In the Israeli Press lotion by benbenzhou


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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

                                   RTD related news

                      In Israel
                              Issue N° 172 – 16 September 2005
 Actu Actuality                                           Life Life Sciences Genomic & Biotechnology
 AeSp Aeronautics & Space                                      for Health
 Cult Cultural Heritage                                   NMP Nanotechnologies, Nanosciences, Multif.
 Eco  Economy & Trade                                          Materials, Production Processes
 Edu  Education                                           Pol  Policy & Regulation
 Ener Energy                                              Secu Security Technologies
 Env  Environment                                         ScSo Science & Society
 Food Food Quality & Safety                               Stat Statistics
 Hum Human resources & mobility                           Tran Transport
 Int  International Co-operation                          TT    Technology Transfer
 IST  Information Society Technologies                    VC   Venture Capital

Science & Technology
    1. Life Colonoscopy safe for octogenarians
Colonoscopies effectively look for colon cancer and remove pre-cancerous polyps in people as old as 90
     2. Life Discovering the real baby Einsteins
You may think that your baby is merely gazing at the stars, when in fact, she may be counting them. That's
what Israeli researcher Dr. Andrea Berger and her colleagues have set out to investigate in their pioneering
research on what goes on inside the minds of young babies, focusing specifically on their mathematical
abilities (11/09/2005)
     3. IST Israeli technology safeguards your mobile phone
Just when you thought you had protected your PC to the hilt, a new threat has emerged on the horizon - an
attack on your mobile phone or PDA. Netanya-based Discretix has developed a security solution for mobile
handsets called CryptoCell, which protects sensitive information against damage from malicious attack
    4. Mazor spinal surgery device gets FDA approval
Mazor Surgical Technologies has developed a platform for minimally invasive spinal surgery (14/09/2005)

     5. IST/Int Partner Buys IC-1 for $18M
Israel’s largest cellular operator buys IC-1 fiber-optic transmission outfit to try and cut costs and offer new
products and services 906/09/2005)

Policy, Miscellaneous
    6. Israel Developing AIDS Vaccine
Finance Ministry seeks institution to develop AIDS vaccine based on a biological agent discovered by
Agriculture Ministry (22/08/2005)
    7. Health funds will have NIS 1b in business in 5 years
BDO Ziv Haft: They will become leading business enterprises (06/09/2005)
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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

    8. Int/IST BSA Cuts Israeli piracy
The Business Software Alliance says its latest campaign to reduce software piracy in Israel has been a big
success (08/09/2005)
    9. U.S. scientists seek ethics guidance from Israel on stem cell research, they tell
       Bar-Ilan conference
The bioethics advisory committee of the Israel Academy of Sciences and Humanities has decided that
within the framework of IVF, embryos no longer destined for implantation may be used for research if the
sperm and egg donors give their informed consent, said Prof. Michel Revel (09/09/2005)
    10. Low-tech industry wins R&D grant priority
The Office of the Chief Scientist will finance half of worthy R&D programs in low technology industries
    11. Env International Ozone Day – September 16, 5002‫‏‬
Under the theme, Act Ozone Friendly – Stay Sun Safe, International Ozone Day will be celebrated on
September 16. Israel has instituted numerous measures to implement the Montreal Protocol (13/09/2005)
   12. IST/Int Israel, CA to cooperate in industrial R&D
Computer Associates will offer benefits to Israeli companies that collaborate in the program (14/09/2005)
     13. IST/Int/Pol Deep Breeze gets European all clear for imaging tech
Deep Breeze announced yesterday it has received a CE mark, declaring its first product, VRIXP, a safe and
effective system. With the certification, the company can market its vibration response imaging (VRI)
technology to physicians in European Union countries (15/09/2005)

Start-Ups, Venture Capital
    14. VC Israeli Startup Valuations Rise
Survey finds 65 percent of Israeli venture-backed startups raised funds at higher valuations than in previous
rounds (30/08/2005)
    15. Two vitamins are better than one
Dermipsor doesn’t know exactly how its anti-psoriasis cream works, but that didn't stop Noam Lanir and
Beny Alagem putting their money in. (07/09/2005)
    16. IVA's Oron: Israel VC must raise, invest $8-10b in 5 years
Israel Venture Association chairman Yoram Oron at E&Y Journey 2005: There's a potential shortage of
R&D funding for seed and early stage companies (15/09/2005)

Globes Survey “Most Promising Start-up”
    17. - Ten tipped to be the next big things
Success in technology can't be predicted with certainty, but the experts who took part in our "Most
Promising Start-up" survey may be relied on to come as close as you can get. (15/09/2005)
    18. - Most promising start-up in 2005: Mellanox
CEO Eyal Waldman wants a mega-IPO (15/09/2005)
    19. BigBand: Beating Cisco and Motorola
The company has technological superiority and higher sales than any other Israeli start-up, but it won’t get
to Nasdaq without a sizeable profit. (15/09/2005)

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

                 Documents available on request (
                                 Le secteur des biotechnologies en Israel
Le secteur des sciences de la vie est en forte croissance depuis une dizaine d'années en Israël. Les efforts
investis par le gouvernement, la communauté scientifique et les industriels ont fait d'Israël un pole
d'excellence technologique dans ce domaine. En novembre 2004, le comite de la recherche et
développement a décidé que les biotechnologies et les nanotechnologies deviendraient les secteurs
prioritaires en termes de financement. Ce rapport fait une compte-rendu des chiffres-clés du secteur, du
soutien gouvernemental, des acteurs du marche et des coopérations internationales
                      Origine : Ambassade de France en Israel - 5 pages - 1/08/2005

                                 Le secteur des nanotechnologies en Israël
C'est avec la création du Comité national pour les nanotechnologies, composé de huit experts scientifiques,
qu'Israël affirme sa volonté de se positionner sur le secteur. Les priorités pour la recherche sur les
nanotechnologies en Israël sont les nanomatériaux, la nanobiologie et la nanoélectronique entre autres. De
plus, les priorités technologiques devraient inclure des applications en matière d'énergie et de dessalement
de l'eau
                       Origine : Ambassade de France en Israel - 4 pages - 1/08/2005

                                             FP5 – FP6
                            FP5 Projects involving Israeli Partners
       EXCEL file – Source: CORDIS (623 projects as at 23 September 2003) – available on-line
                            *FP6 Projects involving Israeli Partners
                     EXCEL file – Source: EC & CORDIS available on-request
           (In order to compile a complete list, everyone's feedback is extremely valuable)

                       Scientific Activities of the Weizmann Institute - 2004
                                              Available on line
                       Les avancées da la recherche anti-cancer en Israel
                                      Ambassade de France, Tel Aviv
                                       PDF Document, April 2005
                                      Intellectual Capital in Israel
                  PDF file – Source: Ministry of Industry and Trade (December 2004)
                   (Part 3 of the report dedicated to the activities of the Chief Scientist)
                                          What is Bioethics?
               Pr. Michel Revel, Président du Conseil National de Bioéthique d' Israel
 Présentation Power Point faite par le Pr. Michel Revel, Président du Conseil National de Bioethique d'
                              Incentives for Industrial R&D in Israel
                       Ministry of Industry & Trade-PDF File- January 2005
               Public Internet Access, The Israeli Case: Operators and Industry
                        PPT file -, Ministry of Communications (October 2003)
                        Telecommunications Industry & Market in Israel
                  PPT file – Source: Ministry of Communications (February 2004)
                                       LIFE SCIENCES & BIOTECH
                        Population-Based Large-Scale Collections of DNA
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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

           WORD file, 29 pages – Source: IL Bioethics Advisory Committee (December 2002)
             Draft position paper for Israel on the subject of cloning research
                WORD file, 17 pages – Source: Weizmann Institute (August 2002)
               The Use of Embryonic Stem Cells for Therapeutic Research
            WORD file, 25 pages– Source: IL Bioethics Advisory Committee (August 2001)
                                       Biotechnology Israel
                                WORD file, 219 pages (October 2002)
                                    Israel Bio Plan 2000-2010
                      PDF file, 8 pages - Source: Ministry of Trade & Industry
                             Israel Biotechnology Strategy Project
             WORD file, 79 pages – Source: Ministry of Trade & Industry (March 2001)
                                       AERONAUTICS & SPACE
                                          IAI’s R&D in FP5
                  Word file, 106 pages – Source: Israel Aircraft Industries (July 2002)
                                    IAI’s areas of interest in FP6
                  PDF file, 81 pages – Source: Israel Aircraft Industries (Sept. 2002)
                                    Israeli R&D in Nanotechnology
                       PDf file – Source French Embassy in Israel (Summer 2004(
                              Israel rides the Nanoscience Revolution
                          PDf file – Source Jerusalem Report (Summer 2004(
              Word file, 7 pages - Source: Ministry of Industry and Trade (January 2003)
            The Effects of Current Events on the Israeli Economy and Investments
               PPT file – Source: Ministry of Industry and Trade (updated March 2003)
                           Israel Investment News – First Quarter 2003
                   WORD file, 17 pages – Source - Ministry of Industry and Trade
             See also “Israel involvement in the EU’s Research Framework Programme”

