Novartis AG (NOVN) won the backing of the European Union’s drug regulator for the Bexsero meningitis shot that Chief Executive Officer Joe Jimenez said was key to returning the company’s vaccines division to profitability.
Novartis should be given authorization to market Bexsero for use in patients starting at 2 months of age, the European Medicines Agency’s Committee for Medicinal Products for Human Use said in a statement today. The European Commission usually follows the committee’s recommendations within three months. The shot would be the first inoculation against the meningococcus B bacterium, the biggest cause of meningitis in industrialized countries.
“This is clearly good news,” Alistair Campbell, an analyst with Berenberg Bank in London, said in a telephone interview today. “We’ve been waiting a long time for the approval and the delay had raised questions about the viability of the division.”
Failure to win approval for Bexsero may have led Basel, Switzerland-based Novartis to sell or scale back the vaccine unit, which the company built through the $7.5 billion acquisition of Chiron Corp., completed in 2006. Andrin Oswald, who heads the unit, declined to discuss the sale of parts or all of the unit.
“Our focus is on expanding and growing the business, not on making it smaller,” Oswald said in a telephone interview today.
Novartis closed down 0.4 percent at 55.60 Swiss francs at 5:30 p.m. in Zurich.
Novartis, Europe’s largest drugmaker by sales, must still persuade national health agencies to recommend that parents give their children the shot and governments to pay for it.
“It’s not only about getting the vaccine approved; it’s also about making it a commercial success,” Campbell said.
Novartis may struggle to get Bexsero included in routine pediatric vaccination schedules because the incidence of meningitis B has been waning for years, said Tim Anderson, an analyst at Sanford C. Bernstein & Co.
“If the disease occurs only rarely, then it may not make sense to administer the vaccine broadly as a preventive measure,” he wrote in a Nov. 14 note to investors.
Analysts are divided on Bexsero’s sales potential. Anderson sees the shot generating annual revenue of about $700 million by 2020, while Helvea SA’s Olav Zilian predicts sales of $1.45 billion in 2016. Campbell doesn’t have a peak sales estimate for Bexsero.
Meningitis can be caused by viruses, fungi and bacteria. Bacterial meningitis causes an estimated 170,000 deaths worldwide each year, according to the World Health Organization.
Novartis competes with Sanofi (SAN) and GlaxoSmithKline Plc (GSK) in marketing shots against four other strains of meningococcus.
Bexsero targets type B, which accounts for as many as 40 percent of cases in North America and as many as 80 percent in some European nations, according to the WHO.
“MenB disease is a major cause of meningitis and septicemia in children, and its ability to cause a rapidly progressive, devastating illness makes it one of the infections most feared by both parents and pediatricians,” Matthew Snape, a pediatrician at the Oxford Vaccine Group at the University of Oxford, said in a statement distributed by Novartis today.
Novartis is discussing the inoculation’s U.S. approval with the Food and Drug Administration, Oswald said. The company may combine its Menveo shot, which protects against the ACWY strains, with Bexsero in a pentavalent vaccine. “A pentavalent vaccine would add quite some benefit,” Oswald said.
Meningococci bacteria can be carried in the throat and transmitted through kissing, sneezing, coughing or sharing food and drink. The bugs mainly affect young children and can cause meningitis, in which the thin lining surrounding the brain and spinal cord becomes inflamed, causing symptoms including stiff neck, high fever, sensitivity to light, confusion, headaches and vomiting.
As many as 10 percent of those infected die within 48 hours after symptoms start, according to the WHO. Brain damage, hearing loss or learning disabilities may affect as many as 20 percent of survivors, the Geneva-based agency said on its website.
Novartis applied to the London-based EMA in December 2010 for marketing approval of Bexsero. A decision was delayed by questions from the regulator, Novartis has said.
Sales in Novartis’s vaccines and diagnostics division peaked at $2.9 billion in 2010 on revenue from influenza vaccines sold during the H1N1 flu pandemic. Last year the business had revenue of $2 billion and a $249 million operating loss.
Jimenez told analysts in January he was confident Bexsero would win regulatory backing and make the division successful. “If that doesn’t happen, then obviously we have to rethink that, because we’re not going to continue to accept losses in the division,” Jimenez said on a conference call Jan. 25.
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