Chaim Hurvitz, the son of the late Eli Hurvitz, has devoted much of the past six months to ventures to commemorate the legendary chairman and CEO of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA). Chaim Hurvitz is a director at Teva, and previously served as manager of its international operations, and has succeeded his father as chairman of cancer diagnostics developer Aposense Ltd. (TASE: APOS). However, he has also embarked on a new venture unrelated to his father and is his own as the sole owner.
Chaim Hurvitz founded CHealth, an investment fund, a year ago. It has already invested in four late-stage pharmaceutical and medical devices companies, including in a company readying for a clinical trial.
CHealth has not disclosed its financial operations, and Hurvitz is threatening never to disclose the firm's financial data. "It's fun," he told "Globes" in an interview. "This is a wholly private venture, and I only have to answer to myself."
Based on the description of the companies described, it is possible to estimate that CHealth has invested $5-10 million to date.
Hurvitz finances CHealth by himself. "This does not mean that I won't open the fund to family and friends in a year, but I first want to check out the field with my own money, in places where I can bring added value," he says.
"I believe that science, entrepreneurship and engineering in Israel are outstanding. The main thing is to reach projects, and then to know how to enter a company. Investors often enter a business like a bull in a china shop, or else financial investors provide money but no guidance for the company at all. Neither way works in the healthcare industry."
The confidentiality about CHealth's financial data spreads to its team. Hurvitz is willing to say that the firm has five executives, two of whom are women who previously worked for Teva, and serve as the medical science manager and administrative manager.
Chaim Hurvitz has more than 30 years experience in drug development at Teva. He also has extensive business ties. He decided to focus on companies which he describes as mature or almost mature. "I seek companies which can reach market within two or three years. All my life, I've worked in management and sales and marketing, and I have no patience for stories about there will be something for sale in eight years. By the way, I believe that there are very few companies that really need eight years from the concept or emerging from academe stage to reach market, provide they operate properly."
Hurvitz usually invests in a company after it has conducted a proof of concept in humans. At this point, he creates a step-by-step work plan, which takes into account subsequent stages of the anticipated process. For example, he might decide to put in a Japanese doctor as the chief researcher of a clinical trial if the product will be marketed in Japan. "In pharmaceuticals, three years forward is like tomorrow morning," he says. "If you conducted the wrong clinical trial, you'll need two years to conduct a new one."
Big pharma is flooded with proposals
Hurvitz also believes that a company should begin developing relations with big pharma companies at this stage. "Many Israeli managers don’t know how to go about this at all. I see Israeli companies go to the giants with amateurish presentations; they don’t know what's important to the companies, they don’t know the jargon, and they miss out.
"The big companies, for their part, are so flooded with proposals that they have no choice but to choose opportunistically, and filter out the Israelis because of lack of chemistry. Even if the scientific and technological presentation of an Israeli company is excellent, it will lose out to another excellent presentation presented by Americans who know how to speak. The Americans know how to talk."
One of Hurvitz's important goals is to teach Israelis to speak like Americans.
Clinical trials, fatty liver, widening the pupil, and teeth straightening
CHealth has made four main investments to date. The first was in an Eastern European-based company that conducts clinical trials as a subcontractor for other companies, a choice that is not routine for a life sciences investment firm.
"The clinical trials field is thriving," says Hurvitz. "Eastern Europe is especially interesting in this area because there is competition in recruiting patients in Western countries, but many people in Eastern Europe can only obtain access to advanced and expensive treatments by participating in clinical trials, because there is a lack of good public health insurance.
"On the other hand, health systems in Eastern Europe are excellent. Doctors are disciplined, they carry out a study's protocol exactly as you requested. This is their advantage over other countries where it's fairly easy to recruit patients, such as India or China."
Hurvitz says, "This combination of factors will not last forever, but there's a ten-year window during which it will work. Another consideration in choosing this company is that it forces me to be close to the science, because what a clinical trials company does is convert the science into reality."
The second company that CHealth invested in is developing treatments for fatty liver, which can lead to cirrhosis or liver cancer, and is due to alcoholism or bad nutrition. "Only in the past decade have we learned that fatty liver should be treated, even if it emerges for non-alcoholic reasons, in order to prevent diabetes and vascular diseases," says Hurvitz. The drug was developed at Sourasky Medical Center Tel Aviv (Ichilov Hospital), from which Hurvitz took it for a CHealth project.
The company has already completed a Phase II clinical trial. "We're now revving our engines for a Phase III clinical trial, which could have results within two years," says Hurvitz. The trial could cost $10-20 million, and the company may seek a strategic partner to help finance and market the product. "It's a very big task to educate doctors on the importance of treating fatty liver," he explains.
CHealth's third portfolio company has developed a mechanical device to widen the pupil of the eye for tests. Current methods for expanding the pupil use eye drops and waiting for them to take effect. After the tests, patients suffer from blurred vision for several hours. The company's device uses electromagnetic waves to contract the eye muscles to widen the pupil. "Within ten seconds, the pupil is widened, and within ten seconds, it's closed. There is no waiting before the test, and afterwards you leave normally," says Hurvitz.
The device is undergoing tests, and Hurvitz believes that CE Mark approval will be obtained by the end of the year. "The results are fantastic, and there are no safety problems. After all, mobile phones are also based on electromagnetic energy," he says. The company plans to market the device in the US, although not immediately. "There's no point in dealing with the US Food and Drug Administration (FDA) and all the difficulties it raises, immediately. They are three times more difficult than the Europeans - and for what? First make some money from the product. This is a mistake that companies frequently make. It's even better to begin in the Israeli market, which is an excellent pilot market."
CHealth's ophthalmology portfolio company is wholly financed by Hurvitz and is not currently seeking additional financing.
The fourth company is developing a teeth straightening device originally developed at Hadassah Medical Organization. Instead of braces, the product uses a plate with small air cushions. A miniature pump inflates the cushions to apply precise and targeted pressure on each tooth. The cushions do not operate continuously, but in pulses, thereby applying pressure on the tooth without damaging the surrounding blood vessels. The precision means that the treatment is faster and more effective than both night braces and an ordinary bridge. The device also eases brushing and does not cause plaque.
The product has already obtained CE Mark certification. "There's nothing like it in the world. Annual sales for dental bridges are $400-500 million. This is a market with money," says Hurvitz.
Published by Globes [online], Israel business news - www.globes-online.com - on May 15, 2012
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