Israeli generics giant Teva ($TEVA) has returned the full rights of a Phase III experimental heart drug that could be worth billions of dollars back to Mesoblast ($MESO) as it walks away from development.
Teva, through its buyout of Cephalon, owned 60% of the rights to the stem cell therapy MPC-150-IM, but has now returned full rights back to the Australian company. The drug is in late-stage testing in advanced chronic heart failure.
Teva was not planning to continue development of the drug, but Mesoblast said it will keep going--although it is now on the lookout for a new partner to help it gain approval, and one with the marketing might to push the drug sales globally. It does however have enough cash to complete testing, which is estimated to cost around $100 million.
Credit Suisse believes that drug could be worth $4.1 billion in peak annual sales, but stem cell therapies have waxed and waned in both popularity and testing results over the years, with many in Big Pharma deciding to pull out of stem cell therapy pacts.
The company said it expects to complete its pivotal 600-patient Phase III trial by the end of next year.
Recently, an independent data monitoring committee found no safety issues and strongly recommended continuing the study after reviewing data from the first 175 patients, Mesoblast said in a statement.
This latest trial is designed to show that the treatment can significantly reduce heart failure hospitalizations and deaths. Mesoblast gained nearly $60 million investment from Celgene ($CELG) last year and is 14% owned by Teva, through its buyout of Cephalon.
It’s not the only biotech looking at a stem cell approach with San Carlos, CA-based BioCardia developing its CardiAMP--a bone marrow-derived therapy which posted positive data from its small Phase II trial last year.
The biotech has however hit difficulties after dropping its $50 million IPO in April, leaving its late-stage efforts for the ischemic systemic heart failure therapy in limbo given its cash constraints.
Mesoblast’s CEO Dr. Silviu Itescu said, “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. 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," Itescu continued. "Mesoblast now has unencumbered rights to partner with a leading cardiovascular company with a commitment to heart failure product commercialization.”
But despite the upbeat nature of its release, the market reacted badly on the news, and in closing trading Mesoblast shares were down 42% at $1.11--wiping more than $300 million off its market value, and taking the shares to 7 year lows.
Teva, although predominantly a generics company, has gained large sales from its handful of marketed drugs, with its biggest being the multiple sclerosis treatment Copaxone--which was making blockbuster sales at peak.
But, with more than a hint of irony, Teva is now seeing these sales hit as generics are eroding its market share, and last year it saw its generics business actually fall. It’s also splashing $40.5 billion on Allergan’s ($AGN) generics business.
The company has also been making a series of cuts over the past two years to help shore up against its Copaxone losses.
"Teva will remain a shareholder--but cardiac is not its primary focus," Itescu told The Sydney Morning Herald. "The central nervous system is [its primary focus]. It is in the midst of a large acquisition [of Allergan]."