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Biotech / Medical : Biochem Pharma (BCHE) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Goldstein who wrote (237)	2/9/1998 2:52:00 PM
From: Todd D. Wiener	Read Replies (2) \| Respond to of 783

BioChem Pharma Eyes SmithKline Tie-Up For Influenza Vaccine By BEN DUMMETT Dow Jones Newswires TORONTO -- BioChem Pharma Inc. (BCHE) is eyeing a possible partnership with SmithKline Beecham PLC (SBH) to help develop and market its new influenza vaccine, according to documents obtained by Dow Jones. BioChem, which discovered the anti-Aids treatment 3TC, already sells a "traditional" influenza vaccine, produced using embryonated chicken eggs. However, the Montreal biotechnology company is now developing a new vaccine produced from cell cultures, which it claims will result in a faster and more versatile manufacturing process, giving BioChem an advantage over its competitors. The documents obtained by Dow Jones show BioChem proposes that SmithKline make milestone payments totalling up to $31.75 million to help finance testing and the approvals of BioChem's injectable and nasally-adminstered vaccine to treat influenza. It wasn't clear in the documents whether the dollar amounts involved are Canadian dollars or U.S. dollars. SmithKline would be entitled to 67% of the profits generated from global sales of the vaccine, and BioChem would get the remaining 33%, the documents show. Broken down further, profits from U.S. sales would go 60% to SmithKline and 40% to BioChem, while profits from non-U.S. sales would be 74% for SmithKline and 26% for BioChem, according to the documents. A spokeswoman for BioChem confirmed her company is in discussions with "a few" potential partners to commercialize its new influenza vaccine, but she declined to elaborate. A spokesman for SmithKline declined to comment. SmithKline is currently in merger talks with Glaxo Wellcome PLC (GLX) to create a pharmaceutical behemoth. The two U.K. companies, which publicly announced their negotiations on Jan. 30, say the merged entity would create the biggest research and development organization in the healthcare industry. It's unclear how the proposed merger of SmithKline and Glaxo would affect BioChem's potential deal with SmithKline. BioChem's 3TC has been marketed through an agreement with Glaxo, which also has the rights to market Lamivudine, BioChem's Hepatitis-B treatment. Analysts said it would make sense for BioChem to seek SmithKline as a partner for its new influenza vaccine because SmithKline is among the biggest producers of vaccines in the world. Glaxo isn't a big player in the vaccine business, they said. According to documents obtained by Dow Jones, finding a partner to help commercialize the new influenza vaccine is one of BioChem Pharma Inc.'s (BCHE) main challenges for 1998, as it moves to build on its earlier successes with the 3TC anti-AIDs treatment. BioChem, in its 1996 annual report, said that its influenza vaccine "is the most advanced candidate" of the vaccines it's trying to develop. BioChem also is researching vaccines to protect against bacterial meningitis and bacterial pneumonia. In the 1970s and 1980s, research and development spending on new vaccines by the healthcare industry was declining because of the low returns on investments and liability concerns, BioChem said. But now BioChem is betting the market for vaccines is improving. In BioChem's 1996 annual report, the company said technological advances in the fields of molecular biology and genomics allow researchers to design more effective vaccines for a greater variety of diseases. In addition, developing countries' increasing emphasis on the distribution of vaccines through private channels instead of public ones (such as the United Nations Children's Fund (UNICEF)) is expected to boost demand for vaccines over time. Vaccines can be more cost effective because they prevent the disease, thereby reducing the need for hospital care and drugs, BioChem said. Analysts said BioChem's strategy of developing a vaccine from cell cultures makes sense, assuming the process fulfills its promise of reducing production time and increasing volumes compared with existing methods. BioChem argued the cell-culture process would be faster and more versatile because the traditional system for making flu vaccines takes six to eight months and special eggs must be ordered a year in advance. Still, there is uncertainty about the potential market for BioChem's new influenza vaccine, since buyers of vaccines in the past have been limited mostly to governments and public agencies, which act as distributors. In addition, it's too early in the clinical-trial process to know how effective the vaccine will be, analysts said. ----- I'm telling you, folks, this is shaping up to be a buyout of BCHE by the new "pharmaceutical behemoth." GLX is the marketer for 3TC and lamivudine (once it's approved), and SBH might be the marketer for the vaccine. If GLX and SBH complete their merger, it would make sense to buy BCHE. After all, why should the big company continue to pay BCHE such large royalties, when it could buy the whole operation? Also, BCHE's strong research capabilities would bolster GLX/SBH's R&D. Todd