Pontifax Ltd. has raised $88 million for its third fund. Most of the capital came from current investors, including from Eli Hurvitz, who provided 10% of the funding/ Other investors included Moshe (Mori) Arkin, Prof. Ruth Arnon, Pujo Zabludowicz, and Israeli investment institutions.
Hurvitz, the former chairman of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), heads Pontifax, but does not serve as its chairman. Pontifax, run by Ran Nussbaum and Tomer Kariv, invests in pharmaceutical companies and occasionally in medical device companies.
Pontifax uses several operating models. It makes ordinary venture capital investments in existing companies, founds its own ventures, joint investments with Swiss pharma giant Roche Holding AG (SWX: ROG), and it makes very early-stage investments in pharmaceutical start-ups with potentially breakthrough drugs. Many of the investments are made jointly with Arkin's Arkin Holdings.
The $30 million Pontifax I Fund invested in Protalix Biotherapeutics Inc. (AMEX:PLX; TASE: PLX), IBI Medical Systems Ltd. (formerly Endogun), CollPlant Holdings Ltd. (TASE: CLPT), NasVax Ltd. (TASE: NSVX), Allium Medical Ltd. (TASE: ALMD), Aposense Ltd. (TASE: APOS), Ovalum Vascular Ltd., and two companies that closed: Elutex and NVR. The Pontifax I Fund achieved an annual return on investment of 48% and returned 2.4 times the money, mostly from the fund's early-stage investment in Protalix whose shares it distributed as dividends in kind when it reached a market cap of $800 million in 2009.
The $80 million Pontifax II Fund's investments include CheckCap Ltd., Macrocure Ltd., BioVent Ltd., Stimatix GI Ltd., Se-Cure Pharmaceuticals Ltd. The fund has an annual return of 31%.
Pontifax is in the process of selling its holding in Biomedix Incubator Ltd. (TASE:BMDX), the owner of Meytav Technological Enterprises Innovation Center Ltd. and Ashkelon Technological Industries (ATI), whose graduate companies include Collplant, IBI Medical Systems, and NasVax. Pontifax will directly acquire shares in the incubators' portfolio companies in exchange for its stake in Biomedix.
Pontifax's collaboration with Roche is a unique venture in which a multinational pharmaceutical company invests in Israeli start-ups with the support of the Office of the Chief Scientist. Six companies have been established through the joint venture, all of which are conducting preclinical trials of their products. Two of the companies are ATI portfolio company Quiet Therapeutics Ltd., which is developing SiRNA gene silencing-based therapeutics; and Meytav portfolio company cCAM Medical Ltd, which is developing a treatment for melanoma.
There has been little capital available for pharmaceutical start-ups in recent years, and only two firms currently focus on the field in Israel: Pontifax and OrbiMed Advisors LLC. Orbimed has raised over $200 million with the support of the Chief Scientist to support fairly late-stage companies.
When the Chief Scientist announced that it would support venture capital funds that focus on pharmaceuticals, while allocating a quarter of the funding to medical device companies, industry sources said that the medical devices sector needed greater support than the life sciences. The counter-argument said that medical device companies were doing fine, while drug development start-ups needed tens of millions of dollars to bring their products to the point at which they would interest strategic partners.
The situation has since reversed. New pharmaceutical funds are leveraging their money for both early and late-stage drug development companies, while hard times have hit medical device companies. Most venture capital firms that invest in the sector have not been able to raise new funds so far, while the cost of bringing products to market, let alone an exit, has soared.
In setting up the new fund, Pontifax was represented by Horn & Co. Law Offices.
Published by Globes [online], Israel business news - www.globes-online.com - on November 3, 2011
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