Biotech Buzz Post No. 4 - INO

The ones who are crazy enough to think that they can change the world, are the ones who do - Steve Jobs (1955-2010), founder of Apple, the man who gave us Pixar, and the greatest tech entrepreneur since Edison.

Inovio Pharmaceuticals (NYSE MKT: INO) – Why we may just have a decent DNA vaccine one of these days

One of my favourite lines from the movies comes from Oliver Stone’s 1987 classic Wall Street, where the old broker is lecturing his younger colleagues on the virtue of patience.  At first you think that the older guy, played by Hal Holbrook, is hopelessly out of date when he complains that ‘the worst thing we ever did was let Nixon get us off the gold standard’. Then he reveals a more modern streak when he advises the young guys to look at the stock of an emerging pharmaceutical company whose first drug is now approved. One of the younger brokers responds somewhat dismissively that ‘it’ll take five years for that company to come around’. To which the Holbrook character reminds his listeners that ‘good things, like Hilton and IBM, sometimes take time’.

In this post I’d like to look at a very good thing that is taking a while to come around but seems to be getting closer – DNA vaccines. Science has known for at least twenty years that a string of plain old DNA, where that DNA codes for a vaccine antigen, can induce a powerful immune response to the antigen so long as you can get the DNA inside enough cells in the body. With genetic engineering having turned the mass-production of DNA constructs into low-cost child’s play, DNA vaccines would be a huge step forward for prophylaxis because you could do away with all the dangers associated with live or killed pathogens and all the inefficiencies that come with harvesting vaccine material out of eggs or cells. And of course, with therapeutic vaccines for cancer and a range of other diseases, the sky is the limit. The reason we don’t have an approved DNA vaccine yet is, I believe, two-fold. Firstly, there’s been some difficulty figuring out the appropriate delivery mechanism. Secondly, it’s taken a while to understand how to get the best antigens. However one thing you can count on in biotech is persistence (hey, look at me – I’ve been a voice crying in the wilderness for this industry in Australia since 2002), and now a company from the salubrious Philadelphia exurb of Blue Bell, Pa. called Inovio Pharmaceuticals (NYSE MKT: INO) seems to have solved many of the problems.

Inovio’s basic approach to DNA vaccines, using technology called ‘SynCon’, involves the use of bioinformatics to pick good antigens, and the delivery of plasmids carrying the chosen DNA sequences via electroporation. Twenty years ago we just didn’t have enough genomic data in order to be able to adequately compare DNA from various viral strains and pick, with the help of powerful software, consensus DNA most likely to cover all strains. Once you tweak such consensus DNA so that expression inside cells is high enough, you’ve potentially got what the DNA vaccines pioneers have been looking for all these years. But of course you then have to deliver it. Traditionally only tiny amounts of ‘naked’ DNA have been taken up by cells. DNA wrapped up in lipids or harmless viruses, or DNA attached to some membrane-penetrating particle and fired in using ‘gene guns’, has been better. However best of all would be if the cell membrane would just open up and let the naked DNA in. That’s what Inovio can do with electroporation – apply a harmless electric current to the delivery area which temporarily ‘permeabilises’ cell membranes.

The data has been looking good for Inovio on this approach, albeit early stage. In patients with a precancerous condition called cervical dysplasia, for example, a DNA vaccine against the E6 and E7 proteins of HPV has generated a strong immune response to dysplasic cells in Phase I. Same story with a vaccine targeting, in Phase II, the WT1 gene involved in Chronic Myeloid Leukaemia. Then there’s the development that may herald the start of the revolution we’ve been awaiting for in influenza – the universal vaccine that would displace the standard seasonal vaccines we get today by protecting against all types of a particular influenza. In April 2013 Inovio reported Phase I data showing that its H1N1 universal influenza vaccine was generating antibodies comparable to the current FDA-approved seasonal vaccine, while in July an H7N9 universal vaccine protected all the vaccinated animals in a challenge study. This was important because H7N9, which emerged in China in March of this year, is a scary bird flu that, like H5N1 before it, has been killing people as well as chickens.

