VBIV (NASDAQ .86)
VBI Vaccines is a Massachusetts-based biotech company that has a hepatitis B vaccine that’s already approved, and selling in fifteen countries right now. It’s got a very large safety database (something we’ll discuss in a bit more detail shortly) and it’s designed to overcome the limitations of the currently available SOC vaccines. At a glance, then, it seems to not only have the potential to meet the unmet need (and in turn, the $700 million market opportunity) but also to represent a more attractive risk-reward profile than a Dyanavax/Heplisav exposure.
The asset in question is called Sci-B-Vac.
The list of countries in which Sci-B-Vac is already approved includes Hong Kong, Israel, Philippines, Vietnam and a large portion of West and Central Africa. To date, it has demonstrated safety and efficacy in over 300,000 patients, and VBI has a database of safety figures in hand that spans 5,000 doses.
The vaccine is created using hamster cells, which enables Sci-B-Vac to mimic the virus to which it’s designed to induce an immune response far more closely than so-called second generation vaccines, which use yeast cells to ‘package’ antigens. For reference, Heplisav-B uses yeast cells, but is able to reduce the dosing regimen when compared to the SOCs in the sector because it uses what’s called immunostimulatory sequences (ISS) as an adjuvant, instead of the alum adjuvant that things like Engerix (an example of one of the most widely used SOCs) employ.
The employing of hamster cells as packaging for the antigens, as well as Sci-B-Vac’s mimicking of all three surface antigens of the hepatitis B virus (the S antigen and the pre-S1 and pre-S2 surface antigens), results in an increase in immunogenicity without the necessity for an alternate adjuvant.
This is a key point, as it allows for a maintaining of the safety profile of the alum type vaccines, but an increased elicited response.
To put this another way, with Heplisav-B, Dynavax has taken second generation vaccines and added an adjuvant to allow for reduced dosage. In contrast, with Sci-B-Vac, VBI has completely reengineered the vaccine to allow for higher immunogenicity, which reduces the amount of the vaccine needed. In doing this, it’s reduced the necessary dosage, and overcome the dosing issue that we outlined above as serving to underpin the large unmet need in the space.
That’s not all.
VBI’s vaccine has also demonstrated an equally effective immunogenicity across all patient types – young, old, healthy, and (very importantly) immunosuppressed patients such as diabetes sufferers. There’s a real problem right now with current vaccine options not inducing immunogenicity in diabetes sufferers (and Heplisav-B is included in this group), and Sci-B-Vac seems to solve this problem.
So what’s the development pathway like?
The company is pushing right now to add the US and Europe to its list of approved regions. These are the two big-ticket markets, and approval in both could amount to more than $1 billion in revenue potential, above and beyond Dynavax’s $700 million Heplisav-B US potential. The European pathway is slightly ahead of that of the US, with the company having announced back in February that the CHMP (a department of the EMA) has expressed its support of VBI’s proposed plan to proceed to the Phase III clinical studies of Sci-B-Vac, and that the product information, as well as data from ongoing studies, supports the Phase III clinical studies and VBI’s planned filing of a market authorization application (MAA) for the vaccine. A pivotal study should kick off during the third quarter of this year, and this presents us with a potential 2018 approval in Europe.
According to most recent communication from management, the US approval program is running parallel to that of the European program, which suggests we should see a pivotal initiated in the US this year also, again serving up the potential for approval in 2018.
There’s also a considerable amount of institutional interest in the company. Arch Ventures, headed up by Robert Nelson, and Perceptive Advisors, the top performing sub $1 billion hedge fund of 2015, headed up by biotech guru Joseph Edelman, both hold large stakes in VBI.
Through Opko Health Inc. (NASDAQ:OPK), billionaire biotech entrepreneur Dr. Phillip Frost also holds a large, and growing, stake in the company.
The takeaway here is that VBI is likely around eighteen months behind Dynavax in terms of getting a hepatitis B vaccine on the market in the US and Europe, but given the information available right now, it looks as though VBI’s Sci-B-Vac has a far higher chance of getting a regulatory green light. Sci-B-Vac also looks superior to Heplisav-B, especially in the immunosuppressed patient population, giving the drug a higher peak sales potential than that of its Dynavax made counterpart.
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