Clal Biotechnology Industries Ltd. (TASE: CBI) will not exercise its option to buy Andromeda from Hyperion Therapeutics (Nasdaq: HPTX), as expected, after the failure of the company's treatment for juvenile diabetes. Clal Biotech held an option to buy Andromeda for a minimum of $2.5 million and maximum of $36.5 million, depending on trial results.
Andromeda's Phase III trial for DiaPep277 was conducted after it looked like the treatment was already written off. DiaPep277 was originally owned by Clal Biotech and Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), which invested tens of millions of dollars in the drug's development. But in 2014, Teva relinquished its rights on the drug and sold them to Clal Biotech.
Shortly afterwards, Clal Biotech seemed to have concluded a once in a lifetime deal when in April 2014. it sold Andromeda to Hyperion for up to $570 million including an immediate cash payment of $20 million. Clal Biotech even reported a NIS 482 million profit from the deal.
But several months later, Hyperion unilaterally cancelled the deal, charging that Andromeda's employees had rigged the results of the clinical trial. Clal biotech feared for its reputation and after counter allegations, Hyperion softened its claims to "violations of appropriate clinical rules."A further trial was agreed with Clal Biotech given the option to buy back the drug. Meanwhile, Hyperion itself was sold yielding returns for Clal Biotech, which held shares in the US company. Now an external committee has deemed the trial a failure.
Meanwhile Clal Biotech CEO Reuven Krupik stepped down after 12 years as part of "the changing of the guard. His replacement will be named by December.
Published by Globes [online], Israel business news - www.globes-online.com - on October 1, 2015
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