Teva swaps Gamida Cell stake for Clal Biotech stake

Len Blavatnik

Teva is selling a 5% stake in Gamida Cell for $6 million in exchange for an additional stake in Len Blavatnik's Clal Biotechnology.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Clal Biotechnology Industries Ltd. (TASE: CBI) today reported two deal that will take place simultaneously. In the first, Teva will sell its stake in cancer treatment company Gamida Cell to Clal Biotechnology, and will increase its holding in Clal Biotechnology in the other. Clal Biotechnology will acquire 5% of Gamida Cell's shares for $6 million, reflected a value of $120 million Gamida Cell. Clal Biotechnology, which is a unit of Clal Industries, is controlled by Len Blavatnik's Access Industries

Gamida Cell recently announced the commencement of Phase III clinical trials, and is considering an IPO sometime in the next two years. Following the deal, Clal Biotechnology will own 24% of Gamida Cell, and its share will be almost as large as that of the largest shareholder in the company, Elbit Medical Technologies Ltd. (TASE:EMTC) (25%). Gamida Cell has another large shareholder - pharmaceutical company Novartis, which twice expressed an interest in acquiring the company, but has not yet gone through with the acquisition. Novartis owns 20% of Gamida Cell, and has undertaken to inject $10 million more into the company, and to take part in any future financing round in order to maintain its 20% holding.

In the second deal, Teva is enlarging its stake in Clal Biotechnology by between 3.5%-7% at a 20% premium on the average market price of the shares during the 10 days preceding the announcement, at a cost of NIS 20 million. This will bring Teva's stake in Clal Biotechnology to 17.5%-21%. The share price of Clal Biotechnology, a biomedical holding company controlled by Clal Industries owner Len Blavatnik, has climbed 30% this year, pushing the company's market cap up to NIS 420 million. Following the deal, the leading shareholders in Clal Biotechnology are Clal Industries (54%), Teva (18%), and Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) (5%), with the public owning the rest.

Teva's deals are interesting because it is the company's first investment in an innovative company in Israel since Dr. Jeremy Levin was CEO in 2012-2014. Teva's current innovative drug development efforts are focused on brain diseases, and it is therefore reasonable to assume that its interest in Clal Biotechnology results mainly from Luc, a US company that is developing a drug for treatment of depression and schizophrenia.

Luc also has an agreement with Novartis involving a treatment for depression with an estimated potential amounting to hundreds of millions of dollars. Teva also has innovative activity in the cancer field (inherited from Cephalon), but previously declared that this area was not the focus of its development activity. Clal Biotechnology has holdings in a number of cancer treatment companies, including Gamida Cell, BioCancell, and US company Neon Thereapeutics. Teva has had extensive dealings with Clal Biotechnology in the past.

Published by Globes [online], Israel Business News - www.globes-online.com - on March 5, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Len Blavatnik
Len Blavatnik
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