Israeli biotech firm surges on mystery firm's nameless analyst note

Tel Aviv

WHEN Pluristem Therapeutics Inc, an Israeli developer of experimental stem-cell treatments, rose 39 per cent in Nasdaq trading last week, traders attributed it to a bullish report on a website linked to a California biotech pundit.

The two-page report from Acceleron Equity Research dated Jan 26 was published on Acceleron's website and distributed by Marketwired, a press-release distribution service, the next day. The site and research document don't identify anyone involved with the firm, while the press release about the report lists a media contact named M Morhamus. The report says the analysts who wrote it don't own Pluristem stock, but that employees and officers of Acceleron might.

The report shines a light on the often opaque world of research firms that drive shares of small-cap companies up and down. Investors don't have enough information about Acceleron to judge its credibility, said Steven Tepper, a senior biomedical analyst at Migdal Capital Markets Ltd in Tel Aviv.

"It would be very irresponsible to make investment decisions on a research report that has no analyst name standing behind it," he said, adding that his comments do not reflect his opinion about Pluristem. "We need to know who owns this research company, who are the managers, what is its business model. A disclaimer means nothing if there's no analyst name written on the report."

The domain name for Acceleron's site was registered by ME Garza on July 16, according to records on whois.com, which tracks registrations. Mr Garza operates biotech news site BioMedReports.com, and in 2012 he posted an article on that site in which he said he owned Pluristem shares. Acceleron was started by Michael Morhamus and AJ Deniken, both of whom have contributed to BioMedReports, Mr Garza said.

Mr Deniken said that he isn't an owner of the research firm and didn't profit from the increase in Pluristem's stock price. He wouldn't say who owned Acceleron and declined to comment further. Mr Morhamus didn't reply to requests for comment sent via Twitter.

"I registered a domain for them, and helped them establish the website, but I don't have ownership or interests in the company," Mr Garza said of Acceleron. "I helped them set up the website technically. I don't have contact with the company and I don't benefit from it financially."

He said that he owned Pluristem stock in the past, but no longer does and didn't benefit from the recent share moves.

Pluristem, based in Haifa, Israel, says it hasn't been in contact with Acceleron. The company is "consistently covered by investment banks and equity research companies worldwide, based on the company's ongoing reports to the SEC (Securities and Exchange Commission)," a Pluristem spokeswoman said . "While the company has not presented to nor been in any discussions with Acceleron, we are pleased and welcome any institute who chooses to analyse and cover companies in the life-science sector."

Acceleron's report recommended buying Pluristem stock and said that it should trade at US$21, an eightfold increase from the price of US$2.68 before the report was published. The stock finished the week at US$3.72 in Nasdaq trading, giving the company a market value of US$261.3 million. The rally included a 20 per cent jump on Jan 28, when Acceleron's opinion was reported by the Israeli news site Globes.

Acceleron's site has a toll-free phone number - the same one listed for Mr Morhamus in the press release - and a general e-mail address. After several calls and e-mails from Bloomberg News starting on Jan 28, someone responded with a voicemail saying an Acceleron analyst will be available to discuss Pluristem on Tuesday, Feb 3. Subsequent calls from Bloomberg haven't yet been returned.

According to BioMedReports.com and a profile on the entertainment industry site IMDB.com, Mr Garza, 48, lives in Los Angeles and has worked as a television producer and talent agent.

In the 2012 article in which Mr Garza disclosed a stake in Pluristem, he quotes Mr Morhamus, who he says is an analyst who freelances for investment firms and writes for various publications. In December 2014, BioMedReports published an interview conducted by Mr Garza with Pluristem chief executive officer Zami Aberman about the company's technology.

Mr Garza said that he has never been paid by Pluristem for any work. He said that he met Mr Morhamus when Mr Morhamus wrote for BioMedReports.com and later set up the Acceleron website for him as a kind gesture. BLOOMBERG