Novavax (Nasdaq: NVAX) – Taking the stress out of future influenza pandemics
“The chickens of America stand ready to do their duty” – US agriculture secretary Earl Butz (1909-2008), telling President Gerry Ford in 1976 not to worry about influenza vaccine supply ahead of a potential swine flu epidemic.Seven years ago Merck & Co. gained FDA approval for a remarkable Australian invention called Gardasil. I suspect not many Americans know that this vaccine against Human Papilloma Virus (HPV), the causative agent in cervical cancer, first originated in the laboratory of Professor Ian Frazer at the University of Queensland (click here to read an article that'll make you think it's as American as apple pie). CSL Ltd (ASX: CSL), the Australian plasma products major and now the world’s 27th largest pharma company, was the original UQ commercialisation partner, having funded Frazer’s work for several years before they licensed the product and swiftly on-licensed it to Merck in 1995. This was an Australian invention so it had to be good, and by 2001 it was clear to the Merck folks that they had an effective vaccine on their hands, with ample virus-neutralising antibodies in all test subjects. Indeed, the product was so good it subsequently made it into an episode of The West Wing (Episode 104, first screened in 2004 and featuring the President’s daughter as a scientist working on HPV). Merck’s vaccine went on to gain FDA approval in June 2006. Last year the company realised US$1.6bn in net sales from Gardasil, making it the company’s seventh biggest seller. More importantly, thanks to Frazer’s work, cervical cancer is now on its way to being just one of those diseases we used to get ‘in the olden days’, like diphtheria or polio.
Ian Frazer was able to make this big step forward in cancer prevention because of Virus-Like Particles, another Australian invention, albeit an indirect one. Back in the mid-to-late 1960s the American researcher Barry Blumberg (1925-2011), while studying the genetics of haemophilia, had found that the serum of a haemophilia patient was reacting to the ‘Australia antigen’, so called because it came from the serum of an Australian Aboriginal. As he and others sought to figure out why this happened, Blumberg won himself half of the 1976 Nobel Prize in Medicine. It turned out that the Australia antigen was actually HBsAg, a protein that sat on the surface of the Hepatitis B Virus, to which the haemophilia patient had antibodies. Blumberg’s work had given us the basis for the Hepatitis B vaccine we’ve had since the early 1980s, which is simply the recombinant HBsAg protein rather than the whole Hepatitis B Virus killed or attenuated. This vaccine introduced would-be vaccine makers to the idea of using sub-viral particles as vaccines. The DNA that codes for HBsAg creates a protein which self-assembles into an empty sphere. The shape of the HBsAG is such that the immune system sits up and takes notice when it sees it, but you don’t have any viral DNA still hanging around inside the spheres like you would with a regular killed or attenuated vaccines, or, for that matter, a DNA vaccine like Inovio’s. It’s a Virus-Like Particle (VLP) rather than a virus. Such vaccines are very safe to use as well as easy to manufacture and, as Frazer and Merck have shown, if you get the right antigen they work like a dream.
The success of Gardasil suggests that it’s worth watching Novavax (Nasdaq: NVAX), from Rockville, Md. Novavax knows how to get broadly immunogenic VLPs from all sorts of pathogens, and has a large proprietary suite of them, many quite advanced in terms of earlier VLP approaches that only included a single protein or lipid. The company is going after influenza for its first VLP vaccine, and I would argue that VLPs could be a substantial improvement over the way we handle influenza today, which is - let’s face it – far from optimal.
Ignore for a moment the fact that Google does a better job of identifying influenza epidemics than the health authorities funded by the taxpayer (click here for that story). The really annoying thing about influenza is that when those authorities have decided which strains are the ones to worry about for the coming winter, the vaccine makers are still doing their quadrivalent vaccine thing (two influenza A strains and two B strains – it used to be trivalent with just one influenza B strain) in eggs. If you just got here in a time machine from the mid-1970s, you heard it right. In 2013, four decades after we figured out how to do genetic engineering, we still get most of our influenza vaccine starting material from the humble chicken egg. Growing influenza in eggs was an Australian invention from 1936, when Sir Mac Burnet (1899-1985), whose work on immunological tolerance won the 1960 Nobel Prize for Medicine, was a world leader in virology working out of Melbourne. Today, when you can grow virus in mammalian cells, egg-based production doesn’t make sense. For one thing, it takes four to six months lead time to get those egg-based factories to turn out vaccines. For another, you’ve often got to alter the virus strain in order for it to grow efficiently in the egg. You don’t have to go back very far in time to see the shortcomings of this system. In 2004 you’ll recall that Americans were forced to rely on herd immunity because a Novartis plant was out of action. And in 2009, when the H1N1 pandemic strain started killing people, we got the vaccine too late to deal with it effectively. Which made people wonder what we’d do next time a real badass 1919-style pandemic roared out of Asia.
Now, don’t get me wrong. Governments have been egged on by the experts for years about this issue, and in 2006 Uncle Sam showed he wasn’t chicken about cell-based manufacturing when he handed out contracts worth more than US$1bn to develop such vaccines. The first fruits of this investment were harvested late last year when Novartis gained FDA approval for Flucelvax, the first seasonal influenza vaccine made in mammalian cells. So eggs are on the way out, which is bad news for companies like CSL. But the cell-based producers had better watch their back as well because Novavax may have all the advantages of cell-based manufacture – such as the ability to use wild-type hemagglutinin instead of hemagglutinin altered to fit the egg production system – and offer a few extra benefits on top of this.
For one thing, cell-based vaccine manufacturing still makes influenza virus that has to be inactivated or attenuated, whereas Novavax’s VLPs don’t have anything with the potential to come alive again. For another, Novavax can move faster and cheaper whenever vaccine is needed. It makes its influenza VLPs under GMP using a recombinant baculovirus and insect culture system (just like Dendreon uses with Provenge) and, significantly, the bioreactor systems involved are single use. You make your vaccine and then you throw away the material you made it in. It all makes for a quick but not dirty system of making vaccines that, so Novavax claims, can qualify a vaccine facility with low capital costs ‘six to nine months faster than a fixed-pipe bioreactor facility used in cell-based manufacturing’.
The proof of the pudding for this kind of system will be when there’s another pandemic like 2009. Back then Novavax’s white coats took H1N1 as soon as the CDC made its sequence available for analysis. 11 weeks later they were making a H1N1 vaccine under GMP that was good enough to license in terms of its immunogenicity. This admirable celerity in vaccine production has helped ensure that the flow of funds from BARDA – the US government’s Biomedical Advanced Research and Development Authority – to develop VLP-based vaccines continues. In 2013 Novavax has shown that it still has the right stuff on ultra-rapid vaccine development. In February a serious H7N9 bird flu emerged in China that killed 44 people in 135 known cases. Novavax started work on a vaccine in early April. By 10 May they were making clinical trial material and by 8 July they were in Phase I.
Now, followers of Novavax shouldn’t get too excited about Novavax’s theoretical ability to deal with pandemics. The company is still some way away from having a regular influenza vaccine ready for approval. In July 2012 it announced that a quadrivalent seasonal influenza VLP vