from the January 2016 issue

Teva invests $30m in US Company Wave Life Sciences

Teva owns 9% of Wave Life Sciences, whose market cap is $290 million.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) invested $30 million in US biotechnology company Wave Life Sciences in the latter's Nasdaq IPO several weeks ago. Wave Life Sciences has a $290 million market cap, following a 13.8% drop in its share price since the IPO. Teva bought 1.9 million shares at the $16 IPO price, giving it 9% of Wave Life Sciences' share capital.

Wave Life Sciences stated following the offering that Teva had notified it of its intention to spend $30 million on buying its shares, but that there was no guarantee that the purchase would be carried out.

Wave Life Sciences develops drugs based on its platform, and its collection of drugs in development includes products for the treatment of Huntington's disease, a medical segment in which Teva is active. Another US biotechnology company linked to Teva is CTI Biopharma, which develops oncological drugs for the purpose of reducing their toxicity. CTI Biopharma today announced that it had received $10 million from Teva after meeting a milestone for the Trisenox drug. The agreement between CTI Biopharma and Teva resulted from Teva's acquisition of Cephalon, which previously acquired the rights to the drug from CTI Biopharma. According to CTI Biopharma's report, it is likely to receive a further $70 million from Teva, subject to meeting future milestones.

Teva last week announced that the US Food and Drug Administration (FDA) advisory committee had recommended the approval of reslizumab, a biological drug for treating asthma in adults. Teva chief scientific officer Dr. Michael Hayden said in response that Teva was very satisfied, and that the recommendation "brings us one step closer to potentially providing a new, targeted treatment option for a specific group of patients with inadequately controlled asthma." Merrill Lynch wrote in response at the end of last week that this was an upside concerning its model for Teva. Analyst Sumant Kulkani wrote that he believes that other companies are developing a similar treatment, including GSK, AstraZeneca, and others.

Citi analyst Liav Abraham believes that sales of the drug will reach a peak of $200 million. Even though this is not very large, however, she says that it is one more element in the positive sentiment concerning Teva's R&D capabilities and backlog of products. Abraham expects more information in 2016 about the original products being developed by Teva for treatment of Huntington's disease and dyskinesia.

Compensation in Russia
A judgment handed down by a Russian court requires Teva to pay $5.9 million to Biotec Group, a local company, in compensation for violating an agreement between the two in 2010.

The company distributed Teva's products in Russia, and since 2010, the partnership has included the distribution of Copaxone, Teva's ethical drug for the treatment of multiple sclerosis. In a "Globes" interview a year ago, Biotec owner and chairman Boris Shpigel, an Israeli-Russian businessman, said, "Without any prior notice, Teva stopped supplying Copaxone through Biotec," and severed all connection with it. "A friendly hand was extended to Teva, which it bit," Shpigel said at the time. "We always gave Teva preference as an Israeli company, and we wanted to show that its products were better that those of its competitors in the US and Europe. We promoted many of Teva's products in the market, in place of competing products."

Despite warnings from the Federal Antimonopoly Service of Russia, Teva has not resumed its supply of products to Biotec, and began marketing Copaxone in Russia through its subsidiary, Teva Russia. At the same time Biotec sued Teva for 408 million rubles, because Teva did not supply it with Copaxone for a government tender in late 2013. The Russian court awarded this amount to Biotec in its new judgment.

Reprinted from the Israel High-Tech & Investment Report January 2016

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