The sale of Israeli drugmaker NeuroDerm to Japanese pharma giant Mitsubishi Tanabe for $1.1 billion last month in the largest ever purchase of an Israeli healthcare company, has put the spotlight on Israel’s biotech sector, where a number of other firms are gearing up for commercialization of their product.
“This is a big deal,” said Anya Eldan, vice president of the Israel Innovation Authority’s Startup Division, about the NeuroDerm deal. “We don’t see this kind of valuation often for a biotech company; it is more typical of an internet company. It shows big support for the Israeli biotech industry.”
NeuroDerm develops treatments for patients suffering from Parkinson’s disease, as well as other disorders related to the central nervous system.
The firm’s leading product candidate is not even on the market yet, but is in advanced clinical trials in both Europe and the United States. The product could hit the market as early as 2019, Mitsubishi Tanabe said last month.
NeuroDerm was founded in one of the Innovation Authority’s technological incubators in 2003 and received the authority’s financial support for seven years, Eldan said. “It is very gratifying that one of our companies has done so well. The company now has a strategic partner that will help bring its product to the market.”
Biotechnology firms typically have a long and painful journey to success. Much money and patience and a lot of luck is needed to develop a drug, a process that takes years and goes through identifying a need, getting an idea for a drug, developing the drug and then undertaking clinical trials that may ultimately lead to regulatory approvals worldwide and commercialization. The chances of failure at each of these stages is huge. And little successes bring much joy.
“In biotech, it is very difficult to succeed, and building an ecosystem in Israel requires patience,” said Eldan.
The NeuroDerm deal, she said, “is the beginning of the coming of age of the Israeli biotech industry, and it is the result of a long-term government policy. We are very happy to see this kind of maturation, and there is still a lot of work to do.”
But, she added, “eventually out of these young innovative companies the next big Israeli pharma firm will emerge.”
An active biotech scene
There are some 1,350 life sciences companies active now in Israel, 612 of them having been created in the last decade, 2007-2016, according to a 2016 Life Sciences Report by the Israel Advanced Technology Industries (IATI) released in May. The IATI is an umbrella organization of the high-tech and life sciences industries in Israel.
Some $823 million flowed into the industry last year, accounting for 20% of all investments in Israeli high-tech, the report showed. And the industry is becoming more mature, with some 33% of companies in preliminary revenue phase, and 5% in the revenue growth stage.
Indeed, companies like BiondVax, a developer of a universal flu vaccine candidate; Gamida Cell, a maker of cell and immune therapy technologies; RedHill Biopharma Ltd, a developer of drugs for gastrointestinal diseases; and Vascular Biogenics Ltd. (VBL), a maker of drugs that targets blood vessels to stop the spread of cancer are all gearing up toward commercialization of their products.
Getting ready to sprint
RedHill Biopharma, the biotech company founded by two kibbutz dwellers, Dror Ben-Asher and Ori Shilo, is traded both in Tel Aviv and on the Nasdaq. The firm is conducting late-stage clinical trials for several drugs, including two that aim to tackle Crohn’s disease and H. pylori, the bacteria that is the root of ulcers and a major cause of gastric cancer, respectively.
RedHill also has a pipeline of other advanced clinical-stage experimental medications in the works, as a way to spread out risk.
RedHill is currently setting up its US commercial infrastructure and salesforce, headquartered in Raleigh, North Carolina, as it waits for its other products to ripen and get the potential approvals needed from the US FDA.
Vascular Biogenics, founded in 2000 by its CEO Dror Harats, a professor at Tel Aviv University and a doctor at the Sheba Medical Center in Ramat Gan, develops anti-cancer gene therapies. Its flagship drug, VB-111, targets glioblastoma multiforme, an aggressive and difficult to treat type of brain tumor.
The company plans to set up a new manufacturing facility in Modiin in central Israel, which will bring the company closer to the potential commercialization of the VB-111 drug.
BiondVax, a Ness Ziona-based company whose shares are traded on the Nasdaq and in Tel Aviv, is a developer of a universal flu vaccine candidate.
The company said last month it has signed an agreement to lease a space of approximately 1,800 square meters in the Jerusalem BioPark, located in the Ein Kerem Hadassah Campus. The mid-sized facility is expected to have the capacity to annually produce tens of millions of doses of its flagship M-001 universal flu vaccine candidate, either in single-dose syringe or in bulk. M-001 is designed to provide protection against current and future seasonal and pandemic flu strains.
“This new planned mid-size commercial manufacturing facility will mark the culmination of BiondVax’s transformation into a fully integrated pharmaceutical company,” operating under international standards, said Dr. Shimon Hassin, BiondVax’s chief operating officer, at the time of the announcement.
Jerusalem-based Gamida Cell has started enrolling patients for a last-stage clinical trial for a drug it believes will help increase the success of bone marrow transplants in blood cancer patients, and help them better withstand the ordeal of the lifesaving procedure. The company hopes that if the trial is successful, it will lead to the launch of a commercially available product in 2020.
“We are at an exciting transition point, and moving from being a research and development firm, based in Israel, to an international commercial firm,” Gamida Cell’s CEO Yael Margolin, who has headed the privately held company for the past 12 years, said in an interview earlier this month. Pharma giant Novartis is one of the investors in the firm.
As shown in the IATI report, over the last decade, Israeli life sciences companies have raised more than $6.7 billion on NASDAQ exchange, with $5 billion raised since 2013. The Nasdaq remains the main source for public offerings for Israeli life sciences companies, with more public offerings and more money raised than on all other exchanges combined, including on the Tel Aviv Stock Exchange (TASE).
The shares of 60 life sciences firms are listed on TASE, the report said, of which 21, like BiondVax and RedHill, are dual-listed on foreign markets. These include biotechnology firms, holding companies that invest in life sciences technologies and firms, medical device companies and pharma companies.
The Israeli government continues to focus on providing a support network for R&D through various programs providing grants and other incentives, the IATI report said.