Pontifax first fund earns 37% return


Healthcare venture capital fund management company Pontifax is likely to raise its fourth fund next year.

Healthcare venture capital fund management company Pontifax, managed by cofounders CEO Tomer Kariv and managing partner Ran Nussbaum, is celebrating its 10th anniversary. The Pontifax group was founded in 2004. Its first fund, with a total of only $36 million, which ends this year, achieved a 37% return, better than the private venture capital funds in the biomed market during this period. The fund owes most of its profit to Protalix Biotherapeutics Inc. (NYSE MKT:PLX; TASE: PLX), in which it invested at an early stage. Pontifax sold its holdings at a peak price four years ago, The first fund also invested in other companies that went public, including Aposense Ltd. (TASE: APOS), NasVax Ltd. (TASE: NSVX), CollPlant Holdings Ltd. (TASE: CLPT), and Biomedix Incubator Ltd. (TASE:BMDX). Most of these companies failed to achieve their goals, but the fund did not lose money on its investment, and even made a profit in some cases.

Pontifax's second and third funds, established in 2008 and 2011, respectively, today manage $80 million and $88 million, respectively. These funds are also expected to achieve good returns, due to their investments in a variety of private companies that recently held Nasdaq IPOs: Kite Pharma, BioBlast Pharma Ltd.(Nasdaq:ORPN), Macrocure Ltd.(Nasdaq:MCUR), and ReWalk Robotics Ltd.(Nasdaq:RWLK). The fund's shares in these companies are still restricted, but it invested in them mostly at low values at a very early stage, so even though the value of some of the companies on the stock exchange fell after their IPOs, and even if the prices fall further, the company is still likely to make a profit on the IPOs.

The funds do not usually declare that they are raising money, but in view of the third fund's impressive performance, it is reasonable to assume that Pontifax will begin raising money for its fourth fund next year.

At an investors conference held by Pontifax last week, new companies in which the fund invested were presented, and its cooperation with Chinese R&D and initial production company WuXi was revealed. WuXi provides services to pharmaceutical and medical equipment companies. WuXi is currently establishing an Israeli branch in cooperation with Pontifax, and plans to offer external R&D services to companies in Israel in this field.

The fund's leading companies were presented at the conference, as well as lesser-known companies in which it has invested in recent years. ReWalk CEO Larry Jasinski presented his company, whose share is currently traded on Nasdaq at a market cap of $256 million. He said that the company's product was likely to be developed in fields such as treatment for paraplegics, multiple sclerosis patients, stroke victims, and cerebral palsy patients.

Another company presented at the conference was Quiet Therapeutics, which in accordance with its name has been rather quiet up until now. The company has developed a drug delivery system that can lead a variety of drugs to focus on malignant tumors. The technology, called gagomers, comes from Tel Aviv University. Researchers Prof. Dan Peer and Prof. Rimona Margalit have won prizes for their development.

Quiet Therapeutics CEO Dr. Ron Lahav explained that the product actually consists of spheres composed of a nanometric envelope containing the drug. The envelope also contains a collection of fatty molecules containing a more liquid material. Materials soluble in both fat and water can therefore be transported within the envelope. The envelope itself is targeted to a receptor called CD44v found in a variety of types of cancer, and can therefore carry its toxic cargo to the right place. The company will initially treat pancreatic and breast cancers that do not respond to the existing drugs, as well as stomach cancer.

Genetic defects

One of Pontifax's new investments is in Eloxx Pharmaceuticals, managed by executive chairperson Silvia Noiman. Eloxx develops drugs for treating congenital genetic diseases. In these diseases, there is a defect in the genetic chain delivering commands to a given protein code, like a defect in the architectonic blueprint of a building. Eloxx's molecule reaches the ribosome, the area in which the plans are translated into buildings, meaning that the genetic code is encoded into proteins, where it gives an order to override the defect in the blueprint, and to build it the right way, instead. The treatment is likely to help children suffering from severe diseases, such as Rett Syndrome, cystic fibrosis, Duchenne muscular dystrophy, and spinal muscular atrophy (SMA). The company is aiming at beginning human clinical trials in 2016. Pontifax, which helped initiate the company, invested in it this year as part of an $8.5 million financing round at a company value of $33 million. The fund holds a 51% stake in Eloxx.

One company not discussed at the conference is Sweetch, considered an exceptional company in Pontifax's portfolio. Sweetch is a mobile health company that is attempting to avert the development of diabetes in patients through personalized instruction for patients at risk. The investment was made jointly with the LionBird fund.

Published by Globes [online], Israel business news - www.globes-online.com - on December 14, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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