Teva Ends CureTech Collaboration

Teva Pharmaceutical Industries Ltd. ( TEVA - Analyst Report ) recently terminated its collaboration with CureTech Ltd. for the development of CT-011. The companies had signed the collaboration agreements in 2006.

Teva, which is currently reviewing its pipeline, intends to invest its resources in areas representing more potential and benefit to patients. CT-011 was being developed for the treatment of hematological malignancies and solid tumors. Teva will recognize a non-cash charge of $109 million due to the termination of the agreement.

Teva had hosted an Investor Day meeting in Dec 2012 where it provided an update on its pipeline and strategic plans. The company is working on streamlining its pipeline and has discontinued 12 programs while introducing 18 new programs. Teva expects to have 10-15 new therapeutic entities (NTEs) approved for development in 2013.

Teva currently carries a Zacks Rank #3 (Hold). The company, which is going through a transition period, provided disappointing guidance for 2013. However, with the company not including the impact of its cost-savings plan in its guidance, we believe Teva is leaving some room for delivering above expectations. Share buybacks also leave some room for upside. We expect investor focus to remain on the execution of the company’s new strategy. Earlier this year, Teva sold off its animal health business in the US to Bayer ( BAYRY - Analyst Report ) . This will allow the company to focus on developing, manufacturing and marketing branded and generic drugs globally -- Teva’s primary areas of strength.

Among generic companies, Mylan ( MYL - Analyst Report ) currently looks better-positioned with a Zacks Rank #2 (Buy). Pernix Therapeutics Holdings, Inc. ( PTX - Snapshot Report ) , a specialty pharmaceutical company that also sells generic products, also carries a Zacks Rank #2.