big pharma money to flow to silent virax

Novartis is due to make a decision on exercising its option to commercialize
Virax Holdings' lung cancer drug platform TG1040 within the next two months.

If/when it does, Virax's Strasbourg-based licensee, Transgene (MC$A631m) will receive some $1b.

Virax's new board has not disclosed how much the company expects to receive but industry sources say the figure could be about $10m.

Virax would then be expected to earn royalties of about $3m-$4m annually from lTG1040 cancer drug sales in North America.

But will Novartis say yes to TG1040?

I believe it will. Here's why:

1. On January 8, Transgene chairman and managing director, Phillipe Archinard, told the Paris Stock Exchange about the success of Phase 2b trials of TG1040. He then held a press conference.

He told analysts that he expected:

. "On a rational basis" Novartis to "obtain";

. Phase 3 TG1040 trials to start about mid 2014;

. TG1040 data to be "showcased" at a major medical conference "in 2014, for sure".

2. On January 29, Transgene joined with Sanofi (MC $A145b) to announce that TG4010 is about to be manufactured.

The pharma groups will build a 50/50-owned, $A15m plant on the Genzyme Polyclonals site in Lyon, a French biopharmaceutical hub.

"Our decision to invest now reflects the increasing confidence in our programs, including our cancer immunotherapy candidate, TG4010", Phillipe Archinard said.

3. Big pharma behemoth, Switzerland-based Novartis (MC $A296.2b) does not currently have an immunotherapy product and - until it does - will be forgoing world-wide annual sales of $1b+;

4. Novartis understands that if it doesn't take up its TG4010 option, Transgene will recruit a rival to replace it.

"We won't stand still", Phillipe Archinard told the January 8 press conference. "We have a window of opportunity. We'll initiate other things".

5. After the January 8 announcements, Transgene's MC climbed by $A86m. Shares have been rising ever since and are now trading about 40pc higher than pre January 8.

While Phillipe Archinard enthusiastically promotes Virax's TG4010 product to the pharma world, Archinard's Perth-based counterpart, Virax chairman Dr Wayne Millen, seems relucant.

Virax's last announcement to the ASX was in early December.

Millen is silent. The Australian market oblivious.

Virax shares remain at $0.014 - 18pc below their 12 month high - giving an MC of $7.7m.