Clal Biotechnology Industries and Teva Pharmaceuticals Solidify their Collaboration for Final Stage Development of Diabetes Drug
Clal Biotechnology Industries Ltd. 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.
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