In the wake of the banks, finance, real estate and high-tech, Israel's biomed industry will have its very own index on the Tel Aviv Stock Exchange (TASE) starting tomorrow. The Biomed Index will comprise 25 companies involved in the development of biotech products and medical devices, and a 26th company Intec Pharma Ltd. (TASE: INTP) will join the Index in a couple of days after its successful IPO two weeks ago when it raised NIS 35.2 million.
Past performance, as they say, is no guarantee of future success but investors will be well aware that had the Biomed Index been operating in 2009, it would have risen by 377%. This dream performance hastened the establishment of the Biomed Index, which will broaden the appeal of these companies to a wider range of investors. The Biomed Index will draw investors who have no expertise in the field and no way of knowing which individual companies are likely to succeed in a very high rick sector.
Index companies must have a market cap of at least NIS 50 million, public liquidity of at least NIS 25 million, and a minimum holding of 20% by the public, ensures that the 26 larger companies in the sector are included, while the smaller fish get left out. Investment companies will now be able to issue Exchange Trade Funds (ETF) for the biomed industry in June, when the TASE allows new ETFs to be issued.
The Biomed Index will probably number well over 26 companies by the end of the year if the wave of planned IPOs is realized. Many of these IPOs will be led by Clal Underwriting Ltd. which leads in this sector. One of the most interesting IPOs is Elbit Medical Ltd., which will be a wholly owned subsidiary of Elbit Imaging Ltd. (Nasdaq:EMITF; TASE:EMIT) and will include the company's stakes in InSightec Ltd. (60%) and Gamida Cell Ltd. (28%). The company hopes to raise NIS 250-300 million, which would make it one of the Index's largest companies.
As it stands the six largest companies on the index will be: capsule endoscope company Given Imaging Ltd. (Nasdaq: GIVN; TASE:GIVN); biopharmaceutical company Kamada Ltd. (TASE:KMDA); Compugen Ltd. (Nasdaq: CGEN; TASE:CGEN), which discovers drug development platforms; crop genetic engineering company Evogene Ltd. (TASE:EVGN); drug development company BiolineRX Ltd. (TASE:BLRX); and biotech holding company Clal Biotechnology Industries Ltd. (TASE: CBI). Each company will comprise between 9.5% to 8% of the Biomed Index.
These six shares enjoyed handsome rises in 2009 with Compugen's share increasing 1,047%, while Evogene was the worst performer of the top six in 2009 climbing a mere 87.5%.
Even taking into account the dreadful performances of public companies in 2008, the companies in Israel's Biomed Index enjoyed a 112% rise over the 2008-2009 two year period compared with a 25% fall in the Tel-Tech Index over the same period, while the Tel Aviv 100 fell 8% over the 2008-2009 period.
Published by Globes [online], Israel business news - www.globes-online.com - on March 1, 2010
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