CEPH Cephalon (MM)

Teva Pharmaceutical Industries Ltd. (TEVA) recently announced its plans to acquire the remaining 50% interest of its Japanese joint venture, which was previously held by Kowa Company Ltd. Teva Pharma will be paying $150 million for the transaction, and following this acquisition, the company will own the entire joint venture. The joint venture will operate as a wholly-owned subsidiary of Teva Pharma immediately following the closure of the deal.

We note that Teva Pharma has been quite active on the acquisition front. In mid September, the company had announced its intention to increase its investment in CureTech Ltd. With the additional investment, Teva Pharma’s holding in CureTech increased to 75%. The company has the option to reach full ownership of CureTech.

Besides investing an additional $19 million in CureTech, Teva Pharma intends to finance up to $50 million of CureTech’s R&D program. Teva Pharma’s decision to increase its investment in CureTech is based on positive final results on oncology candidate, CT-011.

Results from a phase II study showed that CT-011 met the primary endpoint of improved progression-free survival (PFS) in patients suffering from diffuse large B cell lymphoma (DLBCL). CT-011 also demonstrated significant improvement in overall survival and progression-free-survival. DLBCL, an aggressive form of non-Hodgkin's lymphoma (NHL), is estimated to affect about 40% of all NHL patients.

Teva Pharma has struck several deals, including the upcoming acquisition of biopharma company, Cephalon, Inc. (CEPH). The Cephalon deal, which is scheduled to close in October 2011, will not only strengthen Teva Pharma’s pipeline, it should also help the company achieve its goal of increasing its branded revenues significantly.

Earlier, in July 2011, Teva Pharma completed the acquisition of Japanese company Taiyo Pharmaceutical Industry Co. Ltd. for $934 million. With the acquisition of Taiyo, which was the third largest generics manufacturer in Japan, a portfolio of over 550 products was added to Teva Pharma’s product line, along with a strong presence in all major channels of the Japanese pharmaceutical market.

We currently have a Neutral recommendation on Teva Pharma.

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