BioWorld International Correspondent

MUNICH, Germany - Austria's first biotechnology initial public offering, the long-anticipated offering from Intercell AG, of Vienna, began taking orders this week and will have its first day of trading on the Vienna Stock Exchange Feb. 28.

The company plans to raise between €57.4 million (US$74.6 million) and €72.3 million with the public offering by selling up to 8.5 million new shares, or 29.6 percent of the company's total, at a price between €6.75 and €8.50 per share. That range would give the company a market capitalization between €170 million and €220 million. Since its founding in 1998, the company has raised more than $100 million in private finance. The Austrian financial newspaper Wirtschaftsblatt estimated a "fair value" for Intercell shares at between €8.60 and €9. Intercell expects to reach break-even in 2007.

The company said it would use proceeds to finance clinical development of its vaccine against Japanese encephalitis and for additional development and marketing of its product portfolio.

Katharina Wieser, Intercell's head of corporate communications, told BioWorld International that acquisitions would be considered if they fit the company's business plan, but that the proceeds of the IPO primarily would be used to advance the existing pipeline.

Intercell specializes in vaccines against infectious diseases. The company's lead products are a prophylactic vaccine against Japanese encephalitis and a therapeutic vaccine against hepatitis C. Intercell expects the encephalitis vaccine to enter a pivotal Phase III trial this year, and the company is planning to launch it in 2007. The company estimates the market for the vaccine at about €250 million annually.

The hepatitis C vaccine is in Phase II trials. Last year, the company completed a Phase II trial among patients who had not responded to other treatments for hepatitis C. (See BioWorld International, July 28, 2004.)

Hepatologists had been concerned that the vaccine would cause a crisis by bringing T cells into the liver. The trial allayed those fears, and Intercell is planning a trial with a group of patients who have been diagnosed with the disease but do not yet show significant symptoms and are waiting for the current standard interferon/ribavirin treatment. Global sales of hepatitis C drugs are €2.8 billion annually, with demand expected to reach €3.7 billion by 2006, Intercell said. The company estimated that the global market for a vaccine could be up to €1.5 billion, of which €600 million would be in Europe.

Further back in its pipeline, Intercell has vaccines in preclinical testing against other infectious diseases, including Staphylococcus aureus, Group A Streptococcus, travelers' diarrhea and tuberculosis.

In March, the company acquired a facility in Livingston, Scotland, to manufacture its Japanese encephalitis vaccine and other products in its pipeline. Intercell said owning the facility gives it full control over manufacturing at commercial scales and is another step toward a fully integrated vaccine company.

The offering is being led by Goldman Sachs and Lehman Brothers. Co-lead managers are Bank Vontobel in Switzerland; DZ Bank in Germany; and Erste Bank in Austria. Provisions include a six-month share lock-up for current investors and members of the supervisory board and a one-year lock-up for members of the board.