Novartis and Intercell AG have formed a strategic alliance for the development of vaccines. The alliance combines Novartis’ research, development, manufacturing and commercialization capabilities with Intercell’s research skills and pipeline.

Intercell’s portfolio includes more than 10 projects for which Novartis may choose for further development, including the IC43 vaccine candidate for hospital-acquired pseudomonas infections, currently in Phase II trials, and the preclinical IC47 vaccine for pneumonia infections in the elderly and infants. The alliance will focus on the development of vaccines derived from Intercell’s Antigen Identification Program (AIP), including IC31 adjuvant technology in selected areas, which complements Novartis’ reverse vaccinology system of selecting vaccine candidates based on highly conserved antigen sequences. Novartis also has opt-in rights to all future vaccine candidates discovered by Intercell during the collaboration.

“This novel alliance will further leverage the potential of various Intercell vaccine candidates with the research, development, manufacturing and commercialization expertise of Novartis,” said Jörg Reinhardt, chief executive officer of Novartis Vaccines and Diagnostics. “We are pleased to have reached this alliance with Intercell, which shares our vision of science in vaccines and is widely regarded as having one of the most innovative pipelines.”

Intercell is responsible for all costs through Phase II trials and Novartis is responsible for Phase III development, manufacturing and commercialization. Novartis has exclusive rights to further develop the next-generation IC31 adjuvant for use in enhancing the effectiveness of flu vaccines. Novartis will make an upfront payment of $366.5 million to Intercell for exclusive opt-in rights for any existing un-partnered vaccine project or any future projects. This upfront payment includes the purchase of 4.8 million new Intercell shares, which will increase Novartis’ equity stake in Intercell to 16% from 6%. The agreement is subject to customary regulatory approvals.