Cephalon strikes record $2B stem cell pact with Mesoblast

Regenerative medicine just got a big player to enter the game. Cephalon has locked itself in a tight embrace with Australia's Mesoblast, agreeing to pay $130 million upfront, $220 million for a 20 percent stake in the company and offering up to $1.7 billion in milestones in a high-stakes gamble on the biotech's stem cell programs. 

With one eye on a looming patent cliff, Cephalon is pumping a record amount of money into a stem cell deal in hopes that the biotech's unique approach can deliver a slate of new treatments for everything from heart failure to Alzheimer's. Under the agreement, Mesoblast will be responsible for certain Phase IIa trials while Cephalon--which gains worldwide commercialization rights--agreed to step up to the plate and cover the costs of Phase IIb and III studies. Shares of Mesoblast vaulted 30 percent on the news.

"This global licensing agreement positions Cephalon as a leader in regenerative medicine while further strengthening our late stage pipeline with another innovative biologic platform," said Cephalon COO J. Kevin Buch. "Mesoblast has done an outstanding job of developing Phase II clinical data in congestive heart failure and hematopoietic stem cell transplants, plus preclinical data in acute myocardial infarction. We are excited to have the opportunity to develop potentially the world's first stem cell therapy for indications that could serve millions of patients globally."

Mesoblast didn't sell the whole store in the deal, either. In a joint statement the biotech said that it retained rights to programs for bone and cartilage applications, diabetes, eye diseases, and inflammatory and immunological conditions.

- here's the Cephalon release
- see the report from the Sydney Morning Herald
- and read the Bloomberg story