Cephalon Inc. and Mesoblast Ltd. entered into a strategic alliance Tuesday night to develop and commercialize adult stem cell therapeutic products for degenerative conditions of the heart and central nervous system,
Under the terms of the deal, Cephalon (NASDAQ: CEPH) of Frazer, Pa., will make a $130 million upfront payment to Mesoblast — an Australian regenerative medicine company — and regulatory milestone payments of up to $1.7 billion.
In return, Cephalon gets exclusive worldwide rights to commercialize specific products based on Mesoblast's proprietary adult stem cell technology platform.
Conditions targeted under the partnership include congestive heart failure, acute myocardial infarction, Parkinson's Disease and Alzheimer's Disease. The alliance also extends to products for augmenting hematopoietic stem cell transplantation in cancer patients.
Cephalon will also make an equity investment of $220 million to purchase a 19.99 percent stake in Mesoblast. The price represents a 45 percent premium to the last 30 days' volume weighted average price for Mesoblast shares. Cephalon has entered into a standstill agreement to limit its investment to 19.99 percent of Mesoblast common stock for the next 12 months.
“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 Kevin Buchi, Cephalon’s chief operating officer. "Mesoblast has done an outstanding job of developing phase-II (mid-stage) 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."
Buchi is handling day-to-day activities at Cephalon during founder and CEO Frank Baldino’s medical leave, which the company said earlier this week is being extended indefinitely.