Transgene to Start Advanced Tests on Novartis Drug Candidate

Jan 09, 2014 12:10 pm ET

(Updates with closing share price in sixth paragraph.)

Jan. 9 (Bloomberg) -- Transgene SA plans to start enrolling patients for advanced tests of its experimental lung cancer medicine as early as next summer after a mid-stage trial helped determine which people are most likely to respond. The shares gained the most in almost two years.

Preliminary results of an intermediate trial, released yesterday, suggests the drug known as TG4010 is well tolerated by non-small cell lung cancer sufferers and showed researchers how to refine the criteria used to select patients.

“We can move into phase three with this product and this biomarker,” Transgene Chief Executive Officer Philippe Archinard said in a phone interview late yesterday. “We hope to be able to have the first patient in phase three in the summer.”

Novartis AG is considering whether to buy the rights to the product from Illkirch, France-based Transgene, which stands to get as much as 700 million euros ($951 million) from the deal. The Swiss drugmaker will have 90 days to decide whether to exercise its option from when Transgene submits a report on the latest study, Archinard said.

“We now consider it likely that Novartis will exercise its option on TG4010,” Mick Cooper and Robin Davison, London-based analysts at Edison Investment Research Ltd., wrote in a note to clients today.

Transgene stock jumped 19 percent to 10.98 euros in Paris trading today, the steepest one-day gain since March 2012.

Lower Threshold

The trial results released yesterday were designed to help identify patients who may respond best to the treatment by measuring a biomarker known as TrPAL, Transgene said in an e- mailed statement. The research shows the level of TrPAL used to select patients needs to be adjusted to a lower threshold.

“Under this new threshold we have very positive data,” Archinard said. “That said, Novartis has its own way of assessing things. We can’t speak for them.”

Eric Althoff, a spokesman for Novartis, didn’t immediately respond to an e-mail and phone call seeking comment.

TG4010 is often described as a vaccine because it’s designed to stimulate the immune system to fight cancer. The number of new lung cancer cases in the U.S. probably reached 228,190 last year, according to estimates by the American Cancer Society. Non-small cell lung cancer is the most common form of the disease.

Transgene, controlled by the billionaire Merieux family, will meet with regulatory authorities to discuss the next stage of tests and the best threshold for patient selection, it said in the statement.

Should Novartis not exercise its option, Transgene will move on with development of TG4010 on its own or, eventually, with another partner, Archinard said.

The product may generate as much as $1 billion in annual sales, Transgene Chief Financial Officer Stephane Boissel said in a July 12 interview.

--Editors: John Bowker, Marthe Fourcade, Robert Valpuesta