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Israel Business Update
Volume Il Issue III - January 30, 2007

Prepared by Dr. Mike Cohen of the Galilee Institute (http://www.gogalil.com)

Exclusively for Team M-EDG (http://www.m-edg.com) and its Israel Biomedical Initiative



International Monetary Fund Upbeat on Israeli Economy
In a new review on Israel published in January, 2007, the IMF predicts 4.5% growth in 2007, 2% inflation and a balance of payments surplus of 4.8% of GDP. The IMF commended Israel on the strong performance of the economy and the notable improvements in macroeconomic policies while pointed to the need to further strengthen the economy's resilience to shocks, particularly through public debt reduction, as the key challenge facing policymakers. In its report the IMF advocated a more holistic and forward-looking approach to the Jewish State's fiscal policy.

 

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Full IMF Report Available Here

 

 

Bank of Israel: State of Economy Index Rises by 7.3% in 2006. Export of services was up 14.7% in December
The Bank of Israel State of the Economy index was published last week indicating an increase of 7.3% in 2006, after rising 7% in 2005. The State of the Economy index rose by 0.6% in December and 1.4% in the forth quarter of 2006. In a statement issued by The Bank of Israel, it was noted that the index indicated further rapid expansion in economic activity.

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Zion Rings!
Zion Oil & Gas, a bible-based oil research corporation formed under Delaware law, is exploring for oil and gas in Israel on licensed and permitted areas of approximately 219,000 acres located onshore between Tel Aviv and Haifa. On January 3, 2007, Zion CEO Gene Soltero, rang the American Stock Exchange bell to open the First Trading Day with the First IPO of 2007 - Zion. In connection with an initial closing that occurred on December 29, 2006 under Zion's Registration Statement (declared effective by the Securities and Exchange Commission on September 26, 2006), Zion began trading on the American Stock Exchange under the symbol ZN. The $2 Million raised in Zion's second closing brings its IPO total to $5 Million


Video of bell ringing ceremony on the AMEX website


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Intel Israel '06 exports up, sees growth in '07, '08

U.S. chip giant Intel Corp. announced that its Israeli subsidiary posted exports of $1.3 billion in 2006, up 9.2 percent from 2005. "2006 was one of Intel's best years in Israel," Alex Kornhauser, general manager of Intel Israel, told a news conference. "It was full of accomplishments in development, production, and exports." He said that 2007 would see a continuation in growth, while in 2008 "it was reasonable to assume we will see a significant jump similar to what we saw in 2000," he said, when the company's exports reached $2 billion.

 


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Venture capital investment in Israel up 21% in 2006; was 80% higher in the fourth quarter compared with the corresponding quarter of 2005

402 Israeli high-tech companies raised $1.62 billion from local and foreign venture investors in 2006, 21% more than the $1.34 billion raised in 2005 and 11% more than in 2004, say the IVC Research Center and Israel Venture Association (IVA) in their joint Quarterly Survey. 105 Israeli high-tech companies raised $477 million in the fourth quarter of 2006, 25% more than the $381 million raised by 87 companies in the third quarter and 80% more than the $264 million raised in fourth quarter of 2005.

73 companies raised more than $1 million each in the fourth quarter. Of these, eleven companies raised $5-10 million each, eight companies raised $10-20 million each, and five companies raised more than $20 million each. The average company financing round was $4.5 million, compared with $4.4 million in the previous quarter and $3 million in the fourth quarter of 2005.

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Israel-Taiwan Economic Conference

Two-way trade between Taiwan and Israel amounted to around US$1.02 billion for the first 11 months of last year, according to official statistics. Taiwan's exports to Israel totaled US$427 million, while imports from Israel reached US$596 million. Meanwhile, the cumulative amount of investment by Taiwan-ese manufacturers in Israel as of the end of November had reached US$31.34 million, mainly in the high-tech, electronics and machinery sectors, while Israel recorded a total investment of US$18 million in Taiwan.

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$10 Million in Series B Funding Will Support Marketing & Sales!

SailPoint Technologies, a provider of software for enterprise security and compliance solutions, today announced it has closed $10 million in Series B funding. Investors included Lightspeed Venture Partners, Austin Ventures, Origin Partners and Silverton Partners -- all of whom also participated in the company's Series A round. With this latest funding, SailPoint has raised more than $14 million in the last 13 months.
 
