Select Vaccines out-licenses hepatitis A diagnostic test

Select Vaccines (ASX:SLT) has licensed the manufacture, global marketing and distribution of its rapid hepatitis A diagnostic technology to US-based Rapid Medical Diagnostic (RMD), but has kept the distribution rights for the test in Australia and New Zealand.

Select Vaccines will receive milestone payments if RMD obtains regulatory approval in jurisdictions such as the US, Europe and China, as well as ongoing royalty payments -- comprising a high single digit percentage of total net revenue -- from product sales over the next 13 years.

The license agreement includes a net sales minimum target of more than US$3 million per year within four years.

RMD develops and produces rapid tests for a range of diseases including HIV, tuberculosis, West Nile virus and various sexually transmitted diseases. The company is headquartered in Miami, Florida and has a manufacturing facility in Panama.

Production of the diagnostic tests will start as soon as the technology is transferred from Select Vaccines and the company expects sales to commence as soon as regulatory requirements are met.

The technology transfer could take between three to six months and regulatory approval a further 12 months, said Select Vaccines' managing director Martin Soust.

"In an ideal world, and in our experience with Genelabs [with which Select also has a licensing agreement], the tech transfer process was only about two months, and the first regulatory approval came through in about seven months which was Europe," he said. "Probably by the end of 2006, approvals may come through in the United States and/or China, maybe earlier in Europe."

Select Vaccine's assay is specific for Hepatitis A IgM antibodies, the antibodies produced by the body immediately after infection. The tests can be used in the field or in the clinic and perform as well or better than existing lab tests, diagnosing acute infection with Hepatitis A virus with greater than 95 per cent sensitivity (correct diagnosis of positive samples) and greater than 97 per cent specificity (correct diagnosis of negative samples).

Soust declined to provide specific details of the technology being transferred to RMD because aspects are trade secret and "it would be very easy for any competitor to potentially work it out".

Selling prices for the tests will range from about US$1 to US$3 per unit, depending on which platform RMD uses, with each platform tailored for specific markets.

The agreement provides the company with another revenue stream, said Soust. "Secondly, and just as importantly, it builds our confidence in being able to do transactions like this, with our technologies," he said.

Thirdly, it shows that Select Vaccines is following the licensing model it told the market it would proceed down, he said. However, "we may alter that model in the future -- we may not license every product we build," Soust said.

The licence agreement is the third for Select Vaccines, having previously licensed a hepatitis E virus diagnostic to Genelabs Diagnostics (now MP Biomedicals Asia Pacific) and a suite of monoclonal hepatitis E antibodies to UpState USA.