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Merck ends trial of Intercell's MRSA vaccine
June 8, 2011 / 6:40 AM / in 6 years

Merck ends trial of Intercell's MRSA vaccine

<p>A view of the Merck &amp; Co. campus in Linden, New Jersey March 9, 2009. REUTERS/Jeff Zelevansky</p>

ZURICH (Reuters) - U.S. drugmaker Merck & Co is to discontinue a major trial of a key vaccine from Intercell designed to protect against serious hospital infections, the Austrian biotech firm said on Wednesday.

The decision is the latest in a string of recent setbacks for Intercell. Concerns about its pipeline have weighed on the volatile stock, which has lost more than half of its value so far this year.

Intercell’s shares slid to an all-time low and at 1141 GMT were down 23 percent at 3.98 euros, while the European healthcare index was little changed.

The decision to end the Phase II/III study of V710 comes after experts said the vaccine was unlikely to show a statistically significant clinical benefit and there were worries about overall mortality and multi-organ dysfunction.

The groups said, however, additional analyses showed the safety difference was not statistically significant.

Merck is due to present the final detailed findings of the clinical trial at an upcoming medical meeting, the two groups said in a statement.

“This is a significant setback for Intercell, and was the most eagerly anticipated stock catalyst, with V710 seen as potential validation of the company’s technology,” analysts at Jefferies said in a note.

Intercell and Merck earlier halted patient enrolment in the clinical trial of the vaccine to prevent the Staphylococcus aureus (S.aureus) infection due to a recommendation from the study’s independent data monitoring committee.

The V710 vaccine had been tipped to have sales of more than 1 billion euros ($1.47 billion). Analysts see considerable potential for a vaccine like V710, which could be used in elective surgery, or even more broadly on hospital admission or in care homes for the elderly.

The S. aureus infection can cause serious health complications and death.

About 50 percent of S. aureus strains isolated in hospitals worldwide are resistant to multiple antibiotics, and methicillin-resistant S. aureus (MRSA) is a serious health problem in many countries.

STRING OF SETBACKS

Loss-making Intercell has recently appointed a new chief executive and reviewed its strategy as it tries to deal with various product disappointments and seeks to get more products to market.

The group, which has said it would consider a sale if it were to boost shareholder value, also said on Wednesday it was looking to cut costs by more than 50 percent and that some 50 jobs, mostly in the United States, could go as a result.

“The past year has been a tough year, with high losses and a significant setback for us and our shareholders,” CEO Thomas Lingelbach said.

But Lingelbach said he was still upbeat about the group’s future as he expects further growth of its only marketed product, Ixiaro, a vaccine for Japanese encephalitis, a mosquito-born virus that causes inflammation of the brain.

The group is hoping for 60 to 70 percent sales growth this year for the vaccine, though Ixiaro took a knock last month when the group had to recall batches in Europe due to a possible loss of potency.

Intercell distributes this vaccine with Swiss drugmaker Novartis, which holds almost 15 percent of Intercell.

“Focus now returns to Ixiaro’s quarterly sales ramp-up and the early-stage pipeline, suggesting near-term the stock is likely to continue trade at a discount to fair value,” the analysts at Jefferies said, adding Intercell should have enough cash to fund its operations until 2014.

The group is aiming to swing to a profit from 2014.

Editing by Ben Hirschler and Will Waterman

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