Tuesday, May 01, 2007

Celtic and Novartis: Nic Fix

You probably could have predicted it.

First, Cytos Biotech announced last week that Novartis was paying SF35m ($29m) upfront, and promising another SF565m ($468m) in clinical and sales milestones, to buy rights to the Swiss biotech's anti-smoking vaccine. Cytos' project is a Phase II antibody that binds nicotine, making it too big to cross the blood-brain barrier, thus removing the kick from smoking -- and, with any luck, the craving.

A few days later, Celtic Pharma issued a press release on the filing of an IND for its anti-smoking vaccine program -- likewise an antibody that binds nicotine, making it too big to cross...etc. etc. Celtic's vaccine comes from the now vanished British biotech Xenova, who'd done some human testing and found it safe, at least, and with hints of efficacy. Certainly efficacious by analogy. And in any event, not far in development timeline behind the Cytos project. Who'll open the bidding?

In all this smoke, there's a faint whiff of the erectile-dysfunction wars, when Pfizer's PDE-5 Viagra was followed by ED drugs from Bayer and Icos/Lilly...only to see the market, driven by huge DTC spending, suddenly stall. (sorry, no pun. -ed.)

But there's a better analogy: the boom-bust cycle of the nicotine patches of the early 1990s. Produced by drug-delivery companies Alza, Elan, Cygnus and LTS Lohmann, and licensed to Big Pharmas Marion Merrell Dow, Lederle, Warner-Lambert and Novartis-predecessor Ciba-Geigy, analysts envisioned a huge market of wannabe quitters. Indeed, initial sales soared--and then just as suddenly plunged as smokers found that the nicotine patches offered no easy solutions. One assumes that Novartis still has a few ex-Ciba marketers who remember the story and its lessons.

Of course, if the vaccines work brilliantly, they might defy history--and Novartis will have gotten itself a bargain. Meanwhile, Celtic Pharma--effectively a private equity group which buys compounds and hopes to sell them off at a significant profit--may not have to worry too much about the drug's eventual sales if the deal it can sign provides it a healthy enough exit. Celtic, in short, may not have to worry about repeating history, if it can just avoid it.

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