Novartis to invest heavily in Gamida Cell


Gamida Cell’s main investors may sell all their holdings to Novartis at a later stage.

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The deal for the sale of Gamida Cell developer of a stem-cell treatment for blood cancer, to Novartis AG (NYSE:NVS; LSE: NOV; SWX: NOVZ) is back on. This time, however, no huge exit in hundreds of millions of dollars is involved. The deal involved is in multiple stages, starting with an injection of several dozen millions of dollars into the company.

At a later stage, subject to meeting milestones, the existing shareholders in Gamida Cell, headed by Elbit Medical Technologies Ltd. (TASE:EMTC)(a 31% holding) and Clal Biotechnology Industries Ltd. (TASE: CBI) (a 22% stake) are likely to sell their holdings for a substantial sum. The two main owners today reported to the Tel Aviv Stock Exchange (TASE) that Gamida Cell was in “negotiations with a pharmaceutical company for signing an investment and option agreement.” It appears that the company involved is Gamida Cell’s former partner Novartis, which last May unexpectedly reversed its decision to acquire Gamida Cell.

Gamida Cell reported that the investment agreement with the investor (Novartis, E.P.) includes investment of a “substantial” amount for 5% of the company’s shares, while Novartis will also receive an option to acquire all the holdings of Gamida Cell’s shareholders.

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The option is exercisable subject to completion of several milestones involving NiCord, the product that Gamida Cell is developing. Gamida Cell also reported that if and when the option is exercised, the buyer will pay the other shareholders in Gamida Cell a substantial sum in cash, while future payments depend on meeting product development milestones. Gamida Cell estimates the entire deal as including “several hundred million dollars.”

 

Novartis board is opposed

Gamida Cell is developing two products. One is StemEx, a joint venture with Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) that has passed Phase III trials according to the definitions of the US Food and Drug Administration (FDA). Following the completion of the trial, which took over five years, the FDA decided it wanted an additional trial. NiCord, the other product, is along the same lines as the existing treatment for cancer, but is apparently more effective, and therefore more competitive.

An acquisition of Gamida Cell by Novartis for $200-300 million in cash and several hundred million dollars more in potential revenue, subject to milestones, was called off last May, after the Novartis board of directors refused to approve the deal.

Published by Globes [online], Israel business news – www.globes-online.com

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