Globes
Zvi Marom / Photo: Eyal Izhar, Globes
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018