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GlaxoSmithKline (NYSE: GSK  ) and Nabi Biopharmaceuticals (Nasdaq: NABI  ) set up a nice partnership yesterday for Nabi's NicVAX. Let's just hope it doesn't flame out in phase 3 trials.

NicVAX is designed to help people quit smoking. The vaccine stimulates the body to create antibodies to nicotine, which should bind to nicotine, prevent it from crossing the blood-brain barrier, and thus decrease its euphoric, addictive effects. Removing that effect should make it easier for smokers to quit.

It sounds good in theory, but I wouldn't go out and start shorting cigarette makers like Altria (NYSE: MO  ) , Reynolds American (NYSE: RAI  ) , and British American Tobacco (NYSE: BTI  ) just yet.

In reality, creating a vaccine for nicotine might be more difficult. Earlier this year, Cytos Biotechnology and Novartis (NYSE: NVS  ) had a similar vaccine go up in flames. Glaxo has hedged its bet by paying $40 million for an option to license the drug and letting Nabi continue to pay for the two planned phase 3 clinical trials. If the drug works and Glaxo picks up the option, it'll be on the hook for milestone payments, which could top $460 million if a second-generation vaccine is also a success.

But the milestone payments and a double-digit royalty would be a small price to pay if NicVAX turns out to work. Pfizer's (NYSE: PFE  ) smoking-cessation product, Chantix, had sales of $524 million through the first nine months of the year, and it's ripe for being picked off after reports of psychiatric side effects have led to a double-digit decline in sales.

But before it can compete, NicVAX is going to have to emerge from the smoke-filled uncertainty of clinical development with positive clinical trial results.

Pfizer is a Motley Fool Inside Value selection. Novartis is a Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (11)

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  • Report this Comment On November 17, 2009, at 9:37 PM, Charles1000 wrote:

    Yep; NicVAX won't work either. Plus it's kind of needless since more smokers are just smoking to ween themselves off of nicotine. They're also using that patch/lozenge combination. Plus, after the horrible reports about problems with Chantix, something like NicVAX probably won't be too trusted for a long time!

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