The share price of MCS Medical Compression Systems (DBN) Ltd. (TASE:MDCL) jumped 12% today, following the announcement that the sales of its assets for $4 million had been completed. The announcement follows previous reports that the company would be sold for several million dollars, or closed down if the deal did not go through.
Medical Compression said that the cost of the deal was $800,000 (consultant fees and insurance against possible claims by the purchasers), making the net pre-tax proceeds from the deal $3.2 million. The company's current market cap is NIS 9.2 million ($2.5 million).
The end was a rather poor one for a company traded at a market cap of NIS 188 million at its peak. Medical Compression developed a device for exerting pressure on the limbs in order to prevent the creation of blood clots during orthopedic operations, as a substitute for blood thinning drugs, which are liable to have side effects.
The company competed with similar products, but was the only one to undergo a major clinical trial. The trial proved that its product was as effective as the drug, but had fewer side effects. Revenue from the product neared $10 million annually, but could not break through this barrier, because the company was unable to obtain reimbursement, and because the insurers classified the product as a preventative product, while the drug was classified as a therapeutic product. Despite the clinical trial, Medical Compression's product was not perceived as being adequately differentiated from cheaper means of exerting pressure that did not undergo clinical trials.
The main shareholders in Medical Compression were Accelmed, controlled by Mori Arkin and Uri Geiger (34.4%), Yelin Lapidot (15.8%), Pontifax (9%), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) (7%), and Nissan Medical Industries Ltd. (TASE: NISA) (5.27%). Medical Compression is now becoming a stock exchange shell.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 7, 2017
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