Israeli Regulator Fines Medical Company and Executives for Misleading Reports

Epitomie Medical, a company developing a swallowable pill for weight loss support, announced that the Israel Securities Authority's Administrative Enforcement Committee has finalized a decision holding the company and its senior executives responsible for including misleading details in company reports from late 2023. The company was fined NIS 1.3 million, former CEO Dr. Dan HaShemeshoni NIS 300,000, and Chairman Dr. Shimon Ekhaus NIS 250,000. Additional conditional fines and a conditional ban on holding office were also imposed.

Epitomie stated it disagrees with the decision and intends to appeal, based on legal counsel and insurance company agreement. The reports in question relate to a distribution agreement with global company Nestle for Epitomie's product. Nestle was slated to market the pill, with representatives expressing enthusiasm in 2023 and anticipating a milestone payment of at least $10 million.

However, in November 2023, Epitomie announced Nestle verbally indicated the pivotal clinical trial results did not fully meet the licensing agreement's criteria. This led to a 70% stock drop, and the agreement was officially canceled in early December. Epitomie claims Nestle initially signaled business as usual and continued marketing preparations, only conveying conflicting information verbally later.

The company asserts that the official agreement included stricter trial targets than those set with the U.S. FDA, which were not disclosed to the market. Epitomie maintains it informed the market immediately upon receiving contradictory information. The company is now preparing to market its pill independently in the U.S. and Israel, having appointed Dolav Rafael as its new CEO.

Epitomie's pill expands in the stomach to create a feeling of fullness. Clinical trials showed a 6.6% average weight loss, significantly more than the control group, though less than GLP-1 drugs. The product is intended for prescription but direct patient payment, bypassing insurance. The company's market value is currently NIS 67 million, after its stock lost 94% of its IPO value in December 2021 and 72% in the past year.