Clal Biotechnology Industries And Teva Pharmaceuticals Solidify Their Collaboration For Final Stage Development Of Type 1 Diabetes Drug

Main Category: Diabetes
Article Date: 03 Dec 2007 - 4:00 PDT

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Clal Biotechnology Industries Ltd., (TASE: CBI), an investment group in the field of life sciences, announced recently that Andromeda Biotech Ltd., a wholly owned subsidiary of CBI, signed a Term Sheet with Teva to develop and commercialize DiaPep277, an innovative and advanced drug for the treatment of type 1 diabetes. According to the Term Sheet, Teva and other investors will invest in Andromeda and will finance the development cost. In return, Teva will receive worldwide exclusive rights to manufacture, sell and distribute the drug. The new agreement that will be signed based on the Term Sheet replaces an existing option agreement and will be valid in the event that the results of the interim analysis of the Phase III clinical study data that will expected to be in the first half of 2008, will be satisfactory.

Under the term sheet, within 60 days of submission of an interim report from the current Phase III clinical study, Teva and other investors will have the option to invest 17.5 million dollars in Andromeda at 90 million dollars pre-money valuation. In a second stage, after the completion of the current Phase III clinical study, Teva and other investors have an option to invest additional 17.5 million dollars at 170 million dollars pre- money valuation. In addition, Andromeda has an option to receive additional 15 million dollars investments from Teva.

CBI and the other investors have stock sale rights to Teva to be executed in two Put Options. Upon receiving European marketing approval, CBI and the investors can sell shares valued at 44 million dollars at 480 million dollars valuation and then, upon receiving US marketing approval, CBI and the investors can sell shares valued at 52 million dollars at 555 million dollars valuation. After completion of these two put options, CBI will hold 58% of Andromeda shares, whereas Teva will hold 33% (respectively 52% and 31% on fully diluted basis).

Andromeda will receive from Teva royalty payment on net sales and additional royalties on accumulated sales. In addition, Teva shall pay additional payment for other indications.

"The new understanding with Teva emphasizes Clal's strategy to generate value to its shareholders during the drug development period, said Ruben Krupik, Clal Biotechnology Industries CEO, "Clal Biotechnology Industries will exercise part of its investment in return for millions of dollars and will still maintain control in a company with large potential sales with a high market value."

"This agreement is an important milestone for the clinical development of DiaPep277," said Dr. Shlomo Dagan, Andromeda CEO. "We hope that the agreement will be fully implemented upon obtaining the interim results, resulting in significant progress with the introduction of a novel drug into the market. We are very pleased to have Teva as a potential strategic partner for this program with their extensive experience and numerous successes in introducing novel drugs into the European and US markets."

About Andromeda Biotech

Andromeda Biotech, wholly owned by Clal Biotechnology Industries, is focused on development of innovative treatment for autoimmune diabetes. The company lead product is DiaPep277, currently in phase III clinical studies, is a novel therapeutic approach in treating type 1 diabetes (T1D). It is a unique peptide derived from the human protein, HSP60, which immunomodulates the immune system, prevents the destruction of pancreatic cells that secrete insulin and preserves their natural function.

To date, there is no therapy that could stop the destruction of insulin secreting beta cells. Initially, DiaPep277 is designed to treat newly diagnosed type 1 diabetes adult patients with residual insulin secreting cells. Other potential target populations are type 1 diabetic children, patients with high risk of T1D, T1D patients with slow progressing disease and T2D patients with auto-antibodies. The annual potential drug market is estimated to be more than half a billion dollars.

About Clal Biotechnology

Powered with strategic vision and financial vigor, Clal Biotechnology Industries (CBI) Ltd is one of the largest biotechnology investment entities in Israel. CBI targets promising companies with innovative bio-pharma technologies and transforms them into thriving, productive businesses.

Backed by Clal Industries and Investments, one of Israel's largest investment companies (owned by IDB group), and Teva Pharmaceutical Industries, the world's largest manufacturer of generic drugs, CBI successfully leverages its unique investment model of large-scale, long-term financial and managerial commitment to yield significant results and valued creation.

Clal Biotechnology Industries portfolio includes D-Pharm, Mediwound, Cure Tech, Andromeda, NST, Polyheal, Compugen, and BioCancell.

Clal Biotechnology Industries