Novartis has no need to buy Intercell-source

Mon Jul 18, 2011 8:34am EDT

Related Topics

* Novartis has been seen as buyer for Intercell

* Intercell open to sale after several product setbacks

* Novartis declines to comment

By Katie Reid and Angelika Gruber

ZURICH/VIENNA, July 18 (Reuters) - Novartis (NOVN.VX) has no need or plans to acquire Intercell ICEL.VI, Europe's last independent vaccine maker, a source familiar with Novartis' thinking said.

Novartis currently owns a 15 percent stake in the Austrian biotech group and speculation has swirled that the Swiss drugmaker could buy Intercell, which has said it is open to being acquired after a string of product setbacks over the past year.

"Why would Novartis buy Intercell when it already has access to the pipeline? Novartis does not have any worries about its own vaccine pipeline and is not eager to pursue a transaction," a source familiar with the company's thinking told Reuters.

Loss-making Intercell has recently appointed a new chief executive and is looking to slash costs by more than 50 percent as part of a strategy review as it seeks to break even in the next three to four years.

CEO Thomas Lingelbach was quoted as saying in a newspaper interview on Monday that he sees the group as an attractive takeover target and that it is looking for investors. [ID:nLDE76H0HH]

"We won't comment on any speculation on whether or not we have an interest in buying Intercell. The rationale for the strategic partnership with Intercell was to gain access to innovation in vaccines, and that has not changed," Andrin Oswald, head of Novartis' Vaccines and Diagnostics unit, said.

Last month, Intercell's partner Merck & Co (MRK.N) decided to discontinue a major trial of a vaccine designed to protect against serious hospital infections, adding to worries about Intercell's pipeline's prospects. [ID:nLDE757026]

The group's stock has lost over 74 percent of its value so far this year as various disappointments have weighed on its volatile shares. Intercell has a free float of nearly 82 percent and is worth around $206 million.

Lingelbach has said he still sees further growth of Intercell's only marketed product, Ixiaro, a vaccine for Japanese encephalitis, which is a mosquito-borne virus that causes inflammation of the brain.

Intercell is hoping for 60 to 70 percent sales growth this year for the vaccine, though the product's prospects took a knock earlier this year when Intercell had to recall batches in Europe due to a possible loss of potency. Intercell distributes the vaccine with Novartis. [ID:nLDE74Q0GR] (Editing by Ben Hirschler)

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