Pontifax raises $88 Million Fund

Pontifax Ltd., the firm which generally invests in pharmaceutical companies and in medical device companies, has announced that it had raised a third fund of $88 million. The most part of this amount of money comes from the fund’s previous investors, including Eli Hurvitz, who has provided 10% of the funding. But there are some new investors as well, among which we can name Moshe (Mori) Arkin, Prof. Ruth Arnon, Pujo Zabludowicz, and other Israeli investment institutions.

Hurvitz is the former chairman at Teva Pharmaceutical Industries Ltd. who has now the head position at Pontifax, although he does not also the chairman of the fund. Pontifax is run by Ran Nussbaum and Tomer Kariv.

Pontifax has quite a large number of operating models which go from ordinary venture capital investments in companies which already activate on the market to founding companies of its own, joining investments with the Swiss pharmaceutical giant, Roche Holding AG, and investing in very early-stage pharmaceutical start-ups which have potentially breakthrough drugs. Numerous of these investments are made in collaboration with Arkin’s Arkin Holdings.

For instance, the first fund raised by Pontifax, which has been in the amount of $30 million, has been invested in the following companies: Protalix Biotherapeutics Inc., IBI Medical systems Ltd., CollPlant Holdings Ltd., NasVax Ltd., Allium Medical Ltd., Aposense Ltd., Ovalum Vascular Ltd., and two other companies which have quickly closed, Elutex and NVR. Based on these investments, Pontifax has assured an annual return rate of 48% and returned 2.4 times the money. The greatest return rate has been that of the early-stage investment made in Protalix, company whose shares distributed as dividends in kind when it reached a market cap of $800 million in 2009.

The second fund raised by Pontifax has been in amount of $80 million and it has been invested in companies such as CheckCap Ltd., Macrocure Ltd., BioVent Ltd., Stimatix GI Ltd., Se-Cure Pharmaceuticals Ltd. At the moment, the return rate for the fund is of 31%.

Moreover, the fund is now in the process of selling its holding in Biomedix Incubator Ltd., which is the owner of Meytay Technologies Enterprises Innovation Center Ltd. and Ashkelon Technological Industries, which include companies such as CollPlant, IBI Medical Systems and NasVax. Pontifax is going to directly acquire shares in the incubators’ portfolio companies in exchange for its stake in Biomedix.

The fact is that there has been only little capital invested in pharmaceutical start-ups in the last few years and almost all of it came from Pontifax and OrbiMed Advisors LLC. The fact is that most of investors believe that it is not profitable to invest in the medical device companies rather than in life sciences due to the fact they continue to be at a level which guarantees their survival on the market. However, Pontifax is not persuaded about this and it is convinced that life sciences need millions of dollars in investments before developing products which can arouse the interest of strategic partners, so the company decided to allocate more to the already existing pharmaceutical companies, also allocating a third of its funds to medical device companies. The fact is that the situation has reversed in the mean while and that Pontifax has been right in taking the decision of investing in these fields of activity.