City buoyed by choice of Fellner as Acambis chief

Sale more likely after dealmaker moves in
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The Independent Online

The appointment of a well-known biotech dealmaker as chairman of Acambis, which provides the US with smallpox vaccines, has raised City hopes that the company is heading for a sale.

Peter Fellner will replace the outgoing chairman, Alan Smith, in October, Acambis announced last week. A shareholder said: "We know Peter. His track record is that he has done deals. The same will apply to Acambis in time."

Pharmaceutical giants Novartis, Merck and GlaxoSmithKline could be interested in the group, analysts said.

Mr Fellner was chief executive of Celltech until he sold it to UCB for £1.5bn in 2004. He also helped guide Vernalis, a biopharmaceutical group of which he is also chairman, through a series of acquisitions to give it a £210m market valuation. He joined Acambis in February as a non-executive director.

City speculation is rife over which direction Mr Fellner will take the £189m company. It could go on the acquisition trail itself, targeting a rival such as Austrian group Intercell, but it would have to raise new cash first. The company's long-suffering investors may be more interested in a profitable exit. "He'll dress it up for a sale," said one analyst.

Acambis has lost more than a third of its value over the past 18 months as the US government dragged its feet on awarding a new contract for smallpox vaccines. Development costs of vaccines for Japanese encephalitis, West Nile virus and yellow fever have whittled a cash pile, once as high as £125m, down to just £65m. It recently reported widening losses and said that it had spent £2m on an acquisition that never materialised.

Vaccine makers are attracting a lot of interest from big pharma. Novartis paid $6.4bn (£3.5bn) for vaccines specialist Chiron earlier this year, and signed a deal last month with Intercell for its Japanese encephalitis vaccine.

Merck and GlaxoSmithKline are also expecting to reap billions from their new cervical cancer vaccines. "For a big pharma company with a vaccines presence, Acambis would make a nice bolt-on acquisition," said another analyst.