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12:00 AM
Jun 13, 2011
 |  BioCentury  |  Strategy

Pedal to the metal no more

Vaccine setbacks force Intercell to slash R&D, focus on sales, tech deals

Following two late-stage pipeline failures, Intercell AG has concluded its aggressive growth approach is unsustainable. New CEO Thomas Lingelbach is shifting the vaccine play's strategy with the goal of being financially self-sustaining in three to four years.

To do so, the company will rein in costs, mostly in R&D, and place more focus on growing revenues for its Ixiaro vaccine for Japanese encephalitis. Intercell also will look to add partnership revenues through increased deal-making.

The company's stock plummeted 76% from €16.86 on Dec. 10, 2010, the last day of trading before Intercell announced disappointing data for its travelers' diarrhea vaccine, to €4.04 on June 8, when the company announced the termination of its V710 Staphylococcus aureusvaccine and its new game plan.

"The only way to regain the confidence of the market is to become more realistic," said co-founder and SAB member Alexander von Gabain. "The market will not forgive us if we are not streamlining our organization and putting it together such that in some foreseeable time we can become break-even."

At March 31, Intercell had €87.7 million ($124.4 million) in cash and a three-month operating loss of €10 million ($14.2 million).

Aggressive growth

At the end of 2007, Intercell began a three-year phase of what Lingelbach termed "aggressive growth." At that point, Ixiaro was in registration and Intercell and partner Merck & Co. Inc. had just started a Phase II/III trial of V710.

The following year, Intercell acquired Iomai...

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