Opportunities for Industrial Cooperation and Investment in Israel
Israel’s Biotech Businesses Begin Realizing Potential

With depleted pipelines, and a severe lack of new drugs in development, global pharmaceutical companies are increasingly looking to Israeli biotech, where there is a rich seam of promising new projects. Investors in Israeli companies are now beginning to see profitable light at the end of the tunnel, through acquisitions and IPOs. In particular, Israeli investors are realizing that though biotech ideas may take longer to develop into marketable products than in other high-tech sectors, the rewards are bigger and last longer.

Copaxone Sets a Profitable Example
Teva Pharmaceuticals has proven this point in Israel. During 2013 Teva saw sales of its branded drug – Copaxone® for the treatment of Multiple Sclerosis reach a record $4.3 billion, up from $4 billion the previous year and sales in the first nine months of 2014 were $3 billion. Accumulative sales of Copaxone® for the period 2002-2013 have totaled nearly $30 billion.
Sales of Copaxone® helped Teva maintain annual sales of $20 billion in 2014 with profits of over $4 billion, easily making it Israel’s largest company and one of the world’s leading pharmaceutical firms. Though most of Teva’s income is generated from generic drugs – it is the world’s largest generic drug manufacturer - there is also the promise of more branded ethical pharmaceutical income in the not very distant future. Azilect for the treatment of Parkinson’s Disease saw worldwide sales reach nearly $400 million in 2014.
Teva’s acquisition of US branded drug developer Cephalon for $6.8 billion in 2011 has greatly increased Teva’s branded drug sales and development pipeline. Teva also has a portfolio of promising new drugs led by oral Multiple Sclerosis treatment Laquinimod, which is in Phase III clinical trials and also has potential for treating other neurodegenerative CNS diseases through its ability to modulate immune systems and promote the death of neuron cells. Teva has also developed a popular new dosage of Copaxone, which need only be taken three times weekly instead of daily.

Successful Trials
Another Israeli company with a pipeline of promising new drugs is Clal Biotechnology Industries, controlled by Clal industries, which is itself controlled by US company Access Industries owned by Len Blavatnik. CBI’s portfolio includes 12 life science companies.
CBI’s portfolio includes MediWound (52%), which raised $70 million in its Nasdaq IPO, and has successfully completed a Phase III trial for its burn and wound treatment product. MediWound also owns the commercialization rights for PolyHeal (38%) which received CE approval for marketing in Europe, and is close to FDA approval for its wound management treatment. CBI has a 38% stake in Polyheal.
Other portfolio companies include: CureTech (54%) which is developing cancer lymphoma and colorectal cancer treatments: Gamida Cell (22%), which is developing a stem cell therapy cancer treatment, and has attracted investment from Novartis.
CBI also has stakes in two companies traded on the TASE: D-Pharm (54%) is pioneering the development of lipid-like therapeutics for treating strokes; Biocancell (72%) is developing cancer treatments and its lead product for the treatment of bladder cancer recently reported success in a Phase IIb clinical trial.
Earlier stage CBI portfolio companies include ProtAb (15%), which is developing novel therapeutic agents that modulate cytokine regulation, tipping the balance toward anti-inflammatory signaling pathways in the treatment of autoimmune and inflammatory diseases, and Avraham Pharmaceuticals (21%), which is developing Logostigil, currently undergoing a three-year Phase II clinical trial on patients with mild cognitive impairment, to test whether the drug can delay, or prevent the onset of Alzheimer’s disease.
Protalix Biotherapeutics is a major success story. In 2012, the US FDA approved the company’s Gaucher disease treatment Elelyso for marketing in the US. The drug, which was developed in cooperation with Pfizer, capitalizes on its proprietary biomanufacturing plant cell culture platform to develop biopharmaceuticals and biogenerics or biosimilar pharmaceutical proteins. It is the first drug of its kind in the world with such a platform to obtain FDA approval and the company says they have more products in the pipeline. The Gaucher drug has also received approval for Brazil and Israel.
Other recent success stories include Chiasma, which develops oral versions of biological drugs. A strategic development agreement signed with Roche could be worth $600 million in milestone payments and much more in royalty payments. Opko Health acquired Prolor Biotech for $490 million. Prolor has successfully completed a Phase II trial for hGH-CTP, which treats growth hormone deficiency. Galmed Pharmaceuticals, which is developing a fatty liver treatment, raised $35 million on Nasdaq, while Enzymotec, which is developing lipid-based products and solutions for the nutritional and healthcare markets, raised $63.5 million. Alcobra Pharmaceuticals, which develops a treatment for ADHD, has raised $100 million in three Wall Street offerings.

