Israeli clinical stage oncology drug developer Vidac Pharma is planning to list on the Hamburg Stock Exchange.
Vidac Pharma CEO Max Herzberg, a veteran entrepreneur and investor in Israeli biopharmaceuticals says, "At my age I'm not built for a Nasdaq roadshow." He explains that the Hamburg Stock Exchange is open to companies that want to list without an IPO through a relatively simple procedure and allows access to trading on other European stock exchanges. These stock markets have high liquidity in the life sciences sector with less volatility than Nasdaq, although the trends are the same with high rises over the past decade but down this year.
The catalyst for Vidac to list in Germany came with an agreement in 2019 with Luxembourg-based GEM Global Yield LLC SCS, which has $3.4 billion under management, which extended to the company a share subscription facility of up to €20 million for a 36-month term following the public listing of the company shares on a European national stock exchange. Vidac controls the timing and maximum amount of drawdown under the facility and has no minimum drawdown obligation. Concurrent to the public listing of Vidac Shares, GEM will receive warrants to purchase shares of the company.
Herzberg says, "We hope to use the amount to complete our clinical trial and meanwhile to build a network of relations with retail and institutional investors in Europe." Vidac's valuation for the agreement and the listing is €60 million.
Herzberg, one of the founding fathers of Israeli biotech, took over Vidac, formerly called Sepal Pharma, in 2012. The company sought to use plant hormones for medical use because they secrete similar substances to human hormones that grow in cancer. One such hormone, aspirin, "built a career in pharmaceuticals," as Herzberg puts it. So perhaps he thought other hormones could benefit people. In trials conducted by the company in tissue cultures, one of these substances had anti-cancerous activity. The company raised capital from Herzberg, Miguel Ahuvi and the Koronis Foundation.
"The results were very interesting, but for the treatment to be effective an unreasonable dose was required, like a lot of extracts that come from the plants," says Herzberg. "It was difficult to find financing for the product, but I did not want to close down the company because the results seemed valuable to me. So we bought the patents into a company I set up with my own financing, Vidac."
Vidac raised an additional amount, from Prof. Shmuel Kabili and the Israel Biotech Fund (IBF). "They thought there would be a big trial and in three years, they'd be out" Herzberg says. "When it didn't happen they wanted to close, and I said - sell it to us." This deal was completed in 2019 when CEO Oren Becker also left, and Herzberg became chairman.
Why is it taking longer than you thought?
"The first results of the experiment were positive, but not exciting. In retrospect, we saw that if we test the results only in a certain subset of the test subjects, they are very clear and positive. So we decided to go for a new trial that would see just that, and we were really ready to go ".
But during the Covid pandemic, it was impossible to progress with the trial. "So we continued our lab tests, and found that our drug, which was originally intended for a certain type of skin tumor, can work on many different cancers. The drug uses the Warburg effect, which has been known for decades, and that cancer cells use much more regular sugar. This information is used in PET imaging tests, where the body needs more sugar, where there is a tumor or metastasis."
But why are there no drugs based on this difference between the cells?
"Because every cell consumes sugar, and the intervention in this mechanism was very non-specific," Herzberg explains.
Vidak’s team has discovered another way to intervene in the mechanism of energy utilization by the cell, by altering the binding site of a particular enzyme, which acts as part of the Warburg effect, but specifically in the cancer cell.
"What does Western medicine do? It says - we will kill the tumor with a bomb, and if a bomb is not good enough then a missile, and if not a missile then a guided missile," laughs Herzberg. In contrast, Vidac’s drug activates cell self-elimination mechanisms.
The company has found a family of substances with a similar mechanism, which may be suitable as a remedy against solid tumors. After success in animal experiments, the human experiment will soon begin. It should be noted that the company does not yet record revenue.
Now the big money is needed. "And in Israel, if you get divorced from one venture capital fund, the chances of getting something from another fund is almost zero.
Herzberg therefore opted for a deal with GEM. He has some experience with the capital market - Orgenics, the company he founded in 1982 for the detection of antibodies or antigens in human serum or plasma was on the verge of an IPO before being acquired. Vidac also faces a similar scenario. "Two weeks ago we received an offer, but they said it would only be possible to close the contract in six months and I said I would continue with the registration - I already have one bird in the hand."
Published by Globes, Israel business news - en.globes.co.il - on July 21 2022.
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