Compugen Plunges With 26% Discount Sale: Israel Overnight

Compugen Ltd., the Israeli biotechnology company using computer algorithms to identify targets for cancer drugs, fell the most since 2008 after it sold shares at a discount.

Compugen plunged 20 percent on Feb. 28 to $11.34 to trade $2.13 lower than Tel Aviv shares, the biggest gap on record. The shares slid 13 percent in Tel Aviv today. They traded at $14.20, the highest since 2000, on Feb. 27 in New York, the day before Compugen said it was selling six million ordinary shares at $10.50 a piece, a 26 percent discount. The Bloomberg Israel-US Equity Index of the largest Israeli companies traded in New York rallied 1.8 percent last week.

The company, based in Tel Aviv, is seeking to take advantage of the 80 percent surge in the stock since Aug. 5, when it announced a partnership with Bayer AG on cancer immunotherapy. While investors expect Compugen will obtain a similar agreement with another company, the sale dilutes other shareholders, said Graig Suvannavejh, an analyst with MLV & Co.

“They ultimately could always benefit from having more dry powder” he said in a Feb. 28 by phone from New York. “The deal priced at $10.50, and somebody’s saying, ‘Why should I buy this at $14?’”

Compugen, founded by members of an Israeli army intelligence unit that designed software to break codes, uses computer programs to discover proteins that may have the ability to treat diseases. It then finds partners that pay to develop drugs. The company has never generated a profit since it started trading on the Nasdaq in 2000, according to data compiled by Bloomberg.

Teva, Perrigo

Compugen’s shares in Tel Aviv soared 41 percent on Aug. 5 after Bayer agreed to pay $10 million upfront in cash to Compugen in excess of $500 million for meeting targets in researching, developing and commercializing cancer therapies.

Teva Pharmaceutical Industries Ltd. rallied above $50 per share for the first time since 2011 on Feb. 28 while Perrigo Co., the largest maker of generic over-the-counter medicines in the U.S., posted the best monthly gain since November, as speculation mounted the companies will pursue new acquisitions this year to bolster growth.

Teva climbed 3 percent last week to $49.89, the highest since June 2011, after rising to as much as $50.70. Perrigo gained 3.4 percent, boosting its February advance to 5.6 percent.

More Deals

Mylan Inc., the biggest U.S. generic-drug maker, said it may make a large acquisition this year, Chief Executive Officer Heather Bresch said last week. Dublin-based Actavis Plc on Feb. 18 agreed to buy brand-drug maker Forest Laboratories Inc. for $25 billion.

“There’s been a lot of deal announcements, a lot of discussion around the potential for more deal announcements, and the stocks that have been reacting are the ones who are pursuing the larger transactions,” Randall Stanicky, an analyst at RBC Capital Markets, said by phone from New York on Feb. 28. Perrigo is “going to continue to do deals and continue to supplement further growth on top of that.”

Perrigo said in July that it would buy Irish drug company Elan for $8.6 billion. The merger reduced its tax rate by about 10 percentage points, Royal Bank of Canada said last month, freeing up cash for more acquisitions.

The Bloomberg Israel-US gauge rose to 116.19 last week, extending this year’s advance to 4.5 percent. It gained 6.6 percent in February, compared with a 3.9 percent advance for the TA-25 gauge.

Before it's here, it's on the Bloomberg Terminal.