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

                ---: Events in which EU & EC contribution is more than welcome
                  The EC Delegation in Tel-Aviv will be happy to help & support
Published in previous issues
                                          LSH 4th Call Info Day
             Introduction to the topics on the last call of life sciences and Health (Priority 1),
   with special emphasis on the projects dedicated to SMEs and intr. to health research planned for FP7
                                    September 19th, 2005 – 8.30-12.30
                       ISERD's offices, Industry House, 29 Hamered St.- Floor 14
                                             Keynote speaker
   Dr. Irene Norstedt, Scientific Officer at Priority 1 (Life Sciences, Genomics and Biotechnology for
                               Human Health) of the European Commission

                                            Energin 2005
                                       Energy and Infrastructures
                                        19-20 September 2005
                                               Tel Aviv

             International Conference on « Microorganism-Water and Acquifers »
                                Organized by Ben Gurion University
                                    September 20 and 21, 2005

          The 20th International Congress of the Israel Society of Anesthesiologists
                                27-29 septembre 2005, Tel Aviv

                                       Intensive Cardiac Care
                                   27-29 septembre 2005, Tel Aviv

                          8th National Conference Israel Soc. for Quality
                                           Nov. 23-24, 2005
                                      David Intercontinental, TA
                                    (details will be provided asap)

                                       ISRANALYTICA 2006
                    The 9th Annual Meeting of the Israel Analytical Chemistry Society
                                         January 17-18, 2006
                                David Intercontinental Hotel, Tel-Aviv

           Cost 38 - European Cooperation in the Field of Science and Technical Research
                             4-8 February 2006, Jérusalem & Mer Morte
                            Biomed Israel 2006: Conference & Exhibition
                                  Biotechnology and Medical Device
                          May 29-31, 2006. ICC Jerusalem (Binyanei Hauma)

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

                                   RTD related news
                                    In Israel
                             Issue N° 172 – 16 September 2005

                                    Science & Technology
    1. Colonoscopy safe for octogenarians
Colonoscopy can be safely and effectively used to look for colon cancer and remove pre-
cancerous polyps in people as old as 90, according to doctors at the Rabin Medical
Center-Hasharon Campus. After that age, people who need such a test should undergo
"virtual colonoscopy" – a non-invasive computerized scan.
Dr. Hemda Weiss, a senior Hasharon gastroenterologist who headed the study, and her
team examined 21 men and 22 women ranging in age from 90 to 97 who had undergone a
colonoscopy, in which an endoscope is introduced into the rectum and pushed to the
upper end of the large intestine to look for growths.
They compared success rates with two control groups who had undergone colonoscopies
– one aged 50 to 59 and another aged 70 to 79. Both of the younger groups underwent the
full scan without any immediate complications, Weiss reports in the latest issue of Orek
Rashi, the Rabin Medical Center's monthly newsletter.
Those over 90 did not have immediate complications either, but in 35% of them doctors
were unable to complete the colonoscopy because the large intestine was twisted and is
less flexible in this age group.
This happened in only 16% of those aged 70 to 79. Patients of any age who suffered from
anemia (low iron levels) were also less likely to have a full colonoscopy. The older the
patient, the more likely they were to have pre-cancerous polyps and malignant growths in
the colon.
Weiss said that if a virtual colonoscopy in nonagenarians produces suspicious results,
these patients should undergo a conventional colonoscopy to remove tissue for a biopsy.
Jerusalem Post, 11 September 2005
    2. Discovering the real baby Einsteins
You may think that your baby is merely gazing at the stars, when in fact, she may be
counting them.
That's what Israeli researcher Dr. Andrea Berger and her colleagues have set out to
investigate in their pioneering research on what goes on inside the minds of young
babies, focusing specifically on their mathematical abilities.
Berger, a lecturer at Ben-Gurion University of the Negev says that the aim of her project,
conducted together with experts at the University of Oregon, is to provide data to back up
the theory tha "babies can process quantity data very, very early in life and can even
perform very basic mathematical operations like addition and subtraction."
"The overall direction of our work is to look for the development of executive attention
and cognitive functions in babies. The way I decided to do it was to connect it to the
babies' perception of quantities," Berger told ISRAEL21c.

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

Berger may be conducting basic research, but her work and the cutting-edge
technological tools she is using to conduct it could someday be harnessed to detect
developmental problems or learning disabilities during infancy and therefore allow
intervention to begin earlier.
With the help of well-baby clinics and cooperative parents in the southern city of
Beersheba, Berger has been conducting research that involves the babies wearing a cap of
electrodes, which allows her to pursue a methodology known as 'event-related potential'
or ERP.
ERP measures the electrical activity produced by the brain in response to a sensory
stimulus or associated with the execution of a motor, cognitive, or psychophysiological
More than 50 babies are participating in the study that is trying to figure out what is
going through their minds via this sophisticated electrical scan. Using a warm salt-water
solution, Berger's carefully trained team attaches to each baby's head a shower cap-like
covering called a 'geodesic-net', which consists of 128 electrodes woven together. The
electrodes transmit the electricity to a computer, which displays the brain activity.
The ERP technique enables the analysis of the electrophysiological responses measured
from the scalp as a response to a certain event or stimulus.
ERPs provide unique and important timing information about brain processing. Mental
operations, such as those involved in language processing, and memory, takes place tens
of milliseconds. While other brain imaging techniques are unable to capture the precise
sequence of these operations, ERP recordings are unique in that they are able to provide a
millisecond-by-millisecond reflection of evoked brain activity.
For this reason, ERPs are an ideal methodology for studying the timing aspects of both
normal and abnormal cognitive processes, and are increasingly popular as a tool for
Berger was the first to bring the geodesic-net ERP tool to Israel when she began using it
in her lab - since then, two more Israeli universities have acquired it. Using the technique,
she says "We are able to identify the exact millisecond when the baby is presented with
an impossible event, and we can examine the brainwaves and the pattern of activity."
Her research is attempting to verify and expand on famous research by Dr. Karen Wynn
of the psychology department at the University of Arizona. Ten years ago, Wynn
conducted experiments on young babies and came to the conclusion that they could
quantify small numbers of items.
Wynn studied infants who were first shown a picture of a Mickey Mouse doll - then
another doll. After that, half of them were shown a picture of two dolls, and half only one
doll - so half the group watched a correct mathematical equation and half an incorrect
Another group was shown subtraction shown a sequence of events depicting a subtraction
of one doll. First they were shown two dolls, then one was taken away, and at the end -
half saw one doll and half saw two - again, a correct equation and a mistaken one.
When Wynn recorded how much time each infant spent looking at the display, she found
that the infants looked longer at the 'wrong' answer to the problem, and that therefore the
babies had an understanding of the mathematical concepts, and that they knew that an

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

addition or subtraction results in a change in the number of items and what that change
should be.
Ten years later, Berger believes it is now possible to get a more detailed accurate idea of
what exactly is happening in the baby's minds using ERP - by measuring exactly what
electrical activity takes place when the baby looks at correct and incorrect mathematical
Signals produced by the brains of adults have already been studied. Research by Berger
and her colleagues in the field has determined that when adults make an error there is a
change in the electrical signal recorded at the scalp, which appears to be a signal of the
subject's awareness of making the error. More recently, they have discovered that the
same signal can be found in adults not only when the subject makes an error, but also
when adults are shown an error, for example, an erroneous computation such as 1 + 3 =
These adult signals can be used as a baseline to compare the activity in the babies' brains.
The 50 babies in Berger's study were all healthy, full-term babies without any known
problems. The parents and babies visited the lab for an hour, and the babies watched a
specially-designed film replicating the model of the Wynn research while sitting on their
parents' lab wearing the electrode cap. They were tape-recorded during the session to
allow the collection of gaze time for the correct and incorrect outcomes.
Berger is conducting her study jointly with Prof. Michael Posner at the University of
Oregon, an institution that is on the leading edge of ERP research, and the place where
she did her post-doctoral work.
Their research is being supported by the US-Israel Binational Science Foundation. She is
currently in the final stages of completing collecting her data collection and is now
beginning to analyze it.
Berger began her career working with computers, not babies. Born in Argentina, she
immigrated to the desert Israeli town of Arad in 1977 when she was in high school.
After her required army service was completed, she stayed on, working for the IDF as a
computer programmer, and at the same time completing her degree at Bar Ilan University
in computer science.
"When you do computer science at Bar Ilan, you have to choose a second track - most
people choose mathematics or economics, but I decided to study psychology, and was
very attracted to the subject."
After she left the army, she returned to Arad, and began graduate study in cognitive
psychology at Ben-Gurion University of the Negev, earning her master's and her
doctorate, followed by post-doctoral work in Oregon.
Her interest was in a very specific area called developmental cognitive neuroscience.
"It's the junction between cognitive psychology, developmental psychology and
neuropsychology," she explained.
Her current research is a natural outgrowth of her overall interest in relationship between
the brain and behavior during development, and the development of the executive aspects
of attention and control.
Returning home from her studies at Oregon five years ago, she received a special grant,
designed to bring new researchers to BGU. Today she is a lecturer and runs the ERP

