BioWorld International Correspondent
Intercell AG entered a marketing and distribution agreement with Novartis AG under which the latter company will sell its Japanese encephalitis virus (JEV) vaccine, IC51, in the U.S., Europe, Japan, Latin America and other selected territories.
In return, Novartis will purchase €30 million worth of Intercell stock in a forthcoming share offering and will pay milestones worth up to €37 million, depending on the final Phase III data and on U.S. and European Union regulatory approvals.
Basel, Switzerland-based Novartis also will obtain first negotiation rights to certain products within Intercell's pipeline. Intercell, of Vienna, Austria, expects to launch IC51, an inactivated, attenuated virus vaccine grown in Vero monkey kidney cell culture, in the U.S. in 2007 and in Europe in 2008.
It recently reported favorable data from an interim analysis of Phase III trial data, demonstrating comparable levels of efficacy with JE-Vax, a legacy product that can cause adverse events. The latter is marketed by Sanofi-Pasteur, the vaccines arm of Paris-based Sanofi-Aventis Group. IC51 already is partnered in Australia with CSL Ltd., of Parkville, and in India and selected other Asian territories with Biological E Ltd., of Hyderabad, India. (See BioWorld International, June 7, 2006.)
Intercell plans to price a share offering following a subscription period running from June 14 through June 29. The company will offer up to 4.7 million new shares, as well as 2.5 million shares from existing venture capital investors and 600,000 shares from management and employees.
Existing shareholders will be entitled to subscribe for one new share for every seven shares held at present. The company currently has about 37.9 million shares outstanding.
The news prompted a share price drop of more than 7 percent. The stock closed at €11.87 on the Vienna Stock Exchange, down from Monday's close of €12.80. "We go into this capital increase from a very strong position, with over €35 million in the bank," said Werner Lanthaler, chief financial officer and vice president of sales and marketing, during a conference call.
The company plans to invest between €10 million and €20 million to fund expansion of its cell culture vaccine manufacturing facility in Livingston, Scotland, which it acquired in 2004.
"We need to scale up manufacturing in Scotland," Lanthaler said. The "biggest concern" of its marketing partner, he said, was that Intercell would be unable to cope with market demand for IC51 from 2008. At present, the facility has a capacity to produce up to 1 million doses, but the company plans either to double or triple that figure. "We have not committed to a specific amount. We want to grow the market together," Lanthaler said.
Intercell will use the remainder of the proceeds of the share issue for advancing its preclinical and clinical development pipeline and for general corporate purposes.