Hepatitis C Pill Race Makes BioLineRx a Buyout Target: Israel Overnight

BioLineRx Ltd. (.BLRXARB) surged in New York trading, widening the premium versus its Tel Aviv shares to a record, on bets the biopharmaceutical company will be acquired following its licensing agreement for a hepatitis C treatment.

BioLineRx’s American depositary receipts jumped 69 percent on the Nasdaq Stock Market yesterday, swelling the premium to the Israeli stock to 28 percent. The Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York rose 0.1 percent to 92.53. Check Point Software Technologies Ltd. (CHKP) led gains after Topeka Capital Markets Inc. recommended buying shares of the maker of network security equipment.

BioLineRx’s agreement with French company Genoscience to develop and sell a hepatitis C pill treatment boosts the odds that the Jerusalem-based company will be bought, according to Morgan Joseph TriArtisan Group. Bristol-Myers (BMY) Squibb Co. and Gilead Sciences Inc. (GILD) announced $13.3 billion of acquisitions in the past two months to buy developers of hepatitis treatments.

“The fact that BioLineRx now has a highly novel hepatitis C drug in its armory should make the company an appealing target for strategic partners,” Raghuram Selvaraju, a New York-based equity analyst at Morgan Joseph TriArtisan, said by e-mail yesterday. “The hepatitis C viral infection space is an area that has been particularly hot recently.”

The Bloomberg Israel-US 25 Index has gained 10 percent this year, outperforming the Nasdaq Composite Index’s (CCMP) 7 percent advance and the Standard & Poor’s 500 Index’s 4.5 percent increase. A 14 percent jump in Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic drugs, has helped pushed the Israel-US 25 higher.

BioLineRx ‘Euphoria’

Bristol-Myers, a biopharmaceutical company based in New York, said on Jan. 7 it would pay about $2.5 billion in cash to buy Inhibitex Inc. (INHX), which is developing an oral drug called INX-189 for treating hepatitis C. Pharmasset Inc. (VRUS), based in Princeton, New Jersey, agreed to be acquired by Gilead Sciences for $10.8 billion in a deal announced on Nov. 21.

Gilead, the world’s largest maker of HIV drugs, offered the highest premium on record for a drug takeover of comparable size, according to data compiled by Bloomberg.

As many as 170 million people worldwide carry the hepatitis C virus, a blood-borne disease that can lead to liver cirrhosis and cancer, according to the Centers for Disease Control and Prevention in Atlanta. The market for medicines to treat the disease is about $3 billion worldwide, saidAndrew Berens, a senior health-care analyst with Bloomberg Industries.

“The euphoria you’re seeing is mostly related to the fact that the announcement makes the company an acquisition target,” Berens said in a phone interview from Skillman, New Jersey. “An oral drug is what everyone is trying to develop because the current injection treatments are toxic and cumbersome.”

Volumes Surge

BioLineRx’s ADRs rose to $5.55 after the shares in Tel Aviv climbed 37 percent to 1.65 shekels, or the equivalent of 44 cents. One ADR represents 10 shares.

Phone messages and e-mails sent to Garth Russell, a spokesman for BioLineRx from an external public-relations company, seeking comments on a potential buyout weren’t returned.

Trading volumes on the stock soared yesterday, with more than 6 million BioLineRx ADRs exchanging hands, compared with an average of 7,000 trades a day, according to Bank of New York Mellon Corp.

The Israeli biopharmaceutical company, whose largest shareholder is Teva (BLRX), listed the ADRs on the Nasdaq Stock Market on July 25.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq, the most of any country outside the U.S. after China. The nation is also home to the largest number of startup companies per capita in the world.

Venture Capital

Israeli technology companies raised $2.14 billion in 2011, 70 percent more than in 2010, according to the IVC-KPMG Quarterly Survey e-mailed yesterday.

Check Point, the world’s second-largest maker of network security equipment, climbed 1.2 percent to $56.52 in New York, the highest closing price since Nov. 16.

Shares will probably gain 38 percent to $78 in the next 12 months, Frederick Ziegel, an analyst at Topeka Capital Markets, wrote in an e-mailed report yesterday where he rated the company a “buy” in initial coverage.

EZchip Semiconductor Ltd. (EZCH), a maker of network processors that counts U.S. Internet infrastructure company Juniper Networks Inc. (JNPR) as a customer, gained 3.5 percent to $34.02, swelling the premium versus its Tel Aviv shares to $1.48, the widest among the dually-listed companies.

Bottomed Out

The Philadelphia Semiconductor Index (SOX), which investors use to track chip industry performance, added 0.4 percent yesterday, extending this year’s gain to 14 percent.

Texas Instruments Inc. (TXN), the world’s largest maker of analog chips, said on Jan. 24 that fourth-quarter sales and profit declined less than analysts had predicted, signaling to brokerage Benchmark Co. that the market for electronic components has bottomed out.

“The chipmakers group seems to be on an upper inflection point,” Gary Mobley, an analyst at Benchmark, said by phone from New York yesterday. “Companies are talking about an end of inventory depletion and see increases in bookings.”

Perrigo Co. (PRGO), the largest U.S. maker of generic over-the- counter drugs, fell 2.1 percent in the U.S. to $97.54 yesterday after its shares in Tel Aviv gained 0.3 percent to 373.50 shekels, or the equivalent of $98.65. The $1.11 discount was the biggest among dually-listed companie

By Tal Barak Harif - Jan 24, 201
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