The term “derisked” in biotech can be a tricky one. Investors in VBI Vaccines (NASDAQ:VBIV) learned this all too well when the stock crashed back in June even though many thought risk was relatively low. Its lead candidate, a next-generation hepatitis B vaccine called Sci-B-Vac, achieved all primary endpoints in a Phase III trial. It also demonstrated superiority to the GlaxoSmithKline (NYSE:GSK) standard of care, Engerix B, at every time point throughout the trial regardless of patient age, or diabetic or smoking status.
These are the most vulnerable populations to HBV infection, and VBI showed conclusively that Sci-B-Vac could protect them much more effectively than Engerix B. This is what the market expected, and so risk was perceived to be low.
But VBI shares still plummeted because, even though Sci-B-Vac showed superiority to Engerix B, it wasn’t quite superior enough. The percentage of patients protected after the second dose of Sci-B-Vac was still lower than the percentage of patients protected after the third dose of Engerix B. This meant that VBI would not be able to market Sci-B-Vac as a two-dose vaccine like its next-generation vaccine peer Heplisav-B from Dynavax (NASDAQ:DVAX). That is a significant disadvantage, so the stock collapsed. Can it recover? In the near term at least, that largely depends on safety data.
Sometime in January, VBI will have an even larger data readout for another Phase III trial of nearly twice the number of patients. This one is primarily a safety study, but one which could end up showing a better safety profile than Heplisav-B, which was itself rejected by the Food and Drug Administration twice for safety issues, including serious side effects like myocardial infarction and immune-related diseases. Heplisav-B was since conditionally approved, with continued approval based on real-world safety data. The FDA is looking for more heart safety data and immune diseases thought to be caused by the adjuvant that Heplisav-B uses to magnify immune response.
VBI is still moving forward, with an FDA submission expected next year. If Sci-B-Vac is approved without a fight over safety, as happened with Heplisav-B, we could start to see shares recover as it would give the drug a safety edge over its main competition.
The Sci-B-Vac target market, like the Heplisav-B target market, was and is the immunocompromised as well as health care workers who come into regular contact with infected people. These workers need to be immunized relatively quickly because they are exposed to this population often. Sci-B-Vac was able to achieve a seroprotection rate above 50% just two weeks after the first dose. For Engerix B, that number even after six months was less than 25%. That is inadequate for health care workers, who need a better alternative. Heplisav-B does provide this alternative and, unlike Sci-B-Vac, is a two-dose vaccine. The big question is whether or not Heplisav-B retain its approval.
Dynavax’s final report on its postmarketing study to the FDA on Heplisav-B is due June 30, 2021. The study will compare 25,000 patients who took Heplisav-B with 25,000 patients who took a different vaccine. The study itself is scheduled to be completed next May. The results of that study could end up affecting VBI as acutely as did the Phase III data on Sci-B-Vac last June.
How big is the target market? According to a 2015 CDC survey, the vaccination rate for adults over 50 is only 16.5%, so it’s fairly large. Whether Sci-B-Vac can get a decent market share could largely depend on relative safety advantages versus Heplisav-B. Heplisav-B doesn’t have to be taken off the market outright though. Even if it ends up with a permanent warning on its label and Sci-B-Vac does not, that could be enough to level the playing field.
Disclosure: No positions.
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