From oil prospecting to biotech

Businessman and Habadnik Chaim Lebovits, who has operated in the oil and gold production businesses in exotic places like Burkina Faso and the Ivory Coast, has recently decided to invest in the Petah Tikva biotech firm.

He has been looking carefully for the past few months at BrainStorm, and representatives from Ram Caspi's law office have already finished preparing due diligence documents. The investment's official announcement was released last week, and Lebovits was appointed company president.

Founded in 2004, BrainStorm has developed an innovative treatment for diseases caused by the degeneration and death of nerve cells, such as Parkinson's and ALS. The new treatment uses stem cells from the patient.

The company has been traded over the counter on Wall Street since 2004 on the bulletin board lists at a small valuation of $12 million. The company's financial situation is not impressive, and therefore, it has been looking for an investor.

The firm has a deficit of $2 million in shareholder equity, and already has received $4 million in investments and loans.

Lebovits will invest $5 million in installments in return for a controlling share.

It is assumed that at the end of the investment period, he will hold 51 percent of BrainStorm.

It also appears that information about the investment leaked out early, as shares of the normally sleepy firm rose 30 percent during the two days prior to the announcement. The stock has risen 70 percent since the beginning of 2007.

Lebovits wants to bring the company to the attention of investors and recruit well-known financial figures as advisers.

"Biotechnology investors passed over this company since it did not have any marketing," he told TheMarker last week. "There is no awareness about the company. Israeli scientists have no commercial touch." He added that the share price is at its bottom and has no room to fall any further.

The investment will be made via Lebovits' holding company ACC, which has established the biotechnology subsidiary ACCBT.

Lebovits immigrated to Israel at the age of 20, and lives in Jerusalem. He has worked for the Habad organization and in the diamond business, and set out on his own in 2005.

He is well known in the ultra-Orthodox community, and is considered close to Avigdor Lieberman and Benjamin Netanyahu.

The scientific side of BrainStorm is headed by Professor Eldad Melamed, the head of the neurology department at the Rabin Medical Center in Petah Tikva, and Dr. Daniel Offen, the head of the neuroscience laboratory at the Felsenstein Medical Research Center at Tel Aviv University.

The company's technology takes bone marrow cells from the patient, and uses them to separate stem cells for growing new nerve cells for treatment.

Lebovits said he intends to provide the necessary financial resources for completing the development of the company's products. The firm has had success with rats and mice with Parkinson's disease, and is conducting safety testing on monkeys at a university hospital in Spain.

At the same time, the company is preparing a request for U.S. Food and Drug Administration approval to conduct clinical trials on human beings.

"The internationally-acclaimed scientific team at BrainStorm has achieved remarkable results in developing a cutting-edge stem cell technology, and is well on its way to meeting the unmet need for therapies targeting devastating medical disorders with multi-billion market potential," Lebovits said.

"I am looking forward to being a part of this dynamic organization," he added.