Anti-Smoking Vaccine from Glaxo

GlaxoSmithKline (GSK - Analyst Report) and Nabi Biopharmaceuticals (NABI) signed a licensing agreement for a nicotine conjugate vaccine (NicVAX) as well as for the development of a second generation nicotine vaccine. NicVAX is an investigational vaccine for the treatment of nicotine addiction and the prevention of smoking relapse. Earlier in October, the vaccine received a $10 million grant from the National Institute on Drug Abuse.

As per the agreement, Nabi will get an upfront payment of $40 million and is eligible to receive more than $500 million (together with upfront payment) as option fees and milestones for the vaccine, NicVAX, and follow-on nicotine vaccines. Nabi has the potential to receive double-digit royalties from sales if the product is commercialized. GlaxoSmithKline will have an option to exclusively in-license NicVAX on a worldwide basis and a license to develop follow-on next-generation nicotine vaccines using Nabi's intellectual property together with GSK's own technology.

NicVAX is currently being studied in the first of two phase III clinical trials with results expected at the end of 2010. While Nabi will be responsible for the development of this vaccine, GlaxoSmithKline on exercising its option will take responsibility for further development and commercialization of NicVAX.

Company estimates put the worldwide number of smokers at about 1.2 billion and smoking causes approximately 5.4 million deaths per year. In view of the huge increase in the number of smokers, Datamonitor expects the global market for smoking cessation to reach $4.6 billion by 2016 and vaccines could account for $2 billion in sales.

Currently available smoking cessation therapies have relapse rates which can be as high as 90% in the first year after a smoker quits. Although the vaccine holds immense potential, we however remain concerned about its successful development. In October, an anti-smoking vaccine developed by Cytos Biotechnology and Novartis (NVS - Snapshot Report) missed its main goal in a mid-stage study.