Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) today announced that it will exercise part of its option to increase its stake in Andromeda Biotech Ltd. Today's announcement comes 60 days after Andromeda received the interim report on the Phase III clinical trial of its treatment for type 1 (juvenile) diabetes, DiaPep 277.
Teva will invest $3 million in Andromeda, under the terms of the investment agreement, at a company value of $90 million. Andromeda's parent company, Clal Biotechnology Industries Ltd. (TASE: CBI) will report a capital gain of NIS 10 million on the deal, which it will report in its third quarter results. However, Teva is investing only a fraction of the $10 million and repayment of a $3.5 million owners loan to CBI that Teva undertook to make at this stage.
The reason is that the interim result does not provide statistically significant results about the effectiveness of DiaPep 277, and the report advises Andromeda to wait for the next interim report. CBI and Teva agreed to wait for this second interim report and give Teva a second chance to exercise the balance of its option in Andromeda.
The interim report left Andromeda at the same point at which it began the Phase III trial. The company already had indications that DiaPep 277 was effective and safe, but it has been unable to demonstrate statistically significant results for the effectiveness of the drug. Since statistical significance depends on the sample size, Andromeda has been advised to wait for the second interim report to see if matters become clearer. The second interim report is due in four months. Teva will then have 60 days to decide whether to exercise its option in full or forego the company.
Institutional investors have also deferred a $7.5 million investment in Andromeda.
CBI is the biotech arm of IDB Holding Corp. Ltd. (TASE:IDBH) unit Clal Industries and Investments Ltd. (TASE: CII).
Published by Globes [online], Israel business news - www.globes-online.com - on August 18, 2008
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