CSL grants Merck licence for Iscomatrix

Australia's biggest biotech, Melbourne's CSL (ASX:CSL) has signed a license and option agreement with Merck & Co, granting the New Jersey-based pharmaceutical company certain rights and options to use CSL's Iscomatrix adjuvant in its pipeline of investigational vaccine products.

CSL's Iscomatrix adjuvant system is a phospholipid-cholesterol formulation containing a purified saponin extract from the bark of the South American tree Quillaja saponaria. Adjuvants are used to provide the immune stimulation necessary to induce cellular responses to an antigen and play an important role in the development of innovative vaccines.

While the terms of the agreement remain confidential, CSL will receive payments upon Merck's achievement of specific development and regulatory events, and royalties on vaccine product sales. Merck will also make option payments to CSL if it exercises licenses to certain additional uses.

While CSL could not disclose what these additional uses were, the company's director public affairs Rachel David said the deal "involves a range of products, which will be going to trial with our partner Merck. So it means the product will be in use for quite some time to come."

CSL will supply Merck with all the Iscomatrix adjuvant it requires for development and commercialisation and will also receive distribution rights in Australia for certain vaccines developed using the technology.

Merck chose to license Iscomatrix because the company was satisfied with the product's safety profile and effectiveness, said David. It is possible that clinical trials will be announced as early as next year, she said.

While parts of the deal with Merck are exclusive, said David, CSL is already collaborating with other companies such as US-based Chiron Corporation -- with clinical trials underway for hepatitis C using Chiron's patented recombinant proteins and CSL's Iscomatrix adjuvant.

Revenues up

CSL today posted results for the financial year to June 30, showing sales revenue of AUD$2.75 billion, up 76 per cent on the previous year. The company reported a net profit after tax of $546.5 million for 2004-05, up 149 per cent on the previous year ($219.6 million for 2003-04). This included the sale of JRH, CSL's cell culture business, for an estimated post-tax profit of $250 million. Net operating cash flow of $568 million was up 174 per cent from the previous year and research and development expenditure of $146 million was also up 44 per cent.

The company completed its first market buyback program on May 16, 2005 with 10 million shares purchased for $318 million. CSL's second market buyback commenced on July 12, for up to 8 million shares, and is more than 50 per cent complete.

The company paid a final dividend of $0.30 plus a special dividend of $0.10. Dividends for the full year totalled $0.57, up 50 per cent on the previous year.