Last week, Novartis forked over $364 million for an opt-in deal to co-develop current and future vaccines in the pipeline at Austrian biotech Intercell. No sooner had the ink dried on the new partnership than rumors were sparked that the Swiss drug giant had upped its share of Intercell stock to 16 percent and was planning a takeover bid. At press time, both companies were mum on the matter.

Analysts mostly shrugged off talk of a takeover, pointing out that licensing deals with biotechs are a cheaper, less risky approach for Big Pharma. "This has been a more successful model than buying the company whose development program you want," says Les Funtleyder, healthcare specialist at Miller Tabak. "Novartis clearly likes what it sees in the Intercell pipeline, but the 15 projects are all in early stages. And given the high attrition rate of vaccine compounds, Novartis doesn't want to jump the gun. It can always come back later with an acquisition offer."

The opt-in arrangement lets Novartis Vaccines and Diagnostics select the lookers from Intercell's pipeline. Once the biotech completes Phase II tests, Novartis will step in to do the heavy lifting, including running Phase III trials and commercialization. Intercell will retain the right to profit-share with Novartis or receive milestone payments and royalties for each of its compounds Novartis develops.

"This is the most comprehensive R&D agreement in the vaccines industry to date," said Eric Althoff, head of global communications at Novartis Vaccines and Diagnostics. "It will allow Novartis the opportunity to unlock the potential value that exists in Intercell's vaccine candidates, while allowing Intercell to continue fostering its entrepreneurial environment."

The deal is a two-way street, allowing each company to opt out of a particular licensing agreement. Intercell has separate development deals with Merck and other drug companies, says Funtleyder, while Novartis has dibs on projects all across the biotech industry.

The package includes some tasty rights to commercialize Intercell's novel IC31 adjuvant for influenza vaccines. "IC31 is a next-generation complementary to Novartis' MF59, which has the potential of enhancing the immunogenic response of various vaccine candidates," Althoff says.

Other prospects Novartis is eyeing are IC43, a Phase II candidate to prevent hospital-acquired pseudomonas and related infections, and IC47, a preclinical prevention for pneumonia and ear infections in the elderly and infants.

The Intercell deal is only the latest activity in what has been a busy season at Novartis' vaccine division. Two of its anti-influenza agents, Focetria and Optaflu, won FDA approval this year, while a green light for the pre-pandemic vaccine, Aflunov, is due before 2008. Althoff notes that the firm is also stocked up on vaccine supply for the fall flu season, with 40 million doses--30 percent more than last year.

And on Monday, Novartis said that it would pony up $500 million to license an experimental vaccine to help smokers kick the habit. The vax, developed by Swiss biotech Cytos, coaxes the body to produce antibodies that bind to nicotine and prevent its uptake in the brain.

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But is the pharma-biotech vaccine deal a prelude to a takeover?

Novartis to Intercell: "Gimme All Your Vax."

 Li'l biotech Alnylam dipped its fingers into another Big Pharma cookie jar this week as it brokered a $1 billion deal with Roche. (Novartis is its other partner.) This is the second deal in the past week in which a big drugmaker has plunked down a lot of change for RNA interference, or RNAi, a method of silencing harmful genes that is widely touted as drug research's next big thing. Last week, AstraZeneca paid $405 million to Silence Therapeutics; last year, Merck doled out $1.1 billion for Sirna Therapeutics....



 Thailand is ordering 2 million doses of generic Plavix from India after deeming the discounts for the blood thinner from owners Bristol-Myers Squibb and Sanofi-Aventis too stingy. Playing hardball with patents is nothing new to Thai health officials, who even forced Abbott's stubborn Miles White to say uncle in the face of compulsory-license threats over HIV drug Kaletra's price tag....



 Brazil agreed to Abbott's offer to slice the price of Kaletra by 29.5 percent in return for not resorting to cheapie knockoffs. The lower price for the first-line blockbuster will save Brazil about $10 million a year for its AIDS treatment program, which promises all people with HIV free treatment. In May, Merck's Sustiva patent was shredded by the South American tiger....



 FDA may remove the teen-suicide stigma from Prozac and its pals amid growing noise from shrinks that the warning issued three years ago has scared off docs from treating kids for depression. The number of scrips for pediatric depression fell by more than 50 percent between 2003 and 2005, while teen-suicide seem to be rising by record numbers, a new study says....



 FDA OK'd the first-ever skin patch for Alzheimer's, the Exelon Patch from Novartis (an old drug with a new delivery). Etravirine, Tibotec's second treatment in as many years for drug-resistant HIV, is heading to FDA for accelerated approval....Barr Labs got the go-ahead to market a generic version of Dostinex for Parkinson's....



 A former high-up at China's FDA has been sentenced to death for corruption and approving bogus drugs. Cao Wenzhuang was convicted of pocketing over $300,000 in bribes from two drug firms and "undermining public confidence in an agency safeguarding the nation's health." The trial was followed by the execution of his colleague, Zheng Xiaoyu, convicted on similar charges.

It was a short, sweaty week complete with fireworks....

Pharma Skinny In Briefs

Roche really, really, really, really wants to buy Ventana Medical Systems--so much so that it is pursuing a hostile takeover that includes suing both the object of its desire and the state of Arizona. Talk about crazy love.

The Swiss drug behemoth with a big stake in the oncology market made a $3 billion bid for the Arizona-based cancer-diagnostics maker on June 25. Although the all-cash offer was widely viewed as premium plus--Ventana's 70 percent share of the U.S. tissue-based diagnostics market is projected to net it $285 million in '07 sales--the company immediately cold-shouldered the overture, urging shareholders to sit tight.

On June 29, Roche headed to court, filing two lawsuits. In one, the company is seeking to invalidate Ventana's "poison pill" defense against the buyout that would allow shareholders to buy new stock at half price. In the other, Roche is asking a federal judge to declare Arizona's Anti-Takeover Act unconstitutional. The law limits the voting rights of non-Arizonans, meaning that even if Roche grabbed a controlling share of Ventana, it would have to wait three years to throw its weight around.

It's not hard to understand the reason for Roche's ardor. The acquisition represents a perfect fit for Roche, which is trumpeting the offer as nothing less than a great leap forward in personalized medicine. Already a leader in diagnostics, Roche has a majority stake in Genentech, maker of Herceptin, the breast-cancer blockbuster for women whose tumors overproduce the HER-2 protein. Ventana markets a test to detect the cancer-causing protein. Says Severin Schwan, CEO of Roche Diagnostics: "The deal will allow Roche to develop companion diagnostics which enable the identification of patient responses to treatments, thereby offering more cost-efficient, differentiated, and targeted medicines."

Harder to understand is why Ventana isn't biting. According to Morningstar analyst Alex Morozof, the proposed deal is a win-win for both companies. "Ventana's leadership position in the United States would complement Roche's strong presence in Europe," he said. "The diagnostics field is underrepresented and has great growth opportunities. In return, Roche can put its financial capabilities behind Ventana."

Ventana's hard-to-get act may be a ploy, says Miller Tabak healthcare specialist Les Funtleyder. "They may be fishing for a higher price, they may want to be bought by someone else," he says. "On the other hand, they may feel that they can create more value as an independent."

The clock is ticking. The Ventana board must respond to the original Roche offer by Thursday.

...And the spurned suitor won't take "No" for an answer

Pharmaceutical Executive-07-11-2007

Novartis to Intercell: "Gimme All Your Vax."

Pharma Skinny In Briefs

Roche to Ventana: "Let's Make A Deal"