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

laboratory and is the head of the developmental psychology program. She lives in the
town of Lehavim near Beersheba and is married with two daughters.
"It's a busy life with teaching, research and running the lab," she said. "But I wouldn't
want to do anything else."
Israel 21C, 11 September 2005
    3. Israeli technology safeguards your mobile phone

CryptoCell, which can be added to mobile devices at the chipset level, protects the
processor of a mobile device by isolating it from other parts of the computer
Just when you thought you had protected your PC to the hilt, a new threat has emerged on
the horizon - an attack on your mobile phone or PDA.
Though virus, hacker, and Trojan horse attacks on mobile devices have been rare and
limited in scope up to now, hitting only an estimated 70 million devices, Guy Salomon,
the CEO of Discretix, an Israeli specialist in embedded security technology for mobile
devices, predicts that by the end of 2006 or the start of 2007, virus and hacker attacks on
mobile devices will become as prevalent as they now are on the PC.
It is a gloomy prognosis. Currently about 100 million PCs are sold every year around the
world, but last year alone, some 700 million mobile phones reached the market, and this
year, the figure is likely to rise to $750m. "This is a huge market and a huge problem,"
Salomon told ISRAEL21c. "The potential damage is enormous and could run into
billions and billions of dollars."
For telecom companies themselves, this also spells disaster. Computer viruses can be
stopped by anti-virus software, or by formatting the hard disk. Cell phones, however, do
not have the processing power required to run anti-virus software. Instead, cell phone
users must take the infected phone to the operator's service station where it will be fixed,
or in some cases replaced. This threatens to be extremely time consuming for the operator
in terms of both resources and expenses, and also means that until the problem is solved,
the operator will not be making revenues from each telephone.
"This is a double penalty for the operator," says Salomon. "Not only does he have to fix
your phone, but he also does not even enjoy the usual income he receives for telephone

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

Salomon believes that Netanya-based Discretix has the answer. The company has
developed a security solution for mobile handsets called CryptoCell, which protects
sensitive information against damage from malicious attack.
CryptoCell, which can be added to mobile devices at the chipset level, protects the
processor of a mobile device by isolating it from other parts of the computer. This
enables it to live in a separate environment, protected against external attack. The
solution, which incorporates both hardware and software components, is transparent to
the user.
Discretix also provides protected against content transmitted between phones through its
product, CryptoFlash, a digital rights management (DRM) system. CryptoFlash encodes
and decodes content being sent between phones in order to prevent it from being copied.
Discretix was established at the start of 2000 by three former employees from DSP
Communications, which was acquired by Intel in November 1999. With the Internet
bubble still in place, Discretix raised $8m. from local VCs in its first round of financing
and started work with great enthusiasm. Six months later, the market crashed, and
Discretix was left floundering, wondering where on earth its market had suddenly
"It's embarrassing to look back on our first business plan and see what we predicted
then," admits Salomon. "At that time everyone thought this was going to be the next big
thing, and that within a matter of a year or two, 3G would be everywhere. Then suddenly
we were in crisis. I believed in our market and in our technology and we had money in
the bank, but many people felt it was hopeless and that the market was dead."
The company struggled on for another year, surviving on its initial offering, and then in
December 2001 signed an agreement with Ericsson to embed its technology into
Ericsson's chipset and create a security platform for Ericsson's 3G mobile phones. The
agreement was only worth about $500,000, but Salomon hoped that the deal with a top
tier telecom manufacturer would prove a breakthrough for the start up.
When life did not get easier, the company began moving into the flash card market.
Today about 60% of the company's business comes from telecom, and 40% from flash.
The CEO of Ericsson brought Discretix to the attention of Accel Partners, a large US VC.
At the end of 2003 Accel invested $9.5m. in Discretix with Israeli VC, Pitango Venture
Capital. This proved to be the real turning point. In the wake of this, and as business
began to pick up in the telecom field, Discretix has signed contracts with companies like
Sony-Ericsson, Samsung, LG, NEC, Philips, Mitsubishi, and other giants. In the DRM
field, Discretix has entered into a contract with SanDisk.
"We have more deals coming in now," admits Salomon. "We are growing like crazy, and
the company is in extremely good shape."
Today Discretix is the largest embedded security company in the world, recognized as the
market leader by research firms, IDC and Gartner. The company employs 52 staff in
Israel, and a further 13 around the world. It has been profitable for the last three quarters,
and this year expects to make an estimated $10m. in sales.
"I was the only one that believed the market was there for us," says Salomon. "We were
very stubborn and persisted when many other companies in the same field gave up or
went under."

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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

The upturn in the telecom market has brought increasing interest in this space. Over the
last 18 months, the competition has been growing, and Discretix's rivals today are not
small, emerging companies, but often large publicly traded organizations that have been
specializing up to now in the security field.
"People have recognized that this is a very sexy market. It's the largest consumer market
in the world," Salomon explains.
The main rivals on the market today are Maryland company, SafeNet, a Nasdaq traded
company that has been working for many years in the information security for customers
like the FBI and the CIA. SafeNet, which merged with Rainbow Technologies in March
last year to become world's seventh largest information security company, moved into the
mobile security field three and a half years ago, and now employs 300 people in the
sector. It has annual revenues of about $200m.
Salomon insists that though Discretix is a smaller company with the additional
disadvantage of coming from Israel, when its main markets are in the US and the Far
East, its technology is unique, fast, and stable. To maintain this advantage, Discretix
focuses heavily on R&D. and is already planning to introduce a third new product,
offering security for personal devices.
Salomon is extremely ambitious. Over the next three years, he hopes to turn Discretix
into a $100m. company, with profits of almost 80% of that figure. If all goes well, there
is talk of a public offering in 2007, the year that Salomon predicts will see the mobile
security market take off. "We are in a great and promising market and already have the
largest chunk of the market share. If we are smart enough we can now use this market
share and our knowledge to create something even bigger," he says.
Israel 21C, 11 September 2005
    4. Mazor spinal surgery device gets FDA approval
Mazor Surgical Technologies has received FDA approval for its newly developed Hover-
T Bridge, a platform for minimally invasive spinal surgery (MIS).
Mazor's flagship product, the SpineAssist, based on miniature robotic technology, is a
precise positioning tool. By teaming SpineAssist with Hover-T, Mazor can provide a
complete MIS platform for lumbar spine procedures.
The Hover-T is attached percutaneously to the patient allowing the SpineAssist to float
above the spine. This allows surgeons to accurately access any point in the spine through
a minimal invasive approach with minimal muscle or tissue disruption. Mazor stated that
Hover-T will allow for the first time the ability to navigate along the entire lumbar spine
without the need to expose bone, muscle or tissue, and makes it possible to perform
spinal procedures with the smallest of incisions.
Although MIS implants represent for the manufacturers a premium product with high
income, utilization is still very low. Mazor believes that the SpineAssist MIS platform
will change this trend and encourage usage of premium implant products and become a
major revenue generator for Mazor as well as for implant companies.
Professor Moshe Shoham founded Mazor within the Technion Incubator in 2001. The
company's main offices are located in Israel, with recently opened offices in the US.
To date, Mazor has raised over $19.5 million in two rounds. VC companies that have
invested in Mazor include Alice Ventures, Johnson & Johnson DC, Israel HealthCare
Ventures, Shalom Equity, Dor Ventures, Proseed, and ITP.
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  Delegation of the European Commission to the State of Israel
  Scientific Affairs

