from the June 2015 issue

EndoChoice raises $96m in NYSE IPO

The main beneficiary of the medical device company's IPO was Mori Arkin and Uri Geiger's Accelmed with a 9% stake.

US-Israeli medical equipment company EndoChoice Holdings Inc. (NYSE:GI) last Friday raised $96 million on the New York Stock Exchange at a company value of $366 million, after money. The offering was priced at the lower limit of the range mentioned by the company - $15 a share. On the first trading day, however, the share price already rose to $17, giving the company a $415 million market cap.

An immediate rise in the share following pricing usually indicates pressure from the underwriters to lower the price, and that the company made a concession on its price in order to bring strong parties into the offering, even though demand outstripped supply. In this case, the demand for the flotation totaled $500 million-$1 billion.

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JP Morgan and Bank of America Merrill Lynch led the offering, with the William Blair and Stifel banks as secondary underwriters. The main beneficiary of the IPO was Mori Arkin and Uri Geiger's Accelmed, which holds 9% of EndoChoice (worth $37.5 million) after investing $14 million in the company. Evergreen Venture Partners and the discoverer of EndoChoice's flagship product, Avi Levy, are likely to sell shares for $1.87 million each if the underwriters exercise their 30-day green shoe option, which appears likely, given the positive trend in trading in the share.

EndoChoice's 4th flotation
Founded as a US company, EndoChoice has a portfolio of hundreds of specially designed products for gastroenterologists. In 2013, Israeli company Peer Medical, which developed a more accurate colonscope for diagnosing intestinal cancer and precancerous tumors, was merged into EndoChoice. This product is now EndoChoice's growth engine. EndoChoice's 2014 revenue totaled $61.4 million in 2014, 20% more than in 2013, and the company posted a $53.2 loss in 2014.

The IPO represents a triumph for the business model that has resulted in half of Accelmed's business. Accelmed, among the first investors in Peer Medical, merges innovative Israeli technology into a company with tens of millions of dollars in sales, but no major growth engine. The current price reflects a multiple of six for the company's revenue, meaning that the market perceives EndoChoice as a growing company with future growth potential. The IPO is Accelmed's fourth out of the 18 companies in its portfolio.

Eric Schmidt: "Israel has huge science, technology impact" The Google chairman spoke at the Weizmann Institute, which he visited with Innovation Endeavors investment firm executives.

"Israel is thriving in terms of innovation because you have a culture that makes it possible to question authority and to challenge everything - you don't follow the rules," said Google Chairman Eric Schmidt speaking before hundreds of students and researchers at the Weizmann Institute of Science. Eric Schmidt tells entrepreneurs to stay home

Schmidt is currently on a short visit to Israel. He arrived at the meeting at Weizmann with executives of the investment firm he heads, Innovation Endeavors, which has been one of the most active investment funds in Israel in recent years.

Schmidt further expressed his admiration for Israel: "The influence that Israelis have on science and technology is tremendous; that's why I'm here, and that's why I invest here." Schmidt also said that, in the modern world, innovation and establishing new companies are necessary in order for an economy to grow.

Schmidt addressed the crowd of researchers and called upon them to "think big": "You have to take big risks. If you are building something, try and solve global problems." He cites as examples some of the developments Google is working on, such as contact lenses that can detect glucose levels and help diabetics.

"1.2 million people die each year in traffic accidents. Anything that can be done to reduce this number would be tremendous," Schmidt said, "In the coming years, many people will move to the big cities, and existing traffic infrastructures will not be sufficient."

12 Israeli digital healthcare start-ups to visit US
Lung congestion diagnosis co Kyma Medical raises $10m

Following the announcement, Elron's share price rose 4%, giving a market cap of NIS 524 million. Kyma hopes to receive approval to market its product in the US by the end of this year, without needing additional human trials.

Kyma was founded by Assaf Bernstein and Uriel Weinstein, both engineers, who met at the biomed company QuantomiX. Kyma's technology uses miniaturized RF technology to detect fluid in the lungs indicating a CHF attack.

Reprinted from the Israel High-Tech & Investment Report June 2015

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