Ebb & Flow

Investors gave a cool response to Intercell’s news that it had signed a deal covering its Japanese encephalitis vaccine with Novartis (NVS; SWX:NOVN). The agreement includes milestones up to E37 million ($46.7 million) split almost equally between final Phase III data and securing U.S. and EU regulatory approvals. The first milestone is expected this year, while the approvals are anticipated in 2007 and 2008, respectively.

NVS’s rights cover the U.S., Europe and markets in Asia and Latin America not covered by other agreements. ICLL retained the right to market JEV to military markets. The pharma also received first negotiation rights to four ICLL programs, including a therapeutic hepatitis C vaccine.

ICLL also announced that it plans an offering of 4.7 million new shares through a 1 for 7 rights issue, plus a secondary placement of up to 2.5 million shares owned by MPM Capital; TVM Capital; Star Ventures; and Alpinvest, as well as placing 0.6 million shares on behalf of management and employees to cover taxes and the excerise of employee stock options.

NVS agreed to invest E30 million ($37.93 million) in the offering. Based on Friday’s close, ICLL would raise E56.4 million ($71.3 million) in new money and NVS would end up with about a 5% stake. Between E10-E20 million of the funds will be earmarked for increasing the company’s JEV production capacity from 1 million to 2-3 million doses a year.

At one stage the stock was down 10% from the week’s opening of E12.80 before recovering slightly to finish the week down

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