Novartis has just shelled out $15 million for Gamida Cell, and here's why.
Swiss drugmaker Novartis has been busy as of late, plunking down $15 million for Israel stem cell therapy developer Gamida Cell.
That will get Novartis another 2.5 percent stake in the company, just a year after spending $35 million on a 15 percent stake in the company, according to a Reuters report.
Novartis could eventually push the deal to $600 million if it exercises the buyout option expiring in 2016.
Why is Novartis making the move? This new investment will help advance Gamida Cell’s clinical programs. That includes developing an experimental treatment for patients with hematological malignancies and blood cancers, like leukemia. This treatment, called NiCord, is set for a Phase III clinical trial in the middle of next year.
By pulling the trigger on this deal, Novartis has agreed to invest $5 million in Gamida Cell for the extra 2.5 percent, with another $10 million to be spent on late stage development of NiCord.
Under the terms of the agreement, Gamida Cell gets to keep the rights to their products and technology and will not have to hand them over to Novartis.
Novartis is the biggest pharmaceutical company in the world when it comes to sales, with an estimated $57.9 billion in 2013. The company had a market cap of about $280 billion, which would make it the largest healthcare company period in this metric. It is known for producing a wide range of widely used drugs, like Clozaril, Diovan, Ritalin, and Lamisil, to name just a few.
Novartis has three operatin divisions, separated into pharmaceuticals, eye care, and generics.
Gamida Cell describes itself as a world leader in stem cell population expansion technologies, as well as therapeutic products. NiCord is its flagship product, which aims to treat patients with a high risk of leukemia and lymphoma. It would be an alternative to bone marrow transplants.