Clal Bio: Exit of NIS 88-325 million – Cadnet is sold to Novartis – the capital market

Exit to the company

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Cadent Therapeutics, a privately held company (13%) owned by Clal Bio, is being sold to Novartis (NVS) for up to $ 770 million, with the immediate consideration standing at $ 210 million, in addition to conditional payments on milestones of up to $ 560 million.

Cadent announced that it estimates that the acquisition agreement will be completed during the first quarter of 2021. Clal Bio clarifies that the acquisition agreement includes standard provisions regarding, inter alia, conditions precedent for its completion, the interim period until its completion and indemnification clauses applicable to Cadent shareholders, including the Company.

The Company’s investment in the cadet is presented in its financial statements as of September 30, 2020 as a financial asset with a fair value of approximately NIS 24 million (approximately $ 7 million). Accordingly, as a result of the value of the cadence reflected in the acquisition agreement, the Company is expected to record in its financial statements for 2020 a substantial profit, the scope of which the Company is examining.

Roughly speaking, Clal Bio’s share in the consideration to be received is about $ 27 million (about NIS 88 million) as an immediate payment, and up to about $ 73 million in payments conditional on meeting milestones. In other words, the minimum profit that Clal Bio is expected to record as a result of the transaction is estimated at NIS 64 million, a profit that may increase to NIS 300 million in the most optimistic scenario of meeting all the milestones in the transaction.

Clal Bio is traded this morning at a market value of about NIS 305 million, with the value of its holdings in the two most significant portfolio companies – Mediwand (MDWD) held 35%, and Gamida Basket (GMDA) held 6% – amounting to NIS 195 million. But the company has additional holdings. The value of Clal Bio’s financial assets as of the end of the third quarter was approximately NIS 109 million, while on the other hand the company has liabilities to stakeholders and other liabilities amounting to approximately NIS 69 million.

Recall that earlier this month Professor Gabi Barbash, who became a regular guest at the news studios as a corona commentator, spoke at a Clal Bio investor conference where he has served as director for 20 years and predicted that 2021 is going to be a big year for the company: “20 years I see management frustrated In the light of developments in the past year, I am optimistic that the investment will finally bear fruit “(for the full article).

Cadent was established in 2017 through a merger of Luc Therapeutics and Ataxion Therapeutics, focusing on the small molecules designed for neural-ion channels. The acquisition will give Novartis full rights to Cadant’s neuroscience portfolio.

“Since the company’s launch, the Cadent team has focused on building a next-generation small-molecule treatment portfolio for cognitive disorders, mood and movement,” he said. Judy Morrison, CEO of Cadent. “Novartis’ expertise in developing central nervous system drug therapy – something we are witnessing firsthand in our existing collaboration – provides an ideal basis for further advancement of the cadet tube and will ensure the broad potential of these drugs for realization for patients.”

Cadent Therapeutics develops treatments for movement disorders, mood disorders and cognitive disorders. The company combines target specificity, patient selection, design and optimization of innovative quantitative drugs and endpoints to create molecules for the treatment of cognitive disorders and movement disorders. The company has an exclusive license and collaboration agreement with Novartis for the development of a negative ultrasonic modulator, the company is currently in Phase 2 for the treatment of resistant depression. The company’s investors include Atlas Venture, Cowen Healthcare Investments, Qiming Venture Partners, Access Industries, Clal Biotechnology Industries and Novartis.