The Hover-T is scheduled to be launched and presented at the North American Spine
Society meeting which will take place in Philadelphia at the end of the month.
Globes 14 September 2005
    5. Partner Buys IC-1 for $18M
Partner Communications has signed an agreement to buy the transmission activity of the
IC-1 telecommunications transmission company for $18 million.
“The transaction will help us to reduce our costs and develop new products and services
in order to be the leader in personal communications in Israel,” said Partner CEO
Amikam Cohen.
Hong Kong-based Hutchison Whampoa is the majority shareholder in Partner. Partner is
currently paying tens of millions of dollars to Bezeq Israel Telecommunications and
Cellcom Israel to carry transmissions between the 10 installations that form its network
About half of IC-1’s 900 kilometers in fiber-optic cables are located off of Israel’s
Mediterranean coast and come ashore at major coastal cities. The company has also
deployed a fiber-optic network within Israel, serving 80 percent of the country’s
industrial parks.
“This is part of the consolidation process in the local telecommunications industry,” said
Gideon Lopez, senior telecommunications analyst at IDC Israel. “The next step will be
for Partner to enter the Internet segment.”
The IC-1 acquisition will initially enable Partner to provide transmission services for
business customers. At a later stage, the acquisition will serve as a foundation for
developing inland telephony and data communications services.
Red Herring, 6 September 2005
                                    Policy, Miscellaneous
    6. Israel Developing AIDS Vaccine
In an unprecedented move, Israel’s Finance Ministry set up a tender committee on
Monday that will select a scientific institution to develop an AIDS vaccine based on an
active pharmaceutical ingredient discovered several years ago in Israel.
The biological ingredient was discovered by a team in the Agriculture Ministry’s
Veterinary Institute. Researchers found the ingredient showed promise in repairing the
immunological system and helping in the fight against AIDS.
The Finance Ministry wants to promote research on the ingredient to develop an effective
drug. The effort is part of a new strategy to utilize intellectual property rights held by the
Israeli government.
The Finance Ministry said this is the first such effort and is part of an overall strategy to
capitalize on intellectual property developed in the public sector, primarily in the fields of
agriculture, health, and defense.
“There is tremendous significance to regulating intellectual property rights in the
government sector in order to better utilize the unique patents and assets,” said Yaron
Zalika, the Finance Ministry’s accountant general.
Greater Foreign Investment
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He added that a new policy in this field will lead to greater foreign investment in
advancing Israeli research and development.
Agriculture Ministry researchers conducted animal tests and claim the ingredient
protected cells against penetration by the HIV virus, while blocking its propagation.
The deadline for submitting preliminary information is October 6. The ministry’s tender
committee will examine the applications and then decide on a contract and the terms for
receiving the rights. The tender is open to local as well as foreign institutions.
The Agriculture Ministry team also filed patent applications in Israel last year and two
months ago in the United States. The Israeli government owns the rights to the ingredient.
Israeli Ministry of Finance, August 2005
     7. Health funds will have NIS 1b in business in 5 years
Accountancy firm BDO Ziv Haft predicts that Israel’s health funds will handle NIS 1
billion in business a year in five years, becoming leading business enterprises. This will
enable them to streamline, and because they own many properties, they will interest
BDO Ziv Haft said health funds could improve their properties by cooperating with
developers, through BOT (build, operate, transfer) or PFI (private finance initiative)
agreements to build hotels or malls. Health funds could also float subsidiaries, securitize
cash flow, or sell inactive assets, such as real estate.
Globes 6 September 2005
     8. BSA Cuts Israeli piracy
The Business Software Alliance (BSA) of Israel said it has experienced an unprecedented
response to its latest ad campaign launched in the beginning of September.
BSA attributed this success to the use of the Internet and interactive television for the
first time in its fight against pirated software. The software industry organization said on
Tuesday it received more than 60,000 calls to its various hotlines in the first week of the
“The response has been many times greater than our previous campaigns due to the use
of the new advertising methods,” said Eran Soroker, BSA’s Israel representative.
He added that calls to the various hotlines have already produced over 1,200 leads on
companies and enterprises suspected of using unlicensed software.
As a result of the latest campaign, Microsoft filed suit on Wednesday in Tel Aviv District
Court against the Petah Tikva municipality for alleged violations of intellectual property
rights regarding the use of its software.
The Redmond software giant asked the court to issue an injunction barring the
municipality, located just east of Tel Aviv, from using the copied software, and to pay the
company $120,000 in compensation.
BSA is investing several hundred thousand dollars in its latest campaign, which includes
television, interactive television, and Internet ads. The software industry advocacy group
estimates that business use of pirated software in Israel has dropped from 50 percent five
years ago to 33 percent today.
“Our target is to reduce this to 25 percent, which would be comparable to the level in the
U.S.,” said Mr. Soroker.
Red Herring, 08 September 2005

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     9. U.S. scientists seek ethics guidance from Israel on stem cell research, they tell
        Bar-Ilan conference
American scientists are looking to Israel for guidance on the scientific and ethical issues
related to embryonic stem cell research, the dean of the Columbia University faculty of
medicine said this week at a bioethics conference held at Bar-Ilan University.
"The U.S. is now looking to many laboratories in Israel, to modern innovations both in
the science and in the politics dealing with stem cell research," Dr. Gerald Fischbach,
who is also executive vice president for health and biomedical sciences at Columbia, said
at the conference Tuesday.
"I think the ethical debate is on a very high level, that it's not colored by religious dogma
the way it is in the United States," he told AngloFile.
The U.S. bans most federal funding for research on embryonic stem cells, which the
Catholic Church and many evangelical Christian leaders oppose because the embryos are
destroyed in the process. Israel, however, supports the practice, which leading Orthodox
rabbinic authorities in Israel and the U.S. say is acceptable because the cells are taken
from embryos that are less than 40 days old and are considered unformed beings.
Rabbis and scientists from Bar-Ilan and from Columbia and Yeshiva universities in New
York addressed the conference, called "Creating in God's Image: Ethical challenges in
stem cell research and in vitro fertilization."
Conference organizers hoped the lectures and discussions would create a "shared
terminology" between rabbis and scientists that would ultimately lead to a "dialogue that
will allow us to determine in an agreed-upon way the boundaries that we won't want to
cross, that we must not cross," said Bar-Ilan rector Prof. Yosef Yeshurun.
Stem cells are cells that are able to proliferate "seemingly without end," and those taken
from embryos are able to develop into many different cell types, Fischbach said.
Scientists hope to be able to implant them into diseased and damaged tissue, such as the
midbrain of Parkinson's patients and the pancreas of diabetes patients.
"The potential is unlimited - unrealized as yet, but that's the dream: that these will be
replacement parts for damaged tissues," said Fischbach.
The Roman Catholic Church, which sees fertilization as the beginning of life, opposes
destroying embryos, as do many evangelical Protestant leaders. "We deplore embryo-
destructive research, since it kills human beings in their earliest stages of development,"
the Southern Baptist Convention ruled in June.
However, Rabbi Moshe Tendler, who heads the Yeshiva University theological seminary
and is a leading authority on Jewish medical ethics, said embryonic stem cell research
does not violate halakha, or Jewish law.
"Before 40 days, we don't recognize this as an organized organism," said Tendler. "It's a
mass of cells. A mass of cells doesn't have humanhood."
Rabbi Daniel Sperber, president of Bar-Ilan's Jesselson Institute for Advanced Torah
Studies, said he doesn't see any "halakhic problems" with destroying an embryo that is
less than 40 days old. In Tractate Niddah, the Talmud refers to an embryo that is a few
days old as being "like a sack of water," Sperber said. "There are no skin and sinews. The
embryos doesn't have a real shape."
Most of the embryonic stem cells are taken from embryos that have been frozen in liquid
nitrogen after being created during in vitro fertilization. There are about 30,000 frozen
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embryos in Israel and 400,000 in the U.S. Embryonic stem cells can also be produced
through therapeutic cloning.
The bioethics advisory committee of the Israel Academy of Sciences and Humanities has
decided that within the framework of IVF, embryos no longer destined for implantation
may be used for research if the sperm and egg donors give their informed consent, said
Prof. Michel Revel, who heads the National Bioethics Council of Israel.
"There is no bad science or bad technology; it is only the use that we make of it that can
be destructive," Revel, who teaches molecular genetics at the Weizmann Institute of
Science, told the conference.
Although stem cells also exist in adults - including in the skin and bone marrow - they
tend to be few, are hard to isolate and can give rise to a limited number of other types of
cells, said Fischbach.
However, Harvard University scientists published research last month describing their
fusing of adult skin cells with embryonic stem cells to create cells that are similar to
embryonic stem cells - raising the possibility that in the future, stem cells can be
produced without damage to embryos. But the scientists said publicly that their work
could not yet replace embryonic stem cell research.
"Any time someone makes an advance in a field other than embryonic stem cell research,
the opposition says, `Aha, we don't need embryonic stem cell research' - which is
completely wrong," said Ross Frommer, the deputy vice president and associate dean of
Columbia University Medical Center.
In 2001 the U.S. placed a ban on federal funding for embryonic stem cell research, except
for existing stem-cell lines. Although private funding is legal, most U.S. laboratories are
federally funded, Frommer said.
The research ban is expected to come up again in the next few months, when the Senate
takes up a bill to loosen restrictions on funding. Although such a bill has senatorial
support, U.S. President George W. Bush has said he would veto it.
The Union of Orthodox Jewish Congregations of America is one of the groups lobbying
for the bill's passage, said Nathan Diament, the director of the OU's Institute for Public
Affairs. Embryonic stem cell research has the support of all Jewish denominations, but
pits the OU against the Christian right on this issue, he said.
"Here is an instance where the whole Jewish community is in the same place, that is to
say, supports stem cell research and government funding for stem cell research," he said.
However, many lawmakers voting on stem cell research are woefully uninformed, said
Many rabbis are similarly unaware of the relevant medical issues, said Tendler. He
warned that if rabbis can't make educated decisions on scientific breakthroughs, the
decisions would be made without their participation, and appealed to rabbis "to take time
off and learn what's happening in the field of medical research."
"They cannot now hide away from it, because it will be paskened [the Jewish law will be
decided] by the doctors and the people, without the benefit of the rabbis," said Tendler.
"It's not going to wait for them."
Ha’aretz, 9 September 2005

