On January 9, 2014 a company in Strasbourg, France made an...

On January 9, 2014 a company in Strasbourg, France made an announcement to the Paris stock exchange.

That announcement related to a cancer drug.

Sequel: An immediate 25c lift in the company's market capitalization from $A454m to $A540m (converting euros to Australian dollars at the rate of 1=1.55).

That's an increase of $86m.

The company's name: Transgene.

Far away in Perth, the MC of another company went in the opposite direction - down 6.7pc to $7.7m.

The company's name: Virax Holdings.

Virax Holdings, a recapitalized phoenix headed by venture capitalist, Dr Wayne Millen, had the option of issuing a similar cancer drug statement, even calling a trading halt. It didn't.

Yet the Strasbourg announcement may have profound implications for the future of Virax, its former creditors and others - including the Australian National University and CSIRO.

And it may have profound implications for Switzerland-based behemoth, Novartis AG.

The announcement relates to the success of the Phase 2b part of the TIME study with TG4010, Transgene's immunotherapy against non-small cell lung cancer (NSCLC), the most common form of lung cancer.

"We are strongly encouraged by these promising initial results from the TIME trial and believe they provide a solid rationale for advancing into the Phase 3 part of the study,” said Philippe Archinard, chairman and CEO of Transgene.

“As the leading cause of cancer-related deaths worldwide, lung cancer remains an area of major unmet medical need.

"We look forward to continuing to develop TG4010 in this important indication and will be meeting with regulatory authorities to advance our plans for the Phase 3 part of the study.

"The data and analyses from the TIME trial have been provided to Novartis and we are working closely with them to ensure they have the information they need to make a decision on their option for TG4010.”

Essentially, the 2b trial found that 75pc of patients who received TG4010 achieved a greater than 25pc reduction in the risk of cancer progression/death compared with placebo.

Background: In 2010 Novartis paid Transgene a non refundable $US10m fee for an option to develop and commercialize TG4010 for the first line treatment of lung cancer.

If Novartis exercises its option the group will pay Transgene up to $A1.1billion.

Transgene will also:

. Receive royalties on the sale of product to Novartis;

. Have co-promotion rights in China and in key European countries.

Novartis will be responsible for all development, regulatory and commercialization costs.

What does this have to do with Virax?

According to a prospectus filed with the ASX on September 19, 2013, Virax wholly-owned subsidiary, Virax Immunotherapeutics Pty Ltd, together with ANU Enterprise Pty Ltd, holds an exclusive world-wide licensing agreement over "certain intellectual property".

Virax has registered the trademark Co-X-Gene to help market the technology.

It has licensed Transgene to develop the Co-X-Gene technologies into two
Transgene immunotherapeutic products, TG4001 and the key TG4010 for lung cancer.

If Transgene commercializes these technologies it must pay Virax:

. Fees;

. Milestone payments and

. Royalties.

So, if Novartis exercises its option, Transgene will be commercializing the technologies - effectively meaning that Novartis money will flow through Transgene to Virax.

But then Virax needs to do two things: From revenue received from Transgene It must pay ANU Enterprise (formerly Anutech Pty Ltd):

. 25pc of fees and milestone payments up to $2m and 20pc thereafter;

. 20pc of royalties.

This means Virax can keep about 75pc-80pc payments received from Transgene.

But then, out of these moneys, it will need to pay some $7.7m to the Virax Creditors Trust, an entity created from a Deed of Arrangement drafted by former administrators from Grant Thornton.

Virax has granted a sub-licence to Transgene to apply the technology rights in the USA and Canada.

How many Americans were diagnosed with lung cancer in 2013. Researchers estimate 228,000. How many died? More than 159,000.

If Novartis exercises its option, worldwide sales of the TG4010 drug may top $1bn annually.

This could have blockbuster implications for the three listed companies.

At present the MCs stand like this:

. Novartis (NOVN:VX): $A237b;

. Transgene (TNG:FP): $A624m;

. Virax (VHL): $7.7m.