Israeli colon capsule maker reels in $24M in IPO and private placement

Check-Cap's ingestible capsule for early colon cancer screening--Courtesy of Check-Cap

Israeli diagnostic outfit Check-Cap raised $24 million in an initial public offering and a simultaneous private placement, giving the company a boost as it looks to develop its disposable imaging capsules for colorectal cancer screening.

The Isfiya, Israel-based company brought in $12 million from its IPO, lower than the $15 million it said it was aiming for in its most recent prospectus. But Check-Cap also closed a $12 million private placement led by Chinese fund Fosun Pharma and existing investors including GE Healthcare ($GE) and Pontifax, raising a total of $24 million. The company plans to list on the Nasdaq under the ticker symbol "CHEKU."

Check-Cap's IPO also included two option series, including one designed to incentivize long-term shareholders. The option allows investors to exercise their options at $6.90 per share, with one-third after a year and two-thirds after two years, but only if the holder continues to hold the shares for which he/she received the options. Check-Cap is also issuing Series A warrants that allow holders to purchase an ordinary share at an exercise price of $7.50, with the warrants becoming usable after 45 days and expiring after 5 years, the company said in a statement.

A fresh infusion of cash helps Check-Cap as it makes headway with its capsule technology for colon cancer screening. The company's ingestible capsules include X-ray technology adapted from radars used in Israeli navy ships to capture 3-D images of the colon, allowing patients to continue "his or her daily routine" and avoid hospital visits or bowel-cleansing procedures, according to Check-Cap's website.

The product is not yet available in the U.S. or EU, but the company's IPO and private placement could help Check-Cap complete its clinical trial of the product on 60 patients, allowing it to register the capsule for marketing in Europe in 2015, Globes reports. The company also hopes to kick off a U.S. clinical trial for the product in 2016, aiming for a stateside product launch in 2017.

Check-Cap is not the only diagnostic outfit developing innovative colon cancer products. In 2014, Covidien--now Medtronic ($MDT)--shelled out $860 million for Israeli devicemaker Given Imaging to get its hands on PillCam, a tiny ingestible camera that captures endoscopic images of the esophagus, small bowel and colon to screen for colorectal cancer. The acquisition was meant to expand Covidien's GI offerings and help the company grab a bigger piece of an estimated $3 billion GI market, Bryan Hanson, group president of Covidien's medical devices and U.S. divisions, said in an earlier statement.

- read the release
- here's Check-Cap's SEC filing
- and here's the Globes story

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