Israel Business Update

Israel Business Update
Volume l Issue 5 - December 22, 2006

Prepared by Dr. Mike Cohen Exclusively for Team M-EDG

Fitch Ratings Changes Israel's Outlook To Positive

Fitch Ratings has today changed the Outlook on the State of Israel's foreign and local currency Issuer Default Ratings ("IDR") to Positive from Stable. The ratings are affirmed at foreign currency IDR 'A-' (A minus) and local currency IDR 'A'. The Short-term rating is affirmed at Short-term 'F1' and Country Ceiling at 'A+'. "The Positive Outlook reflects the Israeli economy's increased dynamism and resilience following the reforms of recent years, demonstrated by the limited economic impact of the war in Lebanon and the strong rebound now underway," said Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch. Economic growth for the year is expected to be at least 4.5 % Fitch said.

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Fitch ups Israel outlook to Positive
This year has demonstrated that Israel's improved debt dynamics and now more robust, even faced with quite extreme security challenges Credit rating agency Fitch today issued a report that upgrades Israel's outlook to Positive, from Stable. The agency also ratified Israel's foreign currency rating of A-minus and local currency rating of A. The agency was impressed with the "increased dynamism" of the Israeli economy and its resilience following the reforms executed in recent years. Both were evident in the economy's rapid rebound from the effects of the second war with Lebanon, which may have lasted just six weeks but which displaced a million people

Official Israel Ministry of Finance Press Release

Bloomberg Analysis

American-Israel Chamber of Commerce and Metro Atlanta Chamber of Commerce Complete Highly Successful Business Mission to Israel
A special focus for this year’s mission was on building relationships between U.S. and Israeli companies in the biomedical area. In all, the delegation met with more than 15 life science companies, including four technology incubators specializing in biotech and medical device companies.

Teva launches $970 million antidepressant
Teva Pharmaceuticals (TASE, Nasdaq: TEVA) today announced the release of copycat anti-depressant tablets, based on the original drug Wellbutrin made by Biovail. The Israeli company has released a 300-mg version of Bupropion Hydrochloride Extended-Release tablets under its alliance with IMPAX Laboratories and Anchen Pharmaceuticals. IMPAX is the one that received the FDA nod and Teva is handling the marketing, all under the agreement with Anchen, which had been the first-filer for the generic version. It therefore received 180 days' marketing exclusivity, which it has transferred to IMPAX. In exchange for its exclusive rights, Anchen is to receive royalties during and after the six-month exclusivity window

JDRF and D-Cure to Provide $6 Million for Cutting Edge Diabetes Research in Israel
The Juvenile Diabetes Research Foundation and D-Cure (Diabetes Care in Israel) have announced a partnership that will fund up to $6 million dollars in type 1 diabetes research in Israel. In their first joint venture, JDRF and D-Cure will each contribute up to $3 million to promote Israel’s highest quality biomedical research. According to Dr. Robert Goldstein, Chief Scientific Officer of JDRF, “The type 1 diabetes research being conducted in Israel is extremely progressive and exciting. JDRF teamed up with D-Cure because we believe that our alliance will empower researchers in Israel to work together to generate better results at a faster pace. Type 1 diabetes impacts people around the world, and our funding of such research will, ultimately, help the global community living with this disease.”

Kyphon Acquires Israel's Disc-O-Tech Medical Technologies for $240 Million

Kyphon Inc. (Nasdaq: KYPH), has signed two definitive agreements (the "Transactions") to acquire all of the spine-related product assets and associated intellectual property rights of Disc-O-Tech Medical Technologies, Ltd., a privately held Israeli company, and its U.S. subsidiary (collectively "Disc-O-Tech"). Under the terms of the agreements, Kyphon will pay Disc-O-Tech $60 million upon execution of the definitive agreements and another $40 million upon the earlier of either closing of the agreement concerning acquisition of the B-Twin and SKy Bone assets or February 1, 2007. A total of another $120 million in three equal annual installments will be paid beginning in January 2008 for Disc-O-Tech's Confidence System assets under the second agreement. An additional $20 million in contingent payments may also be paid based on the development of further technologies. Kyphon will finance the upfront payments due under the definitive agreements with cash on hand and an already established escrow.

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Israeli Government Makes Christmas Merry for Pilgrims, Citizens
As more than 18,000 Christians arrive in Israel this week for Christmas to make the pilgrimage from Jerusalem to Bethlehem, the Israeli government is helping to facilitate their celebrations, ranging from easing travel to the Church of the Nativity to giving out free Christmas trees. Israel's Ministry of Tourism will operate complimentary shuttles running every half hour from Mar Elias Monastery in southern Jerusalem to Bethlehem on Dec. 24 and Christmas Day. To help ease pilgrims' travels, Israeli security has arranged to check the travelers' passports even before they disembark from the shuttles. The measures were implemented this year to prevent traffic jams at the Rachel border crossing between Jerusalem and Bethlehem as an estimated 15,000 to 18,000 pilgrims are expected to travel between the two cities on Christmas Day. As in years past, the Municipality of Jerusalem and the Jewish National Fund will give out free Christmas trees on Thurs., Dec. 21 at Jaffa Gate Square in Jerusalem from 9 a.m. to 12 p.m.