Transgene shrugs off Novartis snub and promises new deal

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Sign of benefit in a subgroup of lung cancer patients was not enough for Novartis, Transgene’s potential partner for TG4010, to sign on for the long haul. This setback did not seem to trouble the French biotech’s chief executive, Philippe Archinard, however, as he confidently predicted he could bring on board another collaborator by the end of 2014.

Investors do not seem as sanguine, however, as shares sank 15% to €9.27 in afternoon trading, bringing the company's market capitalisation back to roughly the same level it was before the Time trial reported data in January. Raising a total of €65.5m ($90.5m) during March, when shares were near a three-year high, was a shrewd move – the group now believes it has sufficient cash for two years of operations.

Year end

Achieving a deal by the end of the year is a realistic goal, Transgene believes, because the data on cancer vaccine TG4010 will have matured and by then it plans to have enrolled the first patients in a phase III trial.

In the phase II Time trial that reported in January, TG4010 missed its primary endpoint of showing a progression free survival benefit in 210 patients with metastatic non-small cell lung cancer. Transgene, however, was excited by achieving a response in a biomarker-identified subpopulation that consisted of 170 of the patients and was hopeful that it would persuade Novartis to execute its option (Decision Time for Novartis as Transgene cancer vaccine scores win, January 6, 2014).

Now Transgene must return to the partnering roadshow in the hopes it can secure new backing for the vaccine. In an interview with EP Vantage Mr Archinard said other companies had expressed interest in the vaccine while it was under Novartis's guard, so striking a deal while the phase III protocols are being confirmed is feasible.

“We have already identified a bunch of them we believe can do justice to this project,” Mr Archinard said.

Getting one of them to sign is a bigger ask, however, and Mr Archinard has taken the uncommon step of establishing a timeline – a pronouncement that sets the company up to disappoint should this slip.

“It would be disappointing to me to start with, to our board, and to our shareholders,” he said of the possibility that talks could extend beyond the year end. “I am not prepared to say today what would happen if I fail.

“We have the data we need. We have a phase III ready to go,” he said. “Everything is zooming down to the end of the year, and we don’t see why we couldn’t have a deal.”

He added that the fundraising affords it some flexibility to wait for a good deal, although the loss of the Novartis option – which would have seen the first of €700m in milestones kick in following its exercise – reduces its cash runway. When Transgene completed the two March fundraisings, Mr Archinard said it had sufficient resources to last through the end of 2016.

Wider view

Another company might have suffered more than a 16% share price decline from such a setback to its lead project, but Transgene is fortunate that it is protected from wider stock gyrations because of the majority ownership of Institut Merieux.

The writing might have been on the wall for TG4010 last week when Novartis agreed to buy GlaxoSmithKline’s oncology business as part of a major asset swap. The Swiss group now has $14.5bn worth of cancer-treatment assets it needs to incorporate into its own functions, and a specialist project like an oncology vaccine is probably a worry Novartis does not want to take on.

It should be noted that as part of the Glaxo deal Novartis showed no interest in the UK group’s disappointing lung cancer vaccine Mage-A3 (Calling the top in oncology? Not quite, April 23, 2014).

What Transgene has is tantalising positive phase II data in a prespecified subgroup identified by a biomarker, but on an asset that carries the unfortunate history of one big pharma rejection. It is not out of the question for Transgene to land another partner of Novartis’s stature, but the odds look long.

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com or follow @JonEPVantage on Twitter

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