Novartis will invest $10 million in BioLineRX for a 12.8% stake. They will select three projects for joint development.
Drug development company BiolineRX Ltd. (Nasdaq: BLRX); TASE:BLRX) signed a strategic business cooperation agreement with pharmaceutical multinational Novartis. Under the agreement, Novartis will invest $10 million in BioLineRX at a 22% premium on yesterday’s market price, for a 12.8% stake, and the two companies will search for joint development projects in Israel. BioLineRX’s share price shot up following the announcement and trading had to be suspended in the share.
Under the plan, three projects will be selected and developed by BioLineRX, and Novartis will have the option of developing them in cooperation with BioLineRX. Exercising the option will involve a $5 million payment, plus half of the project’s development cost, which will be provided as an investment in BioLineRX, also at a premium on the market price.
BioLineRX VP business development David Malek explains that at the end of the joint development process, Novartis can purchase the rights to these projects on predetermined terms. The search is not restricted to any particular segments in the pharmaceutical industry.
BioLineRX CEO Kinneret Savitsky explains, “For quite a long time, we’ve been considering bringing a strategic partner into BioLineRX. We’ve spoken about it in depth with several leading companies, and Novartis was eventually selected. Bringing in a partner of this scale constitutes validation of our business model and the fact that Israel is a leading source of medical innovation, that we know how to select the right projects, and that we also know how to develop them.”
She emphasizes that Novartis will not be exposed to any special information about other projects in BioLineRX’s pipeline, and BioLineRX therefore believes that it will be able to commercialize other projects with other companies, or with Novartis, should it wish to do so, but not in the framework of the present agreement.
Novartis has been considering a strategic investment in Israel for several years, for example in the form of an investment in a technology incubator. One of its leading drugs, Excelon, used to treat Alzheimer’s Disease, originated at Hebrew University of Jerusalem. Novartis recently invested in Gamida Cell.
The structure of the current agreement is unusual. Other international corporations have already invested in Israeli venture capital funds, or in startups with a single product, or in cooperation with university commercial development companies. This is the first time, however, that an international company has invested in a projects company like BioLineRX (the most similar agreement is Teva Pharmaceutical Industries Ltd.’s (NYSE: TEVA; TASE: TEVA) investment in Clal Biotechnology Industries).
BioLineRX is a drug development company that includes academic institutions up until the clinical trials stage. Its current leading products (which are unrelated to the current agreement) are a product for treatment of heart attacks currently being developed by Bellerophon, for which the main trial is slated for completion by mid-2015, a blood cancer drug in Phase II clinical trials, and a drug for treatment of Celiac Disease in Phase 1/2 clinical trials.
Published by Globes [online], Israel business news – www.globes-online.com