In the last month, not a single significant IPO of a medical company has been made on NASDAQ. The latest IPO in the field, Bright Green, which went on the market in May, is already recording a negative return of 87%. For private recruitment in the field, Israeli life sciences companies are looking for alternative recruitment channels. Such is for example the company eMedicines for cancer The Israeli Vidac Pharma, which plans to list for trading on the Hamburg Stock Exchange, Germany.
The Israeli stock plunged 78% after failing an experiment to treat ovarian cancer
Why Hamburg? “I’m not built for a NASDAQ road show at my age,” laughs Max Herzberg, a veteran entrepreneur and well-known biomed investor who founded and runs the company today. European, in a relatively simple process.In these stock exchanges the life sciences sector enjoys high liquidity relatively And slightly less volatility than the Nasdaq. The trends in the European biomed market are similar to those of the Nasdaq – where the field has also experienced an extreme boom in the last decade, and declining this year.
The main trigger for Vidak’s listing on the stock exchange is an agreement it signed with a fund called General Emerging Markets, which manages about $ 3.4 billion, which offered Vidak an “investment line”, ie a credit of 20 million euros, to use the shares, at Vidak’s choice, for three years. . Vidak will be able to use all or part of the amount on the dates you choose, at a price that will reflect a certain discount on the market price. “We hope to use this amount to complete our clinical trial, and in the meantime build a relationship with retail and institutional investors in Europe,” says Herzberg. The value of the company for the purpose of the agreement and listing on the stock exchange is 60 million euros.
Herzberg founded the biotech company Organics in the 1980s, which developed kits for the rapid detection of infectious diseases, “so I define myself as a biomed dinosaur,” he says. The company was sold in the late 1990s to Elra and merged into an Abbott Corporation. It lasted as an active company in Israel for about 40 years, until 2016, a fate that most companies acquired in the country do not receive, and on the eve of its closure employed about 150 employees.
With the exit funds, Herzberg set up an incubator that invested in, among other things, Di Pharm – the stroke company that was issued in Tel Aviv, and reached stage III of the clinical trials, in which it failed, and the company VBL In the field of cancer, which is currently traded on the Nasdaq at a value of $ 141 million. In addition, he founded Pixel Medical, together with the entrepreneur-CEO Avishai Baransky, who performed a blood count test from a single blood drop. Half of the company was sold in 2021 to a Korean company for $ 40 million, about four times the investment.
Aspirin has already “made some career in pharma”
Vidak, formerly known as Spal Pharma, sought to use herbal hormones for medicinal uses. Plants secrete substances similar to human hormones when the plant is under stress. One such hormone, aspirin, “made some career in pharma,” Herzberg puts it. So maybe the other hormones also benefit humans? In an experiment conducted by the company with these materials in tissue cultures, it was found that one of them has anti-cancer 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 is 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 the company because the results seemed valuable to me. So we bought the patents into a company I set up with my own financing, Vidak.”
Vidak raised an additional amount, from Prof. Shmuel Kabili and the IBF Foundation. “They thought there was a big experiment in three years, and ‘they’re out,'” Herzberg says. “When it did not happen they wanted to close, and I said – sell it to us.” This deal was realized in 2019. On the same occasion, the CEO, Oren Becker, also left, and Herzberg returned to the executive chair.
Why does it take 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 experiment that will see just that, and we were really ready to go “.
But during the Corona period it was impossible to advance in the experiment. “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? She says – we will kill the tumor with a bomb, and if a bomb is not good then a missile, and if not a missile then a guided missile,” laughs Herzberg. In contrast, Vidak’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 crop products. 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 separate from one venture capital fund, the chance of getting something from another fund is almost nil. Everyone sits in the same cafe,” Herzberg admits. He therefore opted for a deal with GEM. “What I worry about is that there will be money in the coffers. I learned that from Dror Haretz (CEO of VBL, C.W.). If there is money in the coffers, in the end the company will yield value and the share price will rise. ”
Herzberg has some experience with the capital market – Organics was on the verge of an IPO before being acquired. Vidak also faced 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 hand.”
Line of Business: Development of drugs for skin cancer and other types of cancer
history: Founded by Max Herzberg in 2012 on the basis of Spall, to further develop the patents of the closed company
data: Has raised about $ 21 million to date, joining about $ 9 million raised during the Spal Pharma days. The company is in the clinical trials phase, and still has no revenue