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January 31, 2015 / 11 Shevat, 5775
 
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The Israeli Dash to the NASDAQ

Shmuel Zysman

Shmuel Zysman
Photo Credit: Ranit Nachum-Halevi

“Nonetheless, people need to remember that investors are aware of all of these preliminary stages, and they set an investment goal which is right for them, especially when it comes to Israeli companies,” he said. “As I mentioned before, this is due to the relatively low price in which they offer their initial stock. On the one hand, the investors understand the risks that are on the table. On the other hand, they are aware that if the company’s IPO is valued at between $100-200 million, and if they develop a successful drug that is approved by the Food and Drug Administration, it will be worth billions of dollars, perhaps more.”

“For the investor, that means a potential profit of ten times the investment, perhaps more,” he said. “That is why he takes the risk. The stock markets of the world offer assistance to high-risk companies, and if the company comes fraught with risk, my opinion is that it is preferable if that company deals in bio-tech because it’s a win-win situation. Everybody gains. If these companies succeed, the entire globe would benefit, with the development of a product and from a financial standpoint, with investors and the stock market benefiting. If the company fails, at least science will take a step forward, and there’s no doubt that mistakes are to be learned from. In my view, this is also a gain from a social standpoint.”

What is the rate of success for Israeli biomed companies as opposed to foreign biomed companies?

“When you look at the statistics of success, you need to look at two main things: Do the Israeli companies produce a product that competes with other companies or not? I don’t know of such a statistic, but from this standpoint I don’t believe there’s much of a gap. Another marker that defines success is the profit made by the investors. At least in the first wave of IPOs, it was easy to notice that the price of Israeli companies was climbing higher, which is something that was perceived as an economic success and which produced great returns for investors. Once money comes into the coffers of a company and it could continue to develop its product, there’s no doubt that it makes the value of the company higher.”

What considerations come into play when choosing the investors and the backers? Does it have anything to do with being on the NASDAQ? Is it any different than the IPO in London? Do the funds come from private investors and funds?

“The world of biotech needs a lot of money. The capital market in every country needs a tremendous amount of money in order to try and help. In the last 10 years, the amount of institutional money and funding from risk-management funds has dropped significantly. This is a worrying fact that should be a warning sign over the state of the market, and this could endanger scientific development. The repercussions of this are global. So all of the critics who are complaining that the biomed companies are “rushing to get their shares traded on the stock exchange” are expressing criticism that is unfounded, because the capital market is one of the few existing solutions today for these companies, enabling them to continue with research and development. It’s not a question of being an alternative. Today, it’s the only alternative. As for stock markets, the best stock market is the NASDAQ. The market there is big, the big money is there, and if a company wants to succeed, that’s the place to do it.”

Do you believe that the biomed field could be the next big thing in the years to come?

About the Author: Ranit Nachum-Halevi is a consultant to real estate companies, and former senior real estate correspondent for The Marker, Haaretz's daily financial supplement. She has been working in Israel's media for more than 15 years. You can reach her at ranit.nh@gmail.com.


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