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    10. Low-tech industry wins R&D grant priority
The Office of the Chief Scientist’s research committee has given low technology industry
priority for R&D grants. Until now, almost all grants went to high-tech companies. The
decision implements a plan by Chief Scientist Dr. Eli Opper, first reported by “Globes”,
to award grants to low technology industries, in order to jump-start innovation and
exports. The Office of the Chief Scientist has not yet received any special R&D budget
allocations for the plan, which Opper believes are necessary for such an important
The measure means that the Office of the Chief Scientist will finance half the cost of
worthy R&D programs in low technology industries the same level as in other priority
sectors, biotechnology and nanotechnology.
The research committee also recommended recognizing the cost of purchase know-how,
on the condition that they are part of a comprehensive R&D program, and limited to NIS
50,000, or 30% of the cost, whichever is lower.
Prof. Manuel Trachtenberg of Tel Aviv University’s School of Economics, who was
invited to the committee as an expert, said Israel has seen rapid growth in high-tech in
recent years, accompanied by stagnation, and even decline, in low technology industries,
resulting in a dual economy. He reiterated the conclusions of a Israel Democracy Institute
Annual Economic Conference (the Caesarea Conference) panel he and Teva chairman Eli
Hurvitz participated in.
Trachtenberg said sustainable growth could only occur if most economic sectors grew
simultaneously. No single sector, however fast it is growing, can boost the economy as a
whole. Conversely, unbalanced growth makes the economy highly vulnerable (the
bursting of the high-tech bubble is an example), and involves a high social price caused
by the creation of widening social gaps, which affect future growth.
Trachtenberg said economic lessons from around the world showed that adopting
multipurpose technologies, particularly information and communications technologies,
was essential for increasing productivity, which was the main growth engine.
However, in today’s Israel, little R&D investment is made in low technology sectors,
compared with investment in other Western countries, and the advantages of information
and communications technologies have not yet been absorbed or adopted. Consequently,
one of the ways for achieving rapid growth in these sectors, thereby achieving more
balanced growth in the economy as a whole, is to encourage R&D investment in low
technology industries, while encouraging information and communications technologies
and adapting them to their needs.
Globes 12 September 2005
    11. International Ozone Day – September 16, 5002‫‏‬
International Ozone Day, an annual event that takes place on September 16,
commemorates the date in 1987 when the Montreal Protocol on Substances that Deplete
the Ozone Layer was first signed.
To date, some 190 countries have ratified the Montreal Protocol. Their cooperation in
implementing the provisions of the Protocol has helped to eliminate the annual
production of more than 1.5 million tons of ozone depleting chemicals. It is believed that
had the Protocol not been approved, ozone depletion would have been aggravated,
bringing about increased incidence of skin cancer and cataracts. This is especially
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significant in terms of Israel, which already ranks third in the world in terms of skin
cancer (melanoma) per capita.
Israel, one of the world’s largest producers of methyl bromide, ratified the Montreal
Protocol in 1992 and has ratified all of the amendments to the Protocol in subsequent
Israel’s implementation of the Montreal Protocol is reflected in:
     Strict oversight over the production, export and import of controlled substances
        through the incorporation of special conditions in business licenses and through
        import/export licenses for these substances.
     Implementation of the provisions of the Protocol by means of the Hazardous
        Substances Regulations (Implementation of the Montreal Protocol on Substances
        that Deplete the Ozone Layer) 2004. The regulations set restrictions on the
        production, consumption, import and export of substances that deplete or are
        likely to deplete the ozone layer and establish inspection and control mechanisms.
     Restriction of methyl bromide consumption: Beginning in January 2005, use of
        methyl bromide is restricted to critical uses (uses for which appropriate
        alternatives from the technical, economic or environmental/health aspects are not
        available). Critical uses that were approved for Israel for 2005 and 2006 include:
        cut flowers, post-harvest dates, flour mills, imported furniture, fruit tree nurseries,
        potatoes, strawberries and seed production.
     Formulation of new draft regulations, which relate to the management of ozone
        depleting substances in existing systems, and set timetables for the gradual phase-
        out of recycled controlled substances in air conditioning, cooling and fire
        extinguishing systems, target dates for the introduction of environment friendly
        coolants in new air conditioning systems, recovery of ozone depleting substances
        from cooling/air conditioning systems during installation and maintenance, and
        requirements for safe disposal of controlled substances from systems and
        equipment that have been taken out of use. In the interim, until the regulations are
        promulgated, other legislative tools are being used to advance some of these
        measures. For example, the Standards Institution of Israel has prepared a new
        Israeli standard for ozone friendly coolants in air conditioning systems, which
        entered into force in the beginning of 2005.
     Intention to prevent, by means of conditions to the business licenses of the
        country’s major producers of fire extinguishers, the use of recycled controlled
        materials in new fire extinguishers.
     Increased oversight and supervision to prevent the possibility of smuggling
        controlled substances into Israel. The Customs Authority, in cooperation with the
        Ministry of Industry, Commerce and Labor and the Ministry of the Environment
        has stepped up supervision and conducts spot checks in Israel’s ports to stop
        potential smuggling attempts
Israeli Ministry of Environment, 13 September 2005
    12. Israel, CA to cooperate in industrial R&D
Computer Associates (NYSE:CA) and Chief Scientist Dr. Eli Opper have announced
plans to sign an industrial R&D cooperation agreement during a visit by CA chairman

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Lewis Ranieri and a group of company executives. The agreement is part of the Office of
Chief Scientist’s program of industrial R&D with multinational corporations.
Under the pending agreement, Computer Associates, the world’s largest supplier of
management software, will offer benefits to Israeli companies that collaborate in the
program. The benefits will include the appointment of liaison personnel; the allocation of
marketing, sales, and business development resources; help in creating business plans;
consultancy, technical assistance and support in fields related to Computer Associates’
Joint projects meeting criteria set by the Office of the Chief Scientist will be eligible for
financial aid for part of the R&D costs of the Israeli companies collaborating with
Computer Associates.
Acting Minister of Finance and Minister of Industry, Trade and Labor Ehud Olmert said,
“The program for R&D cooperation with multinational corporations helps leverage
Israeli industry’s technological capabilities and competitiveness. The program gives
Israeli companies the opportunity of linking up with multinational corporations, and
benefiting from the economies of scale they offer in both R&D and in the subsequent
commercialization stage.”
Ranieri said, “Computer Associates attaches great importance to the Israeli market.
We’re active in this area, examining opportunities for expanding our presence and
cooperation with customers, integrators, and government agencies in Israel. Computer
Associates SVP and technical adviser Sam Greenblatt will head a special committee
responsible for this activity.”
Globes, 14 September 2005
    13. Deep Breeze gets European all clear for imaging tech
Deep Breeze announced yesterday it has received a CE mark, declaring its first product,
VRIXP, a safe and effective system. With the certification, the company can market its
vibration response imaging (VRI) technology to physicians in European Union countries.
VRI is a non-invasive, radiation-free technology upon which VRIXP, an imaging device
that aids clinicians in the diagnosis and treatment of various lung conditions, was
VRIXP receives vibration response energy generated by the lungs, and translates it into a
real-time structural and functional image of the lungs.
"The VRIXP system adds a new dimension to interventional pulmonology and evaluation
of patients with lung transplants," says Prof. Mordechai Kramer, who is performing
clinical trials at the Rabin Medical Center.
The VRIXP system received the CE mark after an audit, which found the device safe and
effective to use, and approved it as a lung diagnostic device. "We are introducing a new
imaging technology for the human body that is radiation-free and organ oriented.," says
Igal Kushnir, CEO and founder of Deep Breeze, a privately-held medical device
"Unlike MRI (magnetic resonance imaging), X-ray or Ultrasound, VRI utilizes passive
vibration energy that is naturally created in organs to produce a dynamic image of the

