Swiss Pharma Company Aims For A Hit, Not A Miss: Acquires Stake In Gamida Cell
Swiss Pharma Company Aims For A Hit, Not A Miss: Acquires Stake In Gamida Cell
Money may not grow on trees, but smart acquisitions can certainly raise profits. Swiss drugmaker firm Novartis has just acquired a 15% stake in Gamida Cells. The latter is an Israel based firm which develops stem cell therapies. The deal has been estimated to be worth more than $600 million, according to Gamida's parent company Elbit Imaging.
Novartis will be immediately investing $35 million in Gamida cells for the stake. The Swiss pharmaceutical company will also be given the option of fully acquiring the company. Around 30.8% of Gamida Cell is owned by Elbit Medical Technologies while Elbit Medical is mostly (86%) owned by Elbit Imaging.
The buyout option is available to Novartis provided Gamida Cell achieves specific milestones pertaining to the development of NiCord which is a medicine for treating haematologic malignancies such as lymphoma, leukaemia and sickle cell disease. The option for the buyout phases out in the first half of 2016.
In case the buyout becomes a reality, the shareholders of Novartis stand to gain $165 million in cash. Future payments could amount to around $435 million based on whether Gamida Cell is able to meet certain regulatory requirements and reach a specific sales volume.
Gamida's current shareholders include Amhen, Teva Pharmaceutical Industries and Auriga Ventures. Even prior to the potential buyout, following the completion of the deal Elbit Medical's stake in the company will fall to 24.7%.
Following completion of the deal and prior to the exercise of the option, Elbit Medical's stake in Gamida Cell would drop to 24.7 percent. The deal wherein Novartis acquires the stake will include an immediate payment of around more than $150 million. This is followed by additional payments which will raise the complete value to $550 million.
Shares of Elbit Medical rose by 2.4% to 17.1 shekels which is around $485 in Tel Aviv's stock exchange while Clal Biotechnology's shares rose by 0.8% to 8.24 shekels. The buyout option rests heavily on the development of NiCord. Following the closure of the deal, Clal's stake in Gamida will drop to 19%.
Other than NiCord, Gamida Cell's other main products include Stem Ex. This is designed for treating leukaemia and lymphoma and its stem-cell therapy products are derived from non controversial sources such as umblical cord blood.
Novartis has been expanding for some time now. Its agreement with GlaxoSmithKline was one of the major moves in the pharmaceutical industry. This Swiss pharma is relying on acquisitions for staying power. With new wonder drugs for every kind of disease being developed, Novartis has taken the acquisition route to ensure that it does not miss the gravy train.
