Swiss company Cytos AG partnered its lead program, a therapeutic vaccine for nicotine addiction, with Novartis AG in a deal worth up to CHF600 million (US$498 million).

Novartis received worldwide rights to CYT002-NicQb, which has completed Phase II trials that showed success in patients who developed high antibody levels upon vaccination. Cytos gets CHF35 million (US$29 million) up front, with CHF565 million more tied to the attainment of undisclosed development, regulatory and sales milestones. Cytos also would get royalties on resulting sales.

Cytos, of Zurich, has a number of products in the Phase I to IIa stages of development, all based on its Immunodrug platform, which is designed to trigger the immune system to induce specific antibody and/or T-cell responses. The nicotine vaccine is the first from the platform to complete Phase II trials.

"It's always been our business strategy to develop novel vaccines until we get to proof of concept in Phase II trials," said Claudine Blaser, director of corporate communications at Cytos. "We have developed a powerful platform technology that allows us to generate in a fast and efficient manner candidates targeting several disease areas."

The deal with Novartis is the first Cytos has made for one of its clinical-stage products. It has a separate deal dating to 2001 with Novartis that began in the research stage and now has a product candidate for Alzheimer's disease, CAD106, in Phase I testing. And it has an ongoing deal with Pfizer Inc. in an undisclosed animal health indication.

"We are delighted" with the new Novartis agreement, Blaser told BioWorld Today. "It's a very good validation for our product candidate and also for our whole vaccine program. That it got such interest from big pharma shows we are on the right track."

Novartis, of Basel, Switzerland, takes over further development responsibility, as well as manufacturing and commercialization efforts. Novartis is expected to move CYT002-NicQb into a Phase III trial late in 2008, Blaser said.

A Phase II study in Switzerland that started with 341 smokers showed efficacy in promoting and sustaining continuous abstinence from smoking from week 8 to week 52, in those who achieved high antibody levels. Not all smokers, however, generated enough of an antibody response.

"To have an effect on abstinence we need to induce high antibody titers," Blaser said, adding that the company since Phase II has done a series of studies to optimize the dosing, formulation and regimen. She said the work has resulted in a 10-fold increase in antibody titer levels. "We are convinced that these positive data will be very valuable for the next clinical steps," she said.

The product consists of the Qb empty virus shell with more than 500 nicotine molecules on its surface, Blaser said, and is designed to signal the immune system to produce antibodies against nicotine. Those antibodies are designed to bind to nicotine in the blood, with the resulting complex too large to cross the blood-brain barrier, and thus preventing the uptake of nicotine into the brain.

Blaser said of the deal with Novartis: "They are a top-tier pharmaceutical company, they are pursuing new innovations, and they have strong in-house vaccine expertise. It's a good fit."

Blaser said Cytos' goal is to put most of its focus on "the early and innovative part of drug development," rather than late-stage development and commercialization, especially in large indications. The company has plenty of other programs and upcoming near-term data to keep busy.

In addition to the nicotine and Alzheimer's disease vaccines partnered with Novartis, it has clinical programs ongoing in allergy and asthma, hypertension, atopic dermatitis, melanoma and psoriasis.

Cytos is planning for the next study of CYT006-AngQB, which successfully completed a Phase IIa trial. It also has completed a Phase IIa trial of CYT003-QbG10 in hay fever (grass pollen allergies), and expects to get results this quarter from Phase IIa trials in dust mite allergies and atopic dermatitis. Phase I/IIa trial results from a psoriasis vaccine also are expected this quarter, and data from a Phase IIa trial in melanoma are expected in the second half of the year.

Cytos in February raised CHF70 million through the sale of convertible notes. The five-year, 2.875 percent notes are convertible into shares at CHF175 each, a 34 percent premium at the time. Cytos had about CHF100 million in cash on March 31, which does not include the new CHF35 million from Novartis. It has about 5.2 million shares outstanding.

Cytos' stock (SWX:CYTN) gained CHF8.7 Wednesday, or 5.4 percent, to close at CHF174.70. Year to date, the shares are up 55 percent.