Novartis offers $955M deal to snare Transgene drug option
Novartis has put up $10 million and promised up to €700 million more in milestones in exchange for an option on Transgene's promising, late-stage cancer immunotherapy.
France's Transgene will hold on to control of the upcoming Phase IIb/III pivotal trial of TG4010 that is slated to get under way by the end of this year after enrolling about a thousand patients with non-small cell lung cancer. Once Novartis gets its hands on the IIb portion of the data, the pharma giant will have 90 days to decide whether it will exercise its option on the program. The data is scheduled to arrive in early 2012.
If Novartis decides to pull the trigger on the option--a deal structure that is growing increasingly common in drug development--Transgene will get a fee plus milestones along with co-promotion rights in a list of countries that includes France and China. Novartis will gain control of the program and take responsibility for further costs.
"We believe this agreement represents the best way to accelerate development and create long term value for our shareholders," says Transgene CEO Philippe Archinard. "It is also consistent with the company's goal of becoming a fully integrated biopharmaceutical company as under this agreement Transgene will maintain certain commercialization and manufacturing rights."
However, not everyone was impressed with the optional, uncertain terms of the agreement, andshares in the French biotechnology company went down 12 percent. "We view today's option announcement as slightly underwhelming, given that the ongoing burden of funding remains with Transgene for another two years," says Nomura Code analyst Gary Waanders.
Because Novartis wants to see the outcome of a mid-stage Phase IIb clinical trial before exercising its option, Waanders said he was reviewing his "neutral" rating and fair value estimate of 21.80 euros a share.