Caesarstone, Kamada Sell Shares as Wall Street Soars

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Some 7.8 million shares in Caesarstone Sdot Yam, the maker of kitchen countertops, were sold on Thursday by its two biggest shareholders, Tene Investment Fund and Kibbutz Sdot Yam, for a combined $181 million. The sale, equal to a 23% stake in the company, came just a year after Caesarstone's initial public offering.

The same day, Kamada, the Tel Aviv-traded maker of plasma-derived protein therapeutics, filed a draft prospectus for a U.S. initial public offering. The size of the offering and its pricing remain open but in a precis of the plan sent to institutional investors it was estimated that Kamada would seek to raise $69 million.

Caesarstone and Kamada are gearing up just as the S&P-500 index, a benchmark for Wall Street, has roared to record heights for the year, with a gain of more than 11%. It took less than four months for the S&P to pass year-end 2013 targets of about two-thirds of the strategists polled by Thomson Reuters in December.

Kamada, which is managed by its CEO and co-founder David Tsur, extracts a protein known as Alpha-1 Antitrypsin, or AAT, from human serum. The protein has immuno-modulatory, anti-inflammatory, tissue protective and antimicrobial properties.

The company said that it plans to use the proceeds from its U.S. offering to pursue more clinical tests and develop AAT for additional indications.

Presently Kamada has five plasma-derived protein products in development, including an inhaled formulation of AAT for treatment of AAT deficiency. The company says that Glassia, its flagship product, is the only liquid, ready-to-use, intravenous plasma-derived AAT product approved by the U.S. Food and Drug Administration. It is for use by adults with emphysema caused by congenital AAT deficiency.

In the U.S. and Australia, Glassia is marketed by the U.S. pharmaceuticals giant Baxter under an agreement signed in 2010, the year the FDA approved the treatment. Since then, Glassia has racked up sales of $66 million as of the end of last year and turned into Kamada's growth engine, opening it the door to the U.S. capital markets.

Glassia's sales rocketed to $34.2 million last year from $11.7 million in 2010, helping the company to generate an operating profit last year of about $4 million, after a $10 million operating loss in 2010. On the TASE, the company's share price has climbed nearly 65% in the past year. It has a market capitalization of NIS 1.09 billion.

Kamada says the market potential for Glassia, which is also sold in Israel, Russia, Slovenia, Croatia, Brazil and Argentina, is enormous. It estimates there are 200,000 suffered in the U.S. and Europe alone, only 10% of whom have been identified. No more than half those get treatment.

Kamada says that one way it can achieve growth is through its AAT inhaler, which is now in the second of three clinical trials in Europe needed to win regulatory approvals. In the U.S, it is about to embark on a Phase II trials.

Caesarstone shares dropped 4.9% on Friday, a day after selling stock for $23.25 a share. But until then, the stocks had shown a return of close to 120% since it began trading in March last year.

Tene, which sold the lion's share of the stock and now holds just 2% of Caesarstone, earned some $141 million in the sale, 3.8 times what it invested in the company in two rounds in 20067 and 2009.

The kibbutz sold just a 1.4% equity stake in Caearstone, earning it $11 million but leaving it with a controlling 52.7% of the company. Leumi Partners, the holding company of Bank Leumi, was another investor that sold, divesting a 5% stake for NIS 150 million on a NIS 35 million investment made in Caesarstone in 2006.

J.P. Morgan, Barclays Capital and Credit Suisse Securities managed the offering.

The company's net income grew 36% last year to $39.6 million on sales of $296.76 million. The company said in February that it expects the latter to grow to as much as $340 million.

Yossi Shiran, Ceasarstone's CEO, says the company enjoys bright growth prospects as the number of housing starts in the U.S. starts to grow again and quartz countertops gain market share over alternatives such as granite laminate.

Commuters walk past police barricades near the New York Stock Exchange (NYSE) on Tuesday, Nov. 22, 2011. Almost every week since August has brought news of firings by the world's biggest banks. Credit: Bloomberg

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