Executives from Israel-based companies express concern about future investment and other operational impacts, as the war rages on in Gaza with tragic loss of life amid political and economic uncertainties.
Pictured: An aerial picture of the Tel Aviv skyline/iStock, liorpt
When SpliSense CEO Gili Hart presented at the 2023 North American Cystic Fibrosis Conference in Phoenix, Arizona this month, she was the only member of her company present. SpliSense had planned to send five people, but her colleagues were otherwise engaged, fighting for their country or caring for children while their spouses served after Hamas’s Oct. 7 attack on Israel ignited a war that has killed thousands.
Hart began each of her four presentations with a slide depicting the approximately 1,200 Israelis who were killed that day. “I dedicated my talk to them and to the babies and toddlers and young and old women and men that actually are being kept hostages in Gaza,” she told BioSpace.
Since Oct. 7, more than 11,000 Palestinians have been killed, according to the Gaza Health Ministry, The Washington Post reported Monday, and more than 240 hostages are still being held by Hamas and Islamic Jihad, per multiple news outlets.
Israeli society is distinctly cosmopolitan. According to the World Atlas, there were approximately nine million people living in Israel in 2019; 74% were Jews of various backgrounds, 21% were Arab and nearly 5% were categorized as other. Not surprisingly, many Israeli biotech companies have a similar demographic mix.
SpliSense, for example, is made up of Orthodox Jews, other Jews—religious and secular—Muslim Arabs and people who don’t subscribe to any religion. Hart said that while this diversity could potentially generate some tension, she has not perceived any tension within the company since the conflict began. “Even though we are all together in different religions and different beliefs, everybody understands that this is a crime against humanity. It’s not a conflict between the Israelis and Palestinians.”
Workforce Challenges
In Israel, all Jewish, Druze and Circassian men and women are conscripted into the army at the age of 18. Many remain in the reserves after their required duty, and as of Nov. 6, 360,000 reservists had been called up to fight in the current war, The New York Times reported. The Times of Israel has noted that 15% to 20% of Israeli tech sector employees have been mobilized as reserve soldiers. For some companies, this has led to personnel challenges.
Like SpliSense, AI and immunology company Immunai is currently short team members. The New York–headquartered Immunai has offices in Tel Aviv, Zurich and Prague. Approximately one-third of the company is located in Israel, and co-founder and CEO Noam Solomon said about 10 people have been called to reserve duty. “But 10 people out of 160 is manageable, and we definitely try to make sure that the workload is evenly split between different departments,” he told BioSpace.
As Immunai’s experience demonstrates, the global nature of many companies with a presence in Israel is helpful right now from an operational perspective. AI and immuno-oncology-focused Compugen is headquartered in Israel but also has operations in the U.S., Europe and Singapore. Anat Cohen-Dayag, Compugen’s president and CEO, noted that the company’s operations haven’t been affected. “Our clinical trials and some preclinical trials are run in the U.S. and are operating in the ordinary course of business,” she told BioSpace.
Investment Fears
The bigger question might be the potential impact on investment in Israeli biopharma companies.
“There is some concern, which I can understand, to further invest in Israel–based companies,” Hart said. “There’s a lot of open questions and uncertainties in relation to what the future will hold . . . and companies need to raise money in order to move forward and to mature their programs and plans, and I think that can be a challenge.”
Ori Hershkovitz, an independent analyst and investor who also sits on the board of Rehovot–based Purple Biotech, concurred. “People are going to be more aware of the geopolitical risks associated with investing in Israel, which is de facto surrounded by enemies, and these types of things happen,” he said, adding that the cost of capital associated with Israel is likely to rise, “and that’s going to sting.”
Solomon noted that the past four years have been challenging for every biotech entrepreneur, with the COVID-19 pandemic and global financial crisis. But for those operating in Israel, there is another factor, he said. “We really want to make sure that global international companies working with companies that have a presence in Israel will not be impacted by the way [the war] is represented in the global media.”
A fund backed by several venture capitalists is stepping in to help. Called Iron Nation, the initiative—which was created by Calyx Ventures Managing Partners Chen Linchevski and Gil Friedlander and serial entrepreneur Jason Wolf—aims to raise $20 million to ensure tech start-ups can continue to grow even as some of their staff are deployed during the conflict.
An Ethos of Resilience
Despite these challenges, the tone from the top at Israeli biopharma companies is one of resilience. Hershkovitz recalled a conversation with former Teva Pharmaceutical CEO Eli Hurvitz during the 2006 Lebanon War between Israel and Hezbollah.
“There were a lot of people going around saying that we should sell Teva stock because they might not ship the products,” Hershkovitz said. “[Hurvitz] told me, ‘Listen, even during the Yom Kippur War [in 1973], which is the nastiest war Israel was involved in . . . we didn’t miss one shipment, and it’s not just because [of] our responsibility to the consumer. We consider continuation of life in Israel as our national strength.”
Cohen-Dayag agreed, saying, “The fact that we’ve experienced this trauma and are still experiencing it makes us even more determined to succeed.” She also praised her team’s commitment. “The employees of Compugen in Israel, like everyone else in the country, are traumatized, are devastated,” she said. “These brutal attacks really shook us to our core. We recognize the emotional toll this is taking on our employees in Israel and are taking care to manage their needs with a lot of sensitivity and care.”
One step Compugen is taking is to allow employees who can work remotely to do so. But Cohen-Dayag said that some of these employees are coming into the office anyway. “It is generating a situation that is more normalized,” she said.
Ultimately, she said, “I think that we’re resilient and that we will grow even stronger out of this and continue to innovate, and we will be successful.”
Heather McKenzie is a senior editor at BioSpace. You can reach her at heather.mckenzie@biospace.com. Follow her on LinkedIn.
