The fears of Australian biotechnology company Mesoblast (ASX:MSB) were realized today when, after several days of being suspended from trading, the company reported that Israeli pharmaceuticals company Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) was abandoning joint development of its heart failure treatment. Mesoblast's share price fell sharply on the Australian Stock Exchange.
Teva holds 15% of the company, so the value of its investment has fallen. Furthermore, Teva is liable to have to recognize in its financial statements an additional decline in value on account of the agreement with Mesoblast, since the drug in development was recorded in Teva's books at the end of 2015 at a value of $258 million. In the fourth quarter of 2015, Teva recognized a decline in value of $124 million, mainly relating to the value of its investment in Mesoblast.
Mesoblast develops products based on stem cells to treat various medical indications. As far as Teva is concerned, this is another asset from the legacy of the acquisition of US company Cephalon in 2011 that has proved a failure. Cephalon and Mesobalst had a development and commercialization agreement that passed to Teca when it bought Cephalon.
Mesoblast reported today that it had "regained full worldwide rights and full strategic flexibility to exploit its mesenchymal precursor cell (MPC) technology platform for the cardiovascular field." It added, "The lead asset in this cardiovascular portfolio is Mesoblast’s Phase 3 product candidate MPC-150-IM for advanced chronic heart failure, which has the potential to be a multibillion dollar blockbuster for Mesoblast, with no financial consideration to Teva."
Mesoblast CEO Dr Silviu Itescu thanked Teva for having brought the drug to the Phase 3 clinical trial stage. “We are delighted to regain full control of this very valuable asset in our portfolio, and to have been offered a finance facility we can draw on to meet the funding requirements for the program," Itescu said, "The growing body of clinical evidence validates our strong conviction in the potential of our product candidate MPC-150-IM to change the way that advanced heart failure is treated. We thank our partner Teva for having brought our Phase 3 heart failure program to this advanced stage of development, and acknowledge their decision is based on strategic reasons aligned to their core therapeutic areas of focus. Mesoblast now has unencumbered rights to partner with a leading cardiovascular company with a commitment to heart failure product commercialization.”
Teva stated: "Teva confirms that it has exercised its contractual right to terminate its involvement in the Phase 3 clinical trial of CEP-41750 (mesenchymal precursor cell) for chronic heart failure. All the rights to the use of mesenchymal precursor cells for heart disease have been returned to Mesoblast. Teva will transfer all responsibility for conducting the Phase 3 trial for advanced chronic heart failure to Mesoblast. Teva retains the right to develop and commercialize mesenchymal precursor cells for indications in the central nervous system. Teva hopes that the continuation of this research will lead to new and necessary treatment options becoming available to patients suffering from diseases of the heart."
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2016
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