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Lucid Raises $12M in Second Round of Financing
Lucid Information Technologies, a developer of advanced processing solutions for 3D graphics, announced today the completion of a $12 million equity financing for its Series B Preferred Shares. Intel Capital led the round with the participation of its existing investors, Genesis Partners and Giza Venture Capital. The funds will be used to complete the company's product development and prepare for its product launch later this year. "We are excited to receive this investment," said Moshe Steiner, CEO of Lucid Information Technologies. "This is excellent timing for the launching of our international business activities."

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Silicom Ventures FUND Invests in Yoggie Security Systems, an Israeli-based Security Company
Silicom Ventures FUND LLC announced that it has invested in Yoggie Security Systems, developer of a new network security solution which provides protection to mobile computers in a corporate or individual setting. The company was apparently selected from hundreds of applicant companies that submitted their requests to Silicom Ventures Fund. The Fund, along with Silicom Ventures members, co-invested a total of $750K in the past two rounds. The company has completed its production line and has begun its sales campaign. The funding will be used for expanding the company’s distribution of marketing and sales channels in the US and Europe.

 

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Israel Cleantech Ventures makes first closing at $15-25m

The fund will invest in Israeli or Israeli affiliated companies working in renewable energy, improved electricity production, water, and clean agritech.

 

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Israel's Medgenics introduces the Biopump - a platform technology to provide sustained-action protein therapy
Carmiel, Israel based Medgenics, a closely held biopharmaceutical company, is developing a platform technology to provide sustained-action protein therapy for the treatment of a range of diseases, starting with anemia and hepatitis C. As an alternative to today’s protein therapy which involves frequent bolus injections of proteins, Medgenics is developing a biological pump, called the Biopump, made using the patient’s own skin directly addressing the majority of the $51 billion market for injected proteins. The Biopump works inside a patient’s body to produce and deliver the active protein steadily for a sustained duration in order to treat a targeted indication. The Biopump creates a protein production plant within the patient, intended to alleviate the need for frequent, costly, and painful injections and to avoid their side effects.

 

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See CEO Presentation

 


Eli Lilly to support OBEcure Phase II trials

OBEcure’s OBE101 drug will be tested in Canada on schizophrenia patients taking Eli Lilly’s anti-pyschotic drug Zyprexa. Eli Lilly & Co. (NYSE:LLY) will support Phase II clinical trials by Bio-Light Israeli Life Sciences Investments Ltd. (TASE:BOLT) portfolio company OBEcure Ltd. The trial of OBEcure’s OBE101 drug will be conducted in Canada on 78 schizophrenia patients taking Eli Lilly’s anti-psychotic drug Zyprexa. Eli Lilly’s support for the trial could total a few hundred thousand dollars. OBEcure will allow Eli Lilly to review the results of the trial before publication.

 

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Genetic Risk Factor For Smoking-Linked Head And Neck Cancer
A simple blood test may be able to identify those most at risk for developing head and neck cancer as a result of smoking. This was the finding of a recent study by Prof. Zvi Livneh, Head of the Weizmann Institute's Biological Chemistry Department, Dr. Tamar Paz-Elizur of the same department, and their research team that worked in collaboration with Dr. Rami Ben-Yosef of Tel Aviv-Sourasky Medical Center, Prof. Laurence Freedman of Sheba Medical Center and Prof. Edna Schechtman of Ben-Gurion University of the Negev.

 

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Learning some harsh lessons from the bubble

Sevin Rosen and Mobius Venture Capital, two American venture capital funds, announced their decision not to raise another round of funding. The announcement struck like lightning on a clear day, and dumbfounded the VC industry. Here were two serious, respectable and reasonable funds, which were saying that the VC fund model is faulty; that it is unclear whether investors in them can obtain higher returns than from other instruments; that it is not worth risking the investors' capital
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Israeli Business Delegation visits University of Oklahoma

Opportunity, outreach and Oklahoma — for these Israeli businessmen, Tuesday was a day to combine all three. An Israeli delegation, along with representatives from the University of Oklahoma and the Oklahoma Israel Exchange (OKIE) met Tuesday at Stephenson Research and Technology Center to discuss future collaboration opportunities in bioscience. This was the second day of the delegation’s visit to Oklahoma. For four of the five Israeli guests, it was their first trip to the state of Oklahoma. Alex Harel, managing director of Brilliant Biomedical Magnetic Solutions, said his first impressions were good.

