Intercell in Talks With Private Equity After Patch Drug Failure, CEO Says
Intercell AG (ICLL), the Austrian biotech whose shares plunged 89 percent after research setbacks, is in talks about selling a stake to a private-equity firm, the chief executive officer said. Shares gained the most in a month.
It’s too early to say how much of the company a private- equity partner might purchase, CEO Thomas Lingelbach said in an interview in Vienna yesterday. Shareholders have authorized the company to sell as many as 16 million new shares. Intercell has 48.59 million shares outstanding.
“We are in exploratory talks,” he said, without naming the other parties. “We’ve put the company into a state that enables us to say ‘We are ready to go.’ That means that inside a few hours or days we would be ready to go into a financing mode should the possibility present itself.” The company hasn’t made a final decision on whether to sell a stake, he said.
Intercell shares sank after the company said Dec. 12 it was scrapping development of a vaccine patch to prevent diarrhea in travelers. The patch failed in two patient studies. A second setback followed in April, when a safety panel told Intercell and partner Merck & Co. to stop enrolling patients in a test of an experimental vaccine against a deadly hospital infection. Merck and Intercell terminated the study in June.
Intercell rose 12 percent to 2.07 euros at 5:30 p.m. close of trading in Vienna, it’s biggest gain since Aug. 16. This gives the company a market value of 100.6 million euros ($137 million).
“We are a bargain,” Lingelbach said. Intercell’s Ixiaro vaccine for Japanese encephalitis alone is worth more than the current share price, subtracting cash on hand and debt, he said.
The company cut research and development costs by 58 percent in the first half and fired about 20 percent of its employees.
Intercell took back rights to the traveler’s diarrhea vaccine patch technology it had licensed to GlaxoSmithKline Plc (GSK) after last year’s failed trials, Lingelbach said. Glaxo and Intercell are still conducting a joint study of the patch in pandemic flu.
The company is seeking a new partner for the patch in different indications, he said. Intercell also is looking for a partner for technologies including vaccine-boosting adjuvants and a discovery system for monoclonal antibodies, which mimic substances produced by the human immune system to fight infection. Intercell hopes to be in final-stage talks with at least one prospect by the end of the year, he said.
There has been no discussion of changes to the equity stakes of Intercell’s drug-company shareholders, Lingelbach said. Novartis AG (NOVN) owns about 15 percent of the company, and Glaxo holds 1.9 percent.
Former CEO Gerd Zettlmeissl, who resigned in May, has retained his shares in the company, Lingelbach said. As of Dec. 31, Zettlmeissl had a 0.5 percent stake in Intercell, according to Bloomberg data.