UPDATE 1-Novartis buys rights to Cytos anti-smoking jab

(Adds Cytos statement)

ZURICH, April 25 (Reuters) - Novartis (NOVN.VX), the Swiss-based drugs group, has bought rights to the anti-smoking vaccine made by Switzerland's Cytos Biotechnology (CYTN.S) in a deal valued up to 600 million Swiss francs ($496.7 million).

Novartis, which has made vaccines a key part of its growth platform, said it purchased global rights to the vaccine, CYT002-NicQb, which is set to begin late-stage, Phase III trials in 2008.

Novartis said it would make an upfront payment of 35 million Swiss francs and that further payments were contingent on development and commercialisation milestones, plus royalties on net sales.

Cytos, which has been the target of takeover speculation, said in a separate statement that it could receive up to 600 million francs in combined payments and royalties.

"Novartis will obtain the worldwide exclusive rights for NicQb and will assume the costs of future development, manufacturing and commercialisation," Novartis said in a statement.

Cytos said in March that its anti-smoking vaccine could be ready for the market by 2011. The company specialises in so-called immunodrugs that combine elements of traditional medicines with vaccine technology. Novartis created a new vaccines and diagnostics division last year after it acquired U.S. vaccines and biotechnology firm Chiron.

NicQb helps create antibodies that attach to nicotine molecules in the bloodstream, making them too large to pass through the blood-brain barrier, reducing nicotine uptake in the brain and the stimulation of nicotine-responsive nerve cells.

((Reporting by Thomas Atkins, editing by Paul Bolding;

Email: thomas.atkins@reuters.com

Reuters Messaging: rm://thomas.atkins.reuters.com@reuters.net

Telephone: +41.44.631.7311))

($1=1.208 Swiss Franc) Keywords: NOVARTIS CYTOS /

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