Teva stock yo-yoed and then tumbled Wednesday after the company announced it would partner with French pharma giant Sanofi (SNY) to develop an inflammatory bowel disease treatment.
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The drug belongs to the emerging TL1A class and could eventually rival experimental treatments from Roivant Sciences (ROIV) with partners Pfizer (PFE) and Merck (MRK). Earlier this year, Merck spent $10.8 billion to buy Prometheus Bio for its TL1A drug. Teva’s drug is currently in Phase 2 studies for ulcerative colitis and Crohn’s disease.
Under the terms of the deal, Sanofi will pay Teva Pharmaceutical (TEVA) $500 million up front and up to $1 billion in development and launch milestones. Both companies will share equally in the costs to development the drug, as well as profits and losses in major markets. Other markets will be subject to a royalty agreement.
But Teva stock skidded 3% near 9.30 shortly after the stock market opened. Sanofi stock lifted a fraction near 53.70.
Teva Stock: New Option For Stomach Diseases
The TL1A class caught fire last December after Prometheus said more than a quarter of patients with ulcerative colitis and almost half of the Crohn’s disease group entered remission after 12 weeks of treatment with its drug. Merck later snapped up Prometheus.
Though the Prometheus news didn’t send Teva stock soaring — unlike Prometheus shares which nearly tripled — Sanofi Chief Executive Paul Hudson says Teva’s drug could become the “best-in-class option” for people with serious gastrointestinal diseases.
“This collaboration strengthens our commitment to advancing innovative treatment options for inflammatory conditions with a high unmet need and bolsters our goal to be an industry leader in immunology,” he said in a statement.
A Return To Growth?
Teva is working on turning around its business following a patent cliff that undercut its multiple sclerosis drug Copaxone and a floundering generic drugs business. Chief Executive Richard Francis says the company is entering a new era.
“Our robust, innovative pipeline is key to our pivot to growth strategy,” he said in a statement.
Teva stock broke out of a cup-with-handle base with a buy point at 9.99 on Sept. 11, according to MarketSmith. After spending some time in the buy zone, shares have since fallen below their entry. On Wednesday, Teva stock toppled as much as 9.4% below its entry. Savvy investors are encouraged to cut their losses when a stock falls 7%-8% below its buy point.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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