Compugen, Protalix Biotherapeutics, and Kitov Pharma, three Israeli healthcare companies listed on Nasdaq, each announced financing rounds last Thursday. Compugen raised $75 million, Protalix $43.7 million, and Kitov $6 million. All three rounds were at a discount on the market price (if the price of the warrants is also taken into account).
It is probably no coincidence that the three companies raised money on the same day last week. Medical companies are stocking up on cash in anticipation of a deep recession, while investors are willing to give such companies money, despite the recession, in the belief that the money will be better protected in the pharma industry when an epidemic is at large. The Nasdaq Biotechnology Index has fallen this year by 11%, the same as the Nasdaq Composite Index, which follows all of the leading Nasdaq-listed companies. During the same period, the S&P index is down 16% and the Dow Jones index by18%. In general, the market for essential drugs, such as those that these three companies are trying to develop, is a hedge against a crisis, although a future shortage of cash in the market is liable to force cash-strapped biotech companies to raise money at low valuations.
Compugen raised $75 million at $9 a share, a 12% discount on last Thursday's opening market price. The share price before the start of trading gave Compugen a $694 million market cap, following a 218% climb over the past year. Compugen uses predictive computational discovery platforms to identify novel drug targets and develop therapeutics in the field of cancer immunotherapy. The company has signed joint development agreements with leading companies in the sector, and has reported promising initial trial results this year. SVB Leerink and Stifel, together with SunTrust Robinson Humphrey, were joint bookrunning managers for the offering.
Protalix develops drugs for genetic diseases. The company haled a private placement of shares at $2.48 per share, with one warrant at a $2.36 strike price accompanying each share. Rosario Capital and Houlihan Lokey served as financial advisors in the private placement. Psagot Investment House, More Investment House, Highbridge Capital, UBS O'Connor, Rosalind Capital, and Alrov Properties were among the investors in the placement.
Protalix's share has lost 28% of its value this year, mostly in response to the imminent target date for repayment of $58 million in bonds in November 2021. The amount raised last week, plus the additional amount that the company is due to receive from the exercise of the warrants, will help Protalix redeem its bonds if it obtains additional revenue, for example by meeting the milestones in its agreement with Chiesi Farmaceutici. Chiesi is an Italian family-owned company whose headquarters are located just south of the Lombardy region, where the coronavirus is particularly virulent. It is difficult to predict how the virus will affect Chiesi. Protalix is currently significantly dependent on its agreement with Chiese, but if it succeeds in bring its product to market for the global Fabry patient community, it can probably also transfer the product to another company, if necessary.
On Friday, Protalix released fourth quarter 2019 results, showing revenue of $3.8 million, compared with $1.8 million in the fourth quarter of 2018, and a net profit of $0.3 million, compared with a net loss of $5.4 million in the corresponding quarter.
Kitov, which is also developing an anti-cancer drug, held its financing round at $0.30 per share, the market price. One warrant at a $0.325 strike price was attached to each share in the offering.
Published by Globes, Israel business news - en.globes.co.il - on March 15, 2020
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