Inovio is currently pushing ahead with a busy programme of DNA vaccines. As well as the lead programme against cervical dysplasia and the work in HCV and influenza we mentioned above, there are Phase I and preclinical programs targeting prostate, breast, and lung cancers as well as HIV and malaria. The last mentioned effort is particularly interesting because malaria has evaded all efforts to vaccinate it over the centuries due to each part of the malaria life cycle presenting different antigens. With DNA vaccines these could theoretically be targeted simultaneously. Inovios’s vaccine has worked well preclinically and goes to the clinic next year. One great part about the utility of Inovio’s vaccines is that Uncle Sam is interested – Homeland Security has been looking to the use of DNA vaccines against bioterrorism. As we all know, when it’s a National Security issue, funding for a programme becomes a whole lot easier.

Inovio is now capitalised at a healthy US$315m, and that‘s after the stock spiked and then eased back in July and in spite of the setback which the DNA vaccine field received earlier this month. On 12 August the San Diego-based DNA vaccine pioneer Vical (Nasdaq: VICL) reported that its Allovectin vaccine had failed to meet its primary endpoint in a Phase III trial in metastatic melanoma. What went wrong with Vical? Probably a misunderstanding about how well advanced melanoma patients respond to dacarbazine, which is the standard of care drug and was placebo for the Allovectin trial. It happens –a clinical trial gets designed based on science which is going out of date. This was a problem Neuren (ASX: NEU) had several years ago with its neuroprotection compound when it went to Phase III in heart bypass patients (who were understood to suffer cognitive decline after their surgery but actually don’t) rather than in Traumatic Brain Injury where they probably should have gone. In Vical’s case that company doesn’t think the DNA vaccine game is over and is now focused on going to the clinic with a vaccine against Herpes Simplex Virus type 2 (the cause of genital herpes) before the end of this year. Meanwhile the major Japanese drug company Astellas is in Phase III with a Vical-sourced DNA vaccine against cytomegalovirus in solid organ transplant patients.

In my view the DNA vaccine field has made enough progress to render it fairly resilient when challenges like the recent Vical failure come along. I’ve been arguing for a while now that one of these days a DNA vaccine will make it all the way, and when that happens the rising tide will lift all boats in the field. UQ’s Professor Ian Frazer, the creator of Gardasil, must think so too because he’s working on some DNA vaccines potentially useful in HSV2 and HPV that were created using bioinformatics tools not unlike Inovio’s. If you go to the web site for Frazer’s collaborator Allied Healthcare (ASX: AHZ) you can find some research there that lays out the case for a bright DNA vaccine future in some detail. Take a lot of time to do your own homework. Remember, good things, like Hilton, IBM and Amgen, sometimes take time.

Stuart Roberts, Australian Life Sciences consultant, with global focus
Nisi Dominus Frustra

+61 (0)447 247 909

sroberts2164@gmail.com

Twitter @Biotech_buzz

About Stuart Roberts. I started as an analyst at the Sydney-based stockbroking firm Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group in 2008 and I continued at Bell Potter Securities until June 2013. Over the twelve years to 2013 I built a reputation as one of Australia's leading biotech analysts. I am currently consulting to the Australian biotech industry. Before joining Southern Cross Equities I wrote for The Intelligent Investor, probably the most readable investment publication in Australia. I have a Masters Degree in Finance from Finsia. My hobbies are jazz, cinema, US politics and reading patent applications filed by biotechnology and medical device companies.

Previous Australian Biotechnology Buzz posts:
Immunomedics (Nasdaq: IMMU), 21 August 2013
Inovio Pharmaceuticals (NYSE MKT: INO), 24 August 2013
Oncolytics Biotech (Nasdaq: ONCY),  22 August 2013
Regulus Therapeutics (Nasdaq: RGLS), 23 August 2013

Disclaimer. This is commentary, not investment research. If you buy the stock of any biotech company in Australia, the US or wherever you need to do your own homework, and I mean, do your own homework. I'm not responsible if you lose money.