Veteran Companies
There are about 250 biotech, pharmaceutical and agbio companies in Israel. The country’s veteran biotech firm Bio-Technology General (BTG) is fully owned by Ferring Pharmaceuticals, which acquired the company from Savient Pharmaceuticals of the US in 2005 for $80 million. Operating from its cGMP plant in Beer Tuvia, BTG acts as one of Ferring’s R&D centers focusing on development and manufacture of recombinant bacterial and mammalian cell based products for the pharmaceutical and medical device industries.
Other veteran Israeli biotech firms that are further down the development road include Peptor, which during 2003 merged with the German firm Develogen. Peptor has also signed strategic agreements with major international players in developing its synthetic peptide-based pharmaceuticals. This includes a licensing agreement with Aventis for its diabetes drug and cooperation with Roche in the field of cancer treatment.

Investors in Israeli companies are now beginning to see profiable light at the end of the tunnel
Compugen has signed a $500 million agreement with Bayer Healthcare for R&D, and commercialization of antibody-based therapeutics for cancer immunotherapy against two novel Compugen discovered immune checkpoint regulators. Other Israeli firms developing new chemical entities include Proteologics, which specializes in the ubiquitin system. Based on research by Nobel Prize winner Prof. Aaron Ciechanover of the Technion, the company develops a new class of small molecule drugs against major diseases based on ubiquitin ligase inhibitors. Proteologics has signed a commercialization deal with GSK to develop its promising cancer treatment molecules and recently reported positive results in animal trials on two anti-inflammatory treatments.

Promising Developments
Other promising Israeli biotech companies traded on the TASE include Can-Fite BioPharma, which is developing novel treatments for autoimmune and liver diseases, and cancer. Can-Fite’s lead drug CF101 successfully has progressed through Phase IIa trials for the treatment of rheumatoid arthritis and psoriasis. Another drug CF 102 for the treatment of liver diseases is currently in Phase II clinical trials. Its spin off OpththaliX Inc. is developing a treatment for glaucoma.
Kamada is another of the few Israeli biotech companies to successfully complete Phase III clinical trials. The company received FDA approval for Glassia, its intravenous AAT treatment for congenital emphysema and has a distribution agreement with Baxter International. Intec Pharma is conducting Phase II trials for its sleep disorder treatment. XTL Biopharmaceuticals is developing a drug for the treatment of blood cancer, while RedHill Biopharma, which buys the rights for drugs in advanced clinical trials, raised over $15 million in an IPO in 2013. Pluristem Therapeutics is developing stem cell therapy to treat severe obstruction of arteries that can lead to amputation, and is conducting a Phase II/III trial to treat critical limb ischemia.

Innovative Business Structures
Among innovative business structures, which are designed to overcome Israeli biotech’s difficulties in raising capital and lack of management know-how, is BioLineRx, which is a drug development company bridging the gap between Israel’s enormous innovative R&D potential and global pharmaceutical marketing. Lead drugs include: BL-5010, a novel formulation for non surgical removal of skin lesions (commencing a CE mark clinical trial); and BL-7040, a novel, orally available synthetic oligonucleotide for the treatment of inflammatory bowel disease (phase IIa trial underway). BioLineRX has attracted major investments from OrbiMed and Novartis.
ProCognia has developed a protein-based technology for analyzing blood sugar molecules (glycoanalysis), while Medgenics has developed a proprietary biological platform, the Biopump, which allows patients to produce, within their bodies and on a long-term basis, their own natural human protein therapy for the treatment of a range of chronic diseases, such as anemia and hepatitis C. Nasvax has an agreement with Novartis to develop a family of improved vaccines.
VC Boost Israeli biotech was given a boost by the establishment of a $222 million VC fund which is being managed by Orbimed Advisors, the largest healthcare investment fund in the world. The fund was initiated by an Israeli government tender and investment of $40 million and reflects the feeling that the country’s biotech industry is only scratching the surface of its potential.

Produced By: Daniel Uzan Media & Communications