Clal Biotechnology Industries Ltd. (TASE: CBI) portfolio company Andromeda Biotech Ltd. has bought back the rights of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) to its treatment of type 1 diabetes, DiaPep277, for a future payment of $72 million. Clal Biotech owns 84% of Andromeda, and is buying back Teva's 16% stake. The payment will be made from Andromeda's product or from the proceeds from an exit, if any.
The statement by Clal Biotech's board of directors audit committee says that Andromeda's buying back of the global rights to DiaPep277 from Teva was "important to accelerate the business development and commercialization and the drug that has taken place in recent months."
It is also possible that Teva's rights to DiaPep277 hindered negotiations for commercializing the drug, the development of which can now continue undisturbed.
If DiaPep277 is successful and makes the payment for Teva's stake in Andromeda in full, the deal gives the company a value of $450 million. It is not clear how Clal Biotech will book the deal, and it said that it would make an announcement about this later.
Teva has invested $36 million in stages in DiaPep277 from 2007, when it first invested in Andromeda, through 2013. If the payment is made in full, Teva will make a two-fold return on its investment.
DiaPep277 is a unique peptide to prevent the destruction of insulin producing cells in the pancreas in type 1 diabetics. To date, there is no therapy that can prevent the destruction of insulin secreting beta cells. DiaPep277 is designed to treat type 1 diabetes patients with residual insulin secreting cells in order to preserve their function. It is currently undergoing two Phase III clinical trials. The first trial was successful and the results of the second trial are due by the end of the year. If successful, Andromeda can apply to market the drug.
Teva acquired the rights to DiaPep 277 when Shlomo Yanai was CEO, as part of a deal in which the company bought the rights to several products under development by Clal Biotech portfolio companies. Yanai's successor, Dr. Jeremy Levin, cancelled most of these agreements, and the rights to the products were returned to the companies for little or nothing. Andromeda's product was the last of these products in which Teva had rights, and Teva only released it for a substantial payment.
Teva still owns 14% of Clal Biotech, which is controlled by Len Blavatnik's Access Industries Inc.
Published by Globes [online], Israel business news - www.globes-online.com - on February 20, 2014
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