Clal Biotechnology Industries Ltd. (TASE: CBI) and Elbit Medical Technologies Ltd. (TASE:EMTC) today announced the signing of a memorandum of understanding with a mezzanine investment fund. The fund will lead a $30 investment round in Gamida Cell, a subsidiary of the two companies developing a stem cell cancer treatment, at a company value of $120 million before money.
The fund tends to invest in companies before they hold an IPO. Also participating in the financing round will be Novartis, which currently has a 20% stake in Gamida Cell, under an agreement with the company requiring it to invest at least as much as its share. Other existing shareholders in the company are also likely to join the round. In exchange for their investments, the investors are likely to receive preferred stock in Gamida Cell, options to purchase preferred stock in the company, and other rights, including some protection against dilution of their stakes. As of now, there is no certainty that a final investment agreement will be signed.
Gamida Cell is about to commence Phase III clinical trials for Nicord, its leading product. The product is entering the breakthrough designation track of the US Food and Drug Administration (FDA). The company believes that one trial will be enough for registering its product for marketing. The trial is scheduled to take two years.
Compound deal with Teva
Earlier this week, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Clal Biotechnology announced a compound deal in which Teva will sell its stake in Gamida Cell to Clal Biotechnology, while at the same time increasing its holding in Clal Biotechnology.
Clal Biotechnology will buy 5% of Gamida Cell's shares for $6 million, reflecting a $120 million value for Gamida Cell. Gamida Cell's other major shareholder, Novartis, twice expressed interest in acquiring the company, but has not yet gone through with it. In the other part of the deal, Teva increased its stake in Clal Biotechnology by 4% at a 20% premium on the average market price of the shares over the 10 days preceding the announcement, paying NIS 20 million for the shares. The share price of Clal Biotechnology, a biomedical holding company controlled by billionaire Len Blavatnik's Clal Industries and Investments, has risen 30% since the beginning of the year, pushing its market cap up to NIS 420 million.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 8, 2017
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