Intec Pharma Ltd. (TASE: INTP), which develops pills for delayed release of drugs entering the intestine (an "accordion pill"), has announced that it is in negotiations for an agreement with a major pharmaceutical company. Under the terms of the agreement, Intec will develop a delayed release accordion pill containing that company's drug.
Also as part of the agreement, if signed, Intec will immediately receive $1 million for initial R&D, and possibly an option granting the global company rights to continue development and marketing of the drug.
If the international company exercises this option, it will pay Intec amounts potentially reaching $150 million, depending on the progress of the product, plus royalties on sales, if and when the product reaches the market. The company name and the sub-sector of the drug were not stated, nor the expected date for a decision about exercising the option. The drug involved apparently involves a large indication drug in areas close to those in which the company is currently operating, i.e. drugs for treatment of central nervous system disorders (mental and brain diseases).
This would be only the second such announcement by Intec. Similar agreements signed in the past with pharmaceutical companies for joint development of its products began with insubstantial amounts or before the company held its IPO. The previous agreement reported generated NIS 7 million in revenue for Intec, before being canceled by the pharmaceutical partner for strategic reasons.
Share rallying after a decline
The Intec share was up 4% today following the report, and is now traded at a NIS 185 million market cap. Intec has a number of products that it is developing independently containing generic drugs combined with its unique dispensing method, without any partnership with a major drug company, and a number of previous agreements for joint development of a drug with the companies developing the drug.
These drugs are sometimes generic versions of existing drugs by those companies, with the goal being to extend the life of the patent, and sometimes new drugs that are not effective enough without the delayed release mechanism.
A decade ago, Intec planned to operate solely according to the business model of developing products jointly with large companies. The difficulty in transferring such a product through those companies' product pipeline, however, led Intec to consider the longer and more expensive way of developing an independent product to prove that the technology was feasible, in the hope that after this was proven, leading companies would be more willing to take part in joint development, joint products would be brought forth more quickly, and Intec could receive a higher price for its services.
Search for a partner to improve sleep
This method has meanwhile proven difficult. At the moment, the company has two independent products in its pipeline. The leading product, designed for treatment of Parkinson's Disease, was approved in principle for Phase III trials by the US Food and Drug Administration (FDA) (a multi-center effectiveness trial) in October 2014. The company has been negotiating with the FDA since then to formulate a trial protocol. The company stated in the past that when Phase III trials begin, its chances of signing an agreement with a development partner for this product will grow, and it now believes that it will be able to begin the trials in the second half of 2015.
The second significant product, designed for treatment of sleep disorder, has also passed Phase II trials, but the company will continue forward with it only if it first finds a partner for it.
As of the end of 2014, the company had NIS 30 million in cash, after losing NIS 20.3 million in 2014. Intec lost 14% of its value over the past year. In recent months, private shareholders Yehuda Shimoni and Eli Joseph (brother of chairman Zvi Joseph) have increased their stakes in the company to 6.54% and 5.1%, respectively, by buying shares on the market. The company's largest shareholder is The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), with a 6.6% stake.
Published by Globes [online], Israel business news - www.globes-online.com - on April 12, 2015
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