Transgene signs billion dollar deal with Novartis for TG4010 cancer vaccine option, but still disappoints investors

Transgene has signed an exclusive option agreement with Swiss drug major Novartis for the development and commercialization of the French biotechnology firm's targeted cancer vaccine TG4010 (MVA-MUC1-IL2), for the first-line treatment of non-small cell lung cancer (NSCLC) and other potential cancer indications.

In return, Transgene will receive non-refundable option fee of $10 million and, contingent upon the exercise of the option by Novartis and the achievement of successful development, regulatory and commercial milestones in various indications, will be eligible for up to 700 million euros ($953 million) in milestone payments, plus royalties.

However, the value of the accord and its terms disappointed investors, and saw the French company's shares plunge 17% to 18.51 euros in Paris trading yesterday. The stock had climbed more than 70% over the past year as the company hyped the potential of its cancer vaccine.