 

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Compugen Presents Experimental Data of its MCP-1 Antagonist Candidate
Compugen Ltd. (NASDAQ: CGEN) has presented experimental results for its previously disclosed CGEN-54, an MCP-1 antagonist therapeutic candidate, at GTCBio's 5th Cytokines and Inflammation Conference (January 29-30, 2007, Breckenridge, Colorado). Compugen's CGEN-54 is a truncated variant of MCP-1 that is encoded by a novel splice variant, and the results to be presented at the Conference demonstrate the molecule's ability to inhibit the MCP-1/CCR2 pathway both in-vitro and in-vivo. In cell culture, CGEN-54 strongly inhibited MCP-1-induced monocytes migration, whereas in-vivo, CGEN-54 was effective in reducing macrophage infiltration in a mouse model of peritoneal inflammation.

 

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Amanda Wilkerson, 25, of Miami, an African-American Florida A&M (Tallahassee) student majoring in political science and public-administration recently returned from her second two-week trip to Israel subsidized by Friends of Israel, a group that encourages college students to experience the democratic Jewish state. "When you want to know something about Israel, I can give you a first-hand view," said Wilkerson, planning her second Israeli Fest on campus to share what she's learned.

 

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Christian lover of Israel to receive Mordechai Award
Hospital executive G. Richard Hastings belongs to First Baptist Church of Raytown (MO) but he's done more to study Judaism and to support Israel than all but a handful of local Jews. That's why on Feb. 11 at the Westin Crown Center Hotel, Rich Hastings will become the first non-Jew to be honored with the Mordechai Award at the 10th annual Purim Gala, a benefit for Congregation Beth Israel Abraham & Voliner (Orthodox).

 

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Why no airline mergers? Finally the answer...

For years I have been wondering why there has not been an abundance of airline mergers. I have asked many people I thought wiser than I in the investment world and not received a satisfactory answer.  The light bulb finally came on at a lecture on business ethics by the renowned Rabbi Dr. Meir Tamari, an octogenarian economist visiting from Israel. According to his bio, he served the Bank of Israel for 30 years rising to the position of Chief Economist in the Office of the Governor and also served as a special consultant in the fields of risk evaluation, small firms and entrepreneurship for the British, Japanese, French and U.S Governments as well as the World Bank.

 

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INTRODUCING…INTRODUCING… INTRODUCING…INTRODUCING… INTRODUCING…INTRODUCING… INTRODUCING…

Plenus, Israel's only venture lending fund
Plenus, founded in September 2000, lends money via credit lines to mature and medium-stage technology companies. By leveraging a strong relationships with the global venture capital community, Plenus designs credit facilities focusing on enhancing growth and limiting equity dilution. The Dovrat group company is now preparing to raise capital for a third fund, Plenus 3, which should have $70 million to $100 million under management. The fund is working on a private placement memorandum (PPM) and is expected to start raising the money in practice in the year's second half. Plenus manager Moti Weiss told reporters that the group should finish collecting pledges by year-end 2007, and start investing in 2008. The company is tapping Israeli, American and European institutional investors. A few months back Plenus, which was founded in 2000, set up a mezzanine fund with $80 million to lend.

Plenus' first fund, launched in 2000, had $52 million under management. From August 2007, it will stop extending loans. Plenus I is profitable: market sources estimate that it returns 10%, a figure that should increase if Wintegra goes public. The second fund, from 2005, has $56 million under management. It will be lending until 2015, and market sources believe its rate of turn is 40%. During the year 2006 Plenus was involved in eight exits, including the sale of Identify to BMC for $150 million, the sale of Whale Communications to Microsoft for $75 million, and most recently, the sale of FolloWap to NeuStar for $140 million.

Plenus has completed about 30 deals to date of over $100 million total credit facilities. Investors in Plenus include both foreign and Israeli financial institutions and Private Funds such as Bank Leumi, Israel Discount Bank, Migdal Insurance, Phoenix Insurance, Citibank and D Partners. Plenus, alongside Carmel Ventures, DOR Ventures, D Partners, Peregrine and Vintage Ventures make up the Dovrat Group. The Group controls more than $750 million and is managed by Aharon and Shlomo Dovrat.

 

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The Israel Business Update

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The Galilee Institute
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