Kitov Pharmaceutical Holdings Ltd. (TASE: KTOV) last week announced its acquisition of a new product for its development pipeline, in addition to its product for combined treatment of hypertension and pain. The new product was developed by Israeli company Tyrnovo for treatment of cancer using a new mechanism. The acquisition is a major step forward for Kitov in its risk-reward profile, compared with its current product. As part of the deal, Kitov is acquiring 56% of Tyrnovo for $3.8 million.
Kitov's leading product has a relatively short development period. The main challenge for the product is in marketing. The company has accordingly completed the development process and the clinical trials process fairly quickly, and is now hoping for marketing approval within a year, followed by the signing of a commercialization agreement with a marketing company. The new product acquired from Tyrnovo, on the other hand, is a completely innovative drug requiring the full development process.
As a breakthrough cancer drug, the new product is likely to benefit from concessions in development, which could possibly halve the 15 years of development and hundreds of millions of dollars in investment required for an "ordinary" drug. Even in this case, however, the road is much more difficult and expensive than for Kitov's leading product. At the same time, the potential of an innovative cancer drug is greater, and there is also the possibility of commercializing the product through a third company somewhere along the line.
Beginning clinical trials in late 2018
Kitov currently has $19 million in cash. If the company signs a marketing agreement for its leading product, it is likely to post revenue, while its expenses for the new product will decrease. Although development expenses for Tyrnov's drug until marketing approval is obtained are large, Kitov believes that it will need only $3 million over the next two years before beginning the planned clinical trials in late 2018.
Tyrnovo was founded on the basis of research by Hebrew University Prof. Alexander Levitzki. The product was previously given for commercialization to a startup named NovoTyr Therapeutics, and to Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), which returned it to Yissum Technology Transfer Company of the Hebrew University of Jerusalem as part of the policy adopted by then-Teva CEO Jeremy Levin.
NovoTyr's entrepreneurs restarted the company under the name of Tyrnovo, and changed its business model. The product was previously tested as an independent cancer treatment, and its results were apparently interesting, but not especially so. It is now being tested as a product designed to reduce the resistance of cancer to various types of other drugs. As such it can be included in a cocktail of cancer drugs.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 25, 2017
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