US talks on Roche flu drug deal continue

By Tom Armitage

ZURICH (Reuters) – The United States is in talks with Roche to buy a batch of its Tamiflu influenza drug, the company said on Monday, but it declined to comment on a report that the contract could be worth $1 billion.

A spokeswoman for Roche in Basel confirmed that previously announced talks with the U.S. government over a stockpile of the drug continued. She declined to comment on calculations made by the Financial Times that the contract could be worth $1 billion.

"I can only confirm that the talks with the U.S. government are ongoing but we are not publishing the price," the spokeswoman said.

Roche’s head of virology, David Reddy, said in an interview with the Financial Times that he would not elaborate on the value of a deal with the United States government.

"We are currently in discussion with the U.S. for the purchase of significant quantities of Tamiflu that would put it among the best prepared in the world," the paper quoted Reddy as saying.

Roche stock was up 1.1 percent at 184.50 Swiss francs at 0934 GMT.

The potential size of a U.S. government order has been the subject of analysts’ attention in recent months as the market tries to work out how much additional revenue Roche will reap from sales of Tamiflu for government stockpiling.

The drug chalked up sales of 580 million Swiss francs in the first half of this year, and the firm expects another 300 million francs or more in the second half of the year as more government orders come through.

HEFTY GAIN

An order worth $1 billion from the U.S. government would far exceed current expectations and deliver a hefty one-off gain for Roche.

"If the U.S. order is as big as rumored, the sales will be recorded over 2005/2006, and possibly into 2007 depending on how much product Roche can deliver," Helvea analyst Andrew Fellows wrote in a note to clients.

Fellows said his estimated sales of 700 million francs in 2005 and 300 million in 2006 may prove conservative.

The medicine is in a class of drugs called neuraminidase inhibitors, which reduce the severity of a flu infection and can help patients recover more quickly. GlaxoSmithKline makes another inhalable one, called Relenza, or zanamivir.

The World Health Organization advises countries to stock drugs of this type in preparation for a flu pandemic which is feared would kill millions if the avian flu virus H5N1 mutated to the point where it could infect humans.

So far, more than 25 countries, including many European nations, have bought supplies of the drug, in some cases enough to cover 20 to 40 percent of their population.

The United States has a stock pile of 2.3 million doses of Tamiflu, enough for just one percent of its population.

(Additional reporting by Peter Griffiths in London)