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Deep Breeze, founded in 2001, is conducting clinical studies globally, and evaluating
VRIXP efficacy in critical care patient management, interventional pulmonology, and the
monitoring of asthma, congestive heart failure and lung transplant patients.
VRIXP's first deliveries to Europe are expected in Q4
Ha’aretz, 15 September 2005
                                   Start-Ups, Venture Capital
     14. Israeli Startup Valuations Rise
A survey released by an Israeli law firm found a sharp rise in the number of up rounds in
local venture-backed startups.
Sixty-five percent of the startups in the Shiboleth, Yisraeli, Roberts, Zisman (SYRZ)
survey raised funds at a higher valuation than their previous round. Just two years ago,
only 10 percent reported up rounds.
“There has definitely been a marked improvement, though valuations are still
substantially below the 2000 level,” said Lior Aviram, partner in charge of high tech at
the Tel Aviv-based law firm.
He added that venture capital firms remain extremely cautious about valuations despite
the general optimism in the industry.
The survey looked at 46 of the 100 startups that raised a minimum of $500,000 during the
first half of 2005 in the form of equity investments from venture capital firms. The results
indicated that up rounds outnumbered down rounds by better than a three-to-one ratio.
Only 19 percent of the startups surveyed reported down rounds compared to 62 percent in
2003. In addition, no companies in their second round reported a drop in valuation from
their initial round of financing.
“The second round is usually for advancing the technology, while the third round is when
the company meets the market,” noted Mr. Aviram. “By then venture firms are far
stricter, wanting to see proven technology before investing at a higher valuation.”
A similar survey conducted by Palo Alto, California-based Fenwick & West LLP found
that 62 percent of the startups reported up rounds, while 31 percent were lower than the
previous round.
Red Herring, 30 August 2005
    15. Two vitamins are better than one
More is unknown about psoriasis than is known. This skin disease, which affects 2% of
the world’s population, is connected with the autoimmune system, and heredity is also a
factor. The causes of psoriasis have not been discovered, but a significant correlation has
been found between the disease and viral diseases and mental and physical tension.
In psoriasis, the cells responsible for creation and renewal of interior layers of skin
undergo more intense mitosis. They do not mature properly; their development comes to
a premature halt. This creates concentrations of immature and superfluous cells, which in
turn causes the skin to thicken. The patient suffers from itching, reddening, scaly skin,
and even pain. In severe cases, the disease covers a wide area of the body. Some patients
suffer from limited movement in their joints and thickening of skin covering their joints.
There is no cure for psoriasis; treatment aims at relieving patients’ symptoms and
improving the quality of their lives. There are several such treatments on the market. One
involves tar-based lotions, which retard mitosis. Another common treatment is long
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exposure to sunlight, which can decrease the afflicted area, but has obvious drawbacks.
The leading commercial lotion, which is of limited effectiveness, was developed 20 years
ago by Danish company LEO Pharma. It includes a derivative of vitamin D, whose
operating mechanism has not been solved. The most effective treatment uses steroids,
which depress the immune system and mitosis. Doctors and patients, however, prefer not
to use steroids, because of negative side effects that accumulate over a period of years.
”Dermipsor is a start-up operating in the Meytag Technology Incubator of the Office of
the Chief Scientist. Dermipsor was founded on the basis of research conducted in the
dermatology laboratory of Dana Children’s Hospital, attached to Ichilov Hospital,” says
CEO Dr. Zeev Even-Chen. “Dr. Avikam Harel, the manager of the laboratory, examined
a range of materials for treating the disease in the laboratory, and arrived at a derivative
of vitamin B, called nicotinamide. It was demonstrated in research that adding
nicotinamide to a derivative of vitamin D significantly increases the combined effect,
compared with each of the materials used individually. A more effective treatment was
Dermipsor doesn’t know exactly how its combination works, but by testing and
improving its lotion, the company has arrived at the most active and effective ingredient.
Harel, the company’s CTO, is a pediatrician and specialist in skin diseases. Even-Chen
has 25 years of experience in the biotechnology and pharmaceutical industry, including
extensive experience in drug development and clinical trials in Israel, Europe, and the
US. He was formerly VP regulation and clinical trials at Notal Vision, and also worked at
Peptor, Sigma Israel, Biotechnology General (now part of Savient Pharmaceuticals
(Nasdaq: SVNT)), and InterPharm Laboratories.
”First, we worked on fixed concentrations of nicotinamide and the vitamin D derivative,
and added them to a large number of base lotions of varying composition,” Even-Chen
says. “We first prepared the lotions on the basis of stability of the active ingredients in
the lotions, through a accelerated stability trial, in which we spent six months testing the
stability of the active ingredients under extreme conditions. This system simulates the 2-3
year shelf life needed for the lotion. The fact that we began with this significantly
shortened the processes, since we saw that our materials were stable in only three base
”At this point, we switched to testing biological activity of the stable lotions, using a
mouse-tail model commonly employed in psoriasis research. The mouse-tail trials
showed that one base lotion was more effective than the other two, although the vitamin
B and vitamin D content was identical in all three lotions examined.
”We then conducted another trial, in which examined the effect of varying concentrations
of the vitamins with the same base lotion, and determined the most effective
concentration. We are now testing this concentration on human beings. The human trials,
which began on July 4, were designed to examine not only our lotion, but also to compare
it with LEO Pharma’s existing lotion. We claim that our lotion is the most effective of
those that do no include steroids.”
This clinical trials method, which eliminates many materials in advance, has both greatly
shortened the process and cut its cost. The company predicts that it will require less than
$20 million up until registration of the lotion at the US Food and Drug Administration
(FDA) and in European countries.
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Dermipsor doesn’t offer life saving treatment or develop a brand-new treatment. It offers
an improved treatment for an unpleasant disease that detracts from patients’ quality of
life. With such a minor story, it wasn’t expected that the company would attract a group
of well known investors to add $240,000 to the $500,000 raised from the incubator.
Dermipsor’s investors include billionaire Noam Lanir, CEO of recently floated gambling
website marketer Empire Online Ltd. (AIM: EOL), and Packard Bell co-founder Beny
Alagem, who competed for the acquisition of Bezeq (TASE: BZEQ).
"Globes": Would it be wrong to say that some of the investors, or maybe their
families, themselves suffer from psoriasis?
Even-Chen: ”To the best of my knowledge, that’s not the reason why they invested. The
investors that you mentioned came by way of a personal acquaintance with Harel and
belief in his work. Beyond that, the corresponding lotion made by LEO, which is of
medium effectiveness, has annual sales in the hundreds of millions of dollars. Our lotion,
which is expected to be much more effective, should have at least the same sales, or
higher, while development is cheap, compared with the industry.”
Lanir: ”One of my company’s employees in Cyprus was a mother who suffered from
psoriasis. I saw how the problem completely destroyed her life and the lives of her
family. I heard about a treatment in Israel that helps with the disease, and they went to
Israel for treatment: the treatment on which Dermipsor is based. Within a fairly short
time, the woman came back to life. I don’t consider myself as an investor in companies.
I’m an entrepreneur, but when I saw that this company really helps people change their
lives, I wanted to help.”
Globes 7 September 2005
    16. IVA's Oron: Israel VC must raise, invest $8-10b in 5 years
Israel Venture Association chairman Yoram Oron spoke at Ernst and Young’s Journey
2005 Conference for Venture Capital and Entrepreneurs of Emerging Growth
Companies. The following is the full text of Oron's speech.
The rate of investment in Israel in venture-backed companies is at a level of $1.5 billion
per year. Three years from now, we assess this rate to increase to $2 billion per year. The
typical investment period of a technology fund is approximately five years and as such
VCs tend to raise funds every five years. That means that we need to raise and invest $8-
10 billion in this cycle. Israeli-managed funds represent 50% of the investment into
Israeli venture-backed companies. This means that $4-5 billion need to be raised. In
2004-5, Israeli VCs raised $2 billion. In the next two years, the industry must raise
another $2-3 billion. Some doubt this is feasible.
The other major source of capital comes from foreign funds. Lately there has been
renewed interest in the Israeli market. I believe this money is more sensitive to the
political climate.
Israel still suffers market deficiencies in both ends of the process. I’ll just remind you that
10 years ago, government grants were provided mostly through the chief scientist
program and represented close to 50% of the R&D money in venture-backed companies.
This percentage has been reduced to less than 10%. Meaning that a 1:1 now is a 1:10,
thus creating a potential shortage in companies in the seed and early stage level.
When we compare our industry to that of the US or Europe, an additional deficiency that
we experience is the lack of late-stage financing. Non-equity financing of technology
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companies is practically non-existent in Israel. The banks are not back in the game yet
and venture lending is minimal. This leads to a situation where equity money is used for
expansion stage and working capital and that affects our potential internal rate of return
(IRR). This also explains the M&A phenomena in Israel. I suspect that if Google was an
Israeli company it would have been sold for a few million dollars.
We are now active in promoting mechanisms to bridge those gaps. One such mechanism
is through government incentives and taxation. Another means is to build a local public
market for technology companies, something similar to the AIM in London that could
later serve as a springboard for companies to be floated on Nasdaq.
Globes 15 September 2005
                     Globes Survey "Most Promising Start-ups of 2005"
     17. Ten tipped to be the next big things
Which start-up company is about to make a breakthrough? Which is developing a killer
application or a blockbuster drug? Which stands the best chance of making a successful
IPO or being swallowed by one of the giants? No one in Israel's technology and life-
science industries, whether venture capitalist, experienced CEO, or successful serial
entrepreneur, can appraise a start-up's chances of success with certainty. Since the
elements that go to make a successful company are so many and varied, and every
company is dependent on innumerable external variables over which it has no control, not
to mention on luck, it's impossible to know which start-up will become a billion dollar
company and which will wind up a resounding failure.
Nevertheless, this year "Globes" has decided to start what it is hoped will become a
tradition of trying to identify the companies likely to turn into the next big thing. By
means of a comprehensive survey, with the participation of venture capitalists, engineers,
entrepreneurs, and CEOs of leading technology companies, "Globes" has put together a
list of ten start-up companies that stand a good chance of making a great leap forward.
The participants in the survey were asked to choose three companies they thought were
likely to succeed. Each was requested to choose not more than one to which he or she had
a personal connection, in order to make the survey as objective as possible. Venture
capital firm partners were restricted to just one portfolio company.
The criteria by which the contributors were asked to make their selections were those that
generally distinguish successful companies from unsuccessful ones: quality of
management; quality of investors; promising technology with market potential. Most of
the start-ups chosen are at fairly mature stages. They have annual sales in the millions of
dollars, they are already profitable or close to it; and some have the prospect of making
an IPO in the near future. We asked the participants not to vote for companies that have
already filed prospectuses or are shortly about to do so. This ruled out such companies as
Saifun, InSightec, Passave, and Predix Pharmaceuticals.
So here they are, in order, the ten start-ups that gained the most votes in the survey:
1. Mellanox
Founded: 1999
Employees: 130, mostly at the company's Yokne'am development center
Activity: InfiniBand chip development
Capital raised: $93 million
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Investors: Dell, IBM, Sun Microsystems, Gemini, Sequoia Capital, Walden, Jerusalem
Global, and others.
CEO: Eyal Waldman
See article below
2. BigBand Networks
Founded: 1999
Employees: 350, about 100 in Israel
Activity: Solutions for transmitting video and multimedia content over broadband
Capital raised: $100 million
Investors: Cedar Fund, Charles River Ventures, CommVest, Evergreen Investments,
Lauder Partners, Meritech Capital Partners, Pilot House Ventures, Redpoint Ventures,
STAR Ventures, Time Warner Ventures
CEO: Amir Bassan-Eskenazi
See article below
3. Rosetta Genomics
Founded: 2000
Employees: 30
Activity: Drug discovery based on microRNA genomic technology
Capital raised: About $10 million
Investors: Teva, Dr. Isaac Bentwich, private investors
CEO: Dr. Isaac Bentwich
See article: Golden DNA goose
4. Wintegra
Founded: 2000
Employees: 100
Activity: Fabless semiconductor company
Capital raised: $42 million
Investors: Concord Ventures, Magnum Communications, Genesis Partners, China
Development Industrial Bank, Marvell/Galileo Technology, Texas Instruments, Plenus,
Ron Zuckerman
CEO: Kobi Ben-Zvi
Source: IVC Online
5. Proneuron Biotechnologies
Founded: 1996
Employees: About 50
Activity: Therapies for neurological disorders, including spinal cord injuries, brain
trauma, and neurodegenerative diseases
Capital raised: $41 million
Investors: Teva, Tamir Fishman Ventures, Pitango Venture Capital, Giza ABS GE
Capital Fund, Marcus Foundation, Hudson Investment Group
CEO: Nir Nimrodi
6. FIS
Founded: 1984
Employees: 360, half of them in the UK
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Activity: Software for the insurance industry
Capital raised: $9 million
Investors: Formula Vision (39%), Clal Insurance (19%), Genesis Partners (15%), Giza
Capital Management (9%), founders (19%)
CEO: Shai Alon
2004 revenue: $42 million
7. Traiana
Founded: 2000
Employees: 120, 75 of them in Israel
Activity: Software solutions for large financial enterprises
Capital raised: $30 million
Investors: Sequoia Capital, Gemini Capital Fund Management, Evergreen Partners,
Eastman Chemical Company
CEO: Gil Mandelzis
Source: IVC Online
8. MobilEye
Founded: 1999
Employees: 100
Activity: Automated on-board driver assistant systems.
Capital raised: $51 million
Investors: Leon and Lenny Recanati, Dr. Shmuel Harlap, Lev Leviev, Gil Agmon, Ari
Steimatzky, the Colmobil Group, Delek Motors, Eldan Rent-a-Car, Motorola Ventures,
Solid Investment of New York, investor group headed by CPA Eli Gilboa
CEO: Ziv Aviram
9. Cyota
Founded: 1999
Employees: 120, 85 of them in Israel
Activity: Development of anti-fraud solutions for financial institutions
Capital raised: $30 million
Investors: Giza Venture Capital, RRE Ventures, Israel Seed Partners, JAFCO, Poalim
CEO: Naftali Bennett
10. BitBand
Founded: 1999
Employees: 30
Activity: Video content distribution and delivery solutions over IP broadband networks
Capital raised: $13.5 million
Investors:Sequoia capital, Apax Partners, Aviv Venture Capital (formerly Fantine), The
Challenge-Etgar Fund, Ascend Technology Ventures, Portview Communication Partners
CEO: Ervin Leibovici
Globes, 15 September 2005
    18. Most promising start-up in 2005: Mellanox
Mellanox Technologies has been chosen as the most promising start-up in Israel in 2005.
Mellanox develops InfiniBand solutions that facilitate high-speed information
transmission between clusters of computers, storage components, and servers.
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It is not beyond the realm of possibility that by the time next year’s most promising start-
up is chosen, Mellanox will already have held a Nasdaq IPO at a company value in the
hundreds of millions of dollars. The company achieved profitability last quarter, and has
estimated annual sales of over $40 million. “CEO Eyal Waldman wants a mega-IPO.
He’s waiting for Mellanox to grow further before he starts the process,” one company
investor told me.
Mellanox regularly appears on “Red Herring” magazine’s 100 Europe list of private
companies in Europe and Israel that play a leading role in innovation and technology.
Several weeks ago, the company also made sixth place on the list of the top ten private
companies compiled by “Byte and Switch”, a widely respected storage website.
Mellanox began when Waldman, co-founder and former VP engineering at Galileo
Technologies, left that company a year before it was sold to Marvell Technology Group
(Nasdaq: MRVL) for $2.7 billion.
Waldman managed to raise the fantastic sum of $89 million before the bubble burst. That
gave the company enough oxygen to last through the past few years. “We managed to
more than double our revenue in each of the last five years, and we’re seeing very nice
growth in the markets now,” he says.
Mellanox’s investors include several giant companies who decided to gamble on
InfiniBand: Dell Computer (Nasdaq: DELL), IBM (NYSE: IBM), Sun Microsystems
(Nasdaq: SUNW), and Intel (Nasdaq: INTC). US funds Sequoia Capital, USVP,
Bessemer Venture Partners, and Raza Venture Management own most of Mellanox’s
shares. Israeli funds Gemini Israel Funds, Jerusalem Global Ventures, and Walden Israel
have also invested in the company, and there are other investors, too. Mellanox’s
financing round in late 2001 was held at the huge company value of $246 million, after
Surviving the technology desert
The InfiniBand (infinite bandwidth) standard came into existence as an architecture for
high-speed data communications between servers, storage components, and clusters of
computers. InfiniBand competes with other data communications technologies, such as
Fiber Channel. Its cost-performance ratio is better than that of another competitor,
The need for InfiniBand is growing, as grid computing becomes more and more popular.
Grid computing costs much less than the older mainframe computers, but it requires a
high level of connectivity between servers and storage parts.
Had this review been written three years ago, however, Mellanox’s chances of making
the top ten would have been very poor. At that time, many companies that had previously
supported the InfiniBand standard made an about-face, and Mellanox’s future looked
rather shaky.
Intel, the world’s largest manufacturer of processors, decided against developing
processors for InfiniBand. Microsoft (Nasdaq: MSFT) decided not to support it, as did
Red Hat (Nasdaq: RHAT) and Novell (Nasdaq: NOVL). One after another, a long list of
start-ups operating in the InfiniBand field, which had raised hundreds of millions of
dollars from investors, collapsed.
”We went through a tough three years, in which the technology industry almost
stagnated. Many companies that began before we did failed to survive this technology
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desert. Developing new technology requires large resources and many years,” Waldman
InfiniBand technology has recently recovered from its crisis, but it is still far from
fulfilling the great hopes placed on it. Analysts estimate sales of InfiniBand-related
processors and equipment at $75 million, which they expect to grow to $850 million by
2008. Those are big numbers, but that’s not what investors had in mind when they poured
huge sums into the field.
Mellanox does not have many competitors. Waldman says that his company has an 85%
share of the InfiniBand silicon market. Mellanox’s main InfiniBand competitors include
Fujitsu (TSE: 6702), Agilent Technologies (NYSE: A), and PathScale, a start-up. Its
competitors also include Qlogic and Emulex in Fiber Channel and chip companies like
Broadcom (Nasdaq: BRCM) and Marvell in Ethernet.
Important evidence of recovery in the field came in the acquisition by communications
equipment giant Cisco Systems (Nasdaq: CSCO), a customer of Mellanox, of US start-up
Topspin Communications early this year for $250 million. Topspin sells switches and
cards for InfiniBand solutions in competition with Israeli company Voltaire, a promising
start-up in its own right.
One thing is indisputable Mellanox’s chips lead the field. Although the company won’t
give its investors a phenomenal return, it will certainly dictate the pace in InfiniBand, and
become one of the successful companies on the Israeli high-tech scene.
Considering acquisitions
"Globes": What makes Mellanox such a great promise?
Waldman: ”We have an amazing team in Israel, a successful architectonic solution, and
high performance capability. We also have good relations with strategic customers, as
reflected in our business and technological cooperation. The members of our board of
directors, including Sequoia Capital partner Pierre Lamond, Raza Venture Management
chairman and CEO Atiq Raza, Bessemer partner Rob Chandra, and USVP partner Irwin
Federman are also making the company a success.
”All the top-tier server manufacturers now make products with InfiniBand chips, and so
do communications companies. We hope that storage producers will follow suit in 2006.”
From a business standpoint, where will the company be in another year?
”The company will go public at some point, but we intend to hold our IPO at the right
time. I don’t regard a flotation as a final goal, but as a milestone. We want to do it when
we feel comfortable, because the aim of a flotation is to enable us to enter new markets in
other words, to develop new technologies independently, or through acquisitions.”
What acquisitions are you referring to?
”We’re looking at several companies, but I don’t intend to disclose them.”
What about in the other direction? Is there a chance that you’ll be bought?
”A small chance. We think that the return on the investment will be higher in an IPO.”
Do you think that one of these days, you’ll become a company worth billions of
”Yes. In the future.”
Where will you be a year from now with regard to technology?

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”We’re currently developing the next generations that will provide faster data
communications speeds, with less delay in data transmission between computers, and
between storage components and servers.”
What separates you from your competitors in the InfiniBand field?
”We’re the only ones with a solution that includes a host channel adapter and a switch.
The other companies in the field have only part of the solution. Keep in mind that we
compete with other technologies besides InfiniBand: Fiber Channel, which works mostly
with storage, and Ethernet.”
You’re also on the list of companies that have raised the most money. Couldn’t you
have succeeded with less money?
”It was smart to raise a lot of money. It contributed to the company and our capabilities.
It’s hard for me to answer whether we could have done it with less money.”
What was your biggest mistake?
”We’ve made many. We haven’t gotten storage companies EMC and Hitachi as
customers yet, but they’re on the way, too.”
What was your biggest success?
”We have customers like IBM, Cisco, NetApp, Dell, Silver Storm, and Voltaire. Our ten
largest customers account for 80% of our revenue.”
Globes, 15 September 2005

    19. BigBand: Beating Cisco and Motorola
BigBand Networks was only just edged out for the title of most promising start-up in
2005, and was the first choice of many in the survey that awarded the title.
One of the factors that makes BigBand so promising is its excellent positioning in the hot
market competing for household living rooms. This competition is forcing all
communications providers to offer all-inclusive packages for cable, satellite, DSL, and
fiber to the home (FTTH) infrastructure.
Today’s home consumers want a single pipeline that will bring all communications
services to their homes: telephony, television, Internet, etc. Today’s content providers are
fighting tooth and nail to bring as much information as possible to our living rooms
without having to replace copper cable wires and deal with the expensive problem of the
last mile. They’re trying to do all that without wasting too many broadband resources.
This competition is forcing the providers to find as efficient a platform as possible for
creating more and more value added services, and BigBand develops just such a solution
a triple play platform for transmitting video, voice, and data services, composed of a
router and software solutions. BigBand’s current platform originated in the video field,
where the company started, and video is still the most important element in this triangle.
You may get away with losing a little information in voice transmission, but there’s no
room for compromise on video quality.
BigBand competitors Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq:
JNPR) offer routers with good voice and data communications quality, while Terayon
Communications Systems (Nasdaq: TERN) and Motorola (NYSE: MOT) offer video
solutions. BigBand provides all three components together; its technology is one year
ahead of all its competitors. Even if Cisco acquires companies to close this technology
gap, it will still have to undergo a lengthy process of assimilating the technology.
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BigBand is expected to finish 2005 with revenue of $100-120 million, more than any
other Israeli start-up. For the meantime, however, BigBand’s impressive revenue figures
have not been translated into a successful bottom line. As far as is known, the company is
around the break-even point. Sources close to the company say that it burned large
amounts of cash over the past year consolidating the IP cable division acquired from
ADC Telecommunications (Nasdasq: ADCT) in 2004 for several tens of millions of
dollars. This acquisition was designed to expand BigBand’s business in voice and data
communications, in addition to its video activity. The acquisition also doubled BigBand’s
revenue, as well as its staff, which now stands at 350.
The company’s bottom line is the reason why BigBand has not yet made it to the primary
market. Besides heavy R&D expenses, the reason for its miniscule or non-existent profits
lies in the large sums that the company has had to spend on projects recently undertaken,
including contracts with Cox Communications, the Chinese television and radio network,
a Swiss cable company, and others.
Judging by the stubborn refusal of its pair of entrepreneur-managers to grant an interview
about business matters on BigBand’s agenda in the near future, the company seems to be
already deeply involved in its IPO proceedings, and fears complications with the US
Securities and Exchange Commission (SEC) before its issue. They probably are afraid of
the SEC, and they can’t be blamed for that.
It all began in Finland
President and CEO Amir Bassan-Eskenazi (not co-founder Amir
Ashkenazi) and executive VP and CTO Ran Oz founded BigBand. They met in Finland,
while Bassan-Eskenazi was working at Nokia (NYSE, LSE, HEX: NOK), and Oz was
working at Sonera Corporation (HEX: SRA; Nasdaq: SNRA), Finland’s leading
telephone company. They met again in Israel several years later, when Bassan-Eskenzi
became COO at Optibase (Nasdaq: OBAS), which Oz founded with a team of
entrepreneurs. They founded BigBand in 1999.
Gaining entry into the market in which BigBand operates was no easy task. Entry barriers
are in the tens of millions of dollars, and Bassan-Eskenazi and Oz raised no less than
$100 million in order to enter this market. The company has a broad range of financial
and strategic investors, including Evergreen Venture Partners, Star Ventures, Cedar Fund,
Lauder Partners, Charles River Ventures, Pilot House Ventures, and private investors.
BigBand’s flagship product is the broadband multimedia-service router (BMR), which
makes it possible to provide all three services to televisions with converters or modems.
The router improves image quality, and accommodates high definition television
(HDTV), voice over Internet protocol (VoIP), video on demand (VOD), and other
services. All these solutions have a single goal to increase revenue from value added
services for content providers, while relying on the existing communications
infrastructures in households.
In general, BigBand’s solutions can be divided into two groups: hardware-based
optimization solutions that can be used to transmit as many data as possible on existing
infrastructures through optimal use of bandwidth, and software solutions, which make it
possible to provide value added services through applications developed by BigBand.
These solutions enable communications providers to increase their revenue through
advertising broadcasts on demand, for example. This means that people watching “Sex
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and the City” in New York can watch completely different ads from those seen by those
watching the program in Los Angeles.
One of the innovations pioneered by BigBand through the use of its platform is switched
broadcasts. For example, take a US cable provider that enables its subscribers to watch
150 channels. Despite this wide variety of channels, there is a demand in certain states to
watch only 50 channels. BigBand’s router makes it possible to broadcast only the desired
channels, thereby freeing bandwidth for other uses.
When will we see BigBand on Nasdaq? It probably won’t take too long, but it depends to
a large extent on the company’s ability to streamline and report a significant profit. Wall
Street investors won’t accept a money-losing communications equipment maker, even if
it boasts a breathtaking growth rate.
Globes, 15 September 2005

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