A Shot in the Arm: Intercell's Vaccine for Japanese Encephalitis Wins ACIP Nod

The vaccine maker clears a key hurdle to market a product that will likely find widening appeal as travel to Asia intensifies.

The Advisory Committee on Immunization Practices handed Intercell a victory this week by recommending that U.S. citizens and military personnel traveling to Asia should use its new Ixiaro vaccine for combating Japanese encephalitis in adults.

The June 24 move comes three months after the FDA approved Ixiaro to prevent the mosquito-borne disease, can lead to high fever, brain damage, paralysis, seizures, coma and death (¹ (Also see "Intercell Reaches Commercial Stage In US: Japanese Encephalitis Vaccine Gets FDA Okay" - Pink Sheet, 1 Apr, 2009.) The disease is estimated to affect between 35,000 to 50,000 people annually across Asia, and some 15,000 people are believed to die each year. This suggests a morbidity rate of about 30 percent.

"The consequences of contracting this disease can be devastating due to the high morbidity and mortality associated with this disease," said Gerd Zettlmeissl, Intercell's chief executive, in a statement announcing the recommendation from the ACIP, which advises the U.S. Centers for Disease Control and Prevention.

In the past, the CDC has noted the risk to travelers of contracting Japanese encephalitis is generally believed to be rather low, especially those who visit for less than one month and remain in urban areas. However, the ACIP panel altered its recommendations to reflect more recent trends in which travelers are increasingly visiting rural areas of Asia, where the disease can be especially prevalent.

The endorsement will likely ring Intercell's register--as well as that of its partner Novartis, which has rights to market the vaccine in the U.S., the Europe Union, Japan, and Korea. The ACIP panel noted that no treatment was currently available for Japanese encephalitis. And in a recent interview, Zettlmeissl estimated that, in general, the market to treat diseases related to travel is currently about $1.5 billion and could easily double over the next few years.

He suggested that travelers, who are already paying thousands of dollars for a trip to Asia, are likely to be very motivated to pay for medications that prevent diseases they are likely to encounter. Diarrhea is another example and Intercell, in fact, is developing a vaccine patch for travelers.

With this in mind, Ixiaro carries a price tag of about $195 per dose, and requires two doses to achieve proper immunization. As a result, Zettlmeissl posited that travelers from the U.S. and Europe may eventually generate $200 million or more annually. Intercell won European Union approval in May and the vaccine has been launched there.

His projections don't include vaccinations that would be given to military personnel. In May, Intercell signed an exclusive five-year deal with the U.S. Defense Logistics Agency to supply the U.S. military with Ixiaro. Terms weren't disclosed, but the contract includes options for annual price hikes.

The vaccine, which was developed under a Collaborative Research and Development Agreement with the Walter Reed Army Institute of Research in the U.S., won FDA approval after studies showed a high level of protection was achieved after just two doses. Pediatric studies are currently under way.

The arrangement with Novartis harks back to a deal struck in 2007 (² [See Deal] In exchange for a chance to develop certain vaccines, Novartis agreed to pay a $367.6 million upfront fee and increased its stake in the Austrian vaccine maker to 16 percent. In Australia, Ixiaro is marketed CSL, and, in India, by Biological-e.

Novartis and CSL get 40 percent to 50 percent of sales, while Intercell gets 50 percent to 60 percent of sales, according to a UBS analyst report from June 15, 2009. Intercell also has to pay mid-single-digit royalties to VaccGen, from which it in-licensed the vaccine.

Intercell, which prepares the vaccine using tissue culture rather than live organisms, is responsible for all manufacturing.

Meanwhile, the ACIP also noted that Sanofi-Pasteur, which maintains a small stockpile of an earlier JE vaccine that was discontinued in 2006 due to side effects, will make it available to youngsters less than 16 years old. That's because Ixiaro is only approved for people 17 years and up. Intercell is currently running pediatric trials for its vaccine.

-Ed Silverman ([email protected])