Novo Nordisk and Heartseed first partnered in 2021 to develop an investigational cell therapy for heart failure.
Novo Nordisk has turned its back on cell therapy specialist Heartseed, terminating a four-year-old contract amid a broader strategic realignment.
Tokyo-based Heartseed announced the termination of the partnership in a securities filing on Tuesday, noting that Novo’s decision was driven by its push to “further concentrate on its core business areas of diabetes and obesity.” It is not clear when the agreement will formally end, but Heartseed will no longer be eligible for milestone payments when that date does come.
“We applaud CEO Mike Doustdar’s decisive restructuring and strategy shift,” analysts at BMO Capital Markets told investors in a note Tuesday evening, though they weren’t explicitly reacting to the Heartseed termination. “After witnessing the boon and subsequent fall of NVO shares, we’re starting to see green shoots of a new, refined, and refocused strategy.”
Novo and Heartseed linked up in June 2021, with Novo putting down $55 million in upfront and near-term payments to collaborate on the biotech’s lead asset HS-001, an investigational cell therapy for heart failure. Novo also put more than $540 million on the line in milestone commitments.
In exchange for its investments, Novo gained the exclusive right to advance, manufacture and commercialize HS-001 outside Japan, giving Heartseed the chance to earn high-single-digit to low-double-digit royalties on net sales. The biotech retained development rights to the asset in Japan.
Following the deal’s termination, all intellectual property related to HS-001 will return to Heartseed, which will now “explore options including partnerships” for the overseas development of the asset, according to Heartseed’s securities filing. While the biotech reviews its overseas strategy, it will focus its efforts on HS-001’s Japanese development. “For the time being, we have the resources to continue development as planned using our existing funds,” Heartseed wrote.
The decision to break off the Heartseed pact comes in the thick of Novo’s sweeping and aggressive restructuring initiative. Shares of the pharma are down 35% year-to-date and Novo recently completed a high-profile executive shuffle: In May, former CEO Lars Fruergaard Jørgensen stepped down from his post and was replaced by Doustdar, who had previously served as the company’s executive vice president of international operations.
During Novo’s Q2 earnings call, where Doustdar had the opportunity to address investors before he formally assumed the CEO role, he said he would focus on execution and promised to trim the fat. “We need to reallocate and look at our cost base and really put the money where the growth is,” he said, in order to “not fall behind the competition.” Earlier this month, Novo announced it would be laying off 9,000 employees worldwide.
