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Deal Is Back On: Novartis AG (NVS) To Invest Heavily In Gamida Cell Ltd. Before Acquisition

8/18/2014 6:05:49 AM

Deal Is Back On: Novartis AG To Invest Heavily In Gamida Cell Ltd. Before Acquisition Deal Is Back On: Novartis AG To Invest Heavily In Gamida Cell Ltd. Before Acquisition

August 18, 2014
By Mark Terry, Breaking News Staff

Plans for Novartis AG (NVS) to acquire Israeli-company Gamida Cell are back on the table. In a reported multi-step deal, subject to a several milestones, shareholders in Gamida Cell reported to the Tel Aviv Stock Exchange (TASE) that Gamida was in negotiations with a pharmaceutical company for an investment and option agreement. In May of this year, Novartis backed out of a $600 million transaction to acquire Gamida. The deal was valued at $200 to $300 million in cash and several hundred million more in milestone payments.

Gamida Cell, located in Jerusalem, Israel, is a leader in stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine. It also has a development pipeline of products from sources such as umbilical cord blood. These products are in development to treat numerous conditions, including blood cancers such as leukemia and lymphoma, solid tumors, autoimmune diseases, non-malignant hematological diseases such as sickle cell disease and thalassemia.

Current treatment for blood disorders involves bone marrow transplants, typically from a relative with similar genetic markers. If a matching donor cannot be found, stem cell transplants are an alternative method.
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The company’s largest shareholders are Elbit Medical Technologies Ltd and Clal Biotechnology Industries Ltd, with a 31% and 22% stake, respectively. Elbit Medical is a holding company whose medical division includes investments in InSightech Ltd and Gamida Cell Ltd. Gamida Cell reported the agreement with Novartis would involve 5% of the company’s stock shares. Novartis would also acquire an option to buy all the holdings of Gamida’s shareholders.

One of the major milestones involved in the deal involves Gamida Cell’s NiCord® product. Gamida reported a successful Phase I/II study of NiCord in February, which the company describes as “a paradigm shift in cord blood transplantation.” Novartis would be required to pay the remaining shareholders a significant amount of cash along with future payments depending on completion of product development milestones. Estimates of the entire deal involve several hundred million dollars.

The other major product Gamida is developing is StemEx, which is a joint venture with Teva Pharmaceutical Industries Ltd. It passed Phase III trials. Despite successful completion of the single arm Phase II/III study in July, the FDA advised Gamida Cell to undergo an additional Phase III, randomized, controlled clinical study. StemEx® is being developed an alternative treatment for high-risk leukemia and lymphoma who did not have a family-related matched bone marrow donor.

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