The attempted hostile takeover of Can-Fite BioPharma Ltd. (NYSE MKT: CANF; TASE:CFBI) by Capital Point ended on Tuesday in an unusual compromise agreement. Capital Point will give up its effort to replace Can-Fite's board of directors, and will allow Can-Fite CEO Dr. Pnina Fishman to continue leading the company. In exchange, Can-Fite will employ Capital Point under a consultation agreement in which it will pay Capital Point 5% of all amounts that it raises in the future, up to a maximum of $1.3 million. Capital Point will undertake to vote together with Can-Fite's board of directors at shareholders' meetings for the next two years, and will be enjoined from taking measures aimed at a takeover, such as convening a shareholders' meeting, for the next five years.
Can-Fite's share price rose 7% today following the announcement, pushing its market cap up to NIS 26 million. Can-Fite is a veteran pharma company that develops drugs discovered by Fishman in her laboratory at Rabin Medical Center (Beilinson Hospital). The cost of Fishman's salary in 2018 was NIS 1.7 million - over NIS 100,000 a month.
Can-Fite was founded in 1994 and held its IPO in 2007. The company's share price plunged dramatically by 90% last year, a large part of which followed a $6 million financing round by the company at a discount.
A few days after the financing round was completed and the share plummeted, the company received a letter from Capital Point declaring that it had become a shareholder in the company and was demanding the convening of a shareholders' meeting in order to replace Can-Fite's board of directors. Fishman opposed the takeover attempt with all the force she could muster. The company sued Capital Point in court, while simultaneously signing an agreement with Univo Pharmaceuticals for joint development of products using Can-Fite's know-how in cannabis. Under this agreement, Univo became a shareholder in Can-Fite and an additional force able to vote with the company's management against Capital Point's maneuvers.
In its lawsuit against the takeover, Can-Fite argued, "The plaintiff's money is meant for conducting and completing clinical trials. It is not meant for games on the capital market, as the respondents want to use it, and is not meant for unrelated purposes… The capital market recognizes and is aware of the respondents' tricks, whose main activity is aimed at making a quick profit from attempts to take over companies, and at their activity with stock exchange shells and low capital market activity." Capital Point is now becoming Can-Fite's consultant.
Capital Point, whose market cap is NIS 50 million, is an investment company held mainly by Shir Roichman and Prof. Yehuda Kahane (24% each). Its main success was an investment in NeuroDerm, sold for $1 billion in 2017. The company had another exit - ConTIPI Medical, sold to Kimberly Clark for $90 million. Capital Point currently has a number of investments in medical companies, among them Entera Bio, RDD, NextGen BioMed, Anchiano Therapeutics, and DiA Imaging Analysis. It also has investments in shares of various listed companies.
Published by Globes, Israel business news - en.globes.co.il - on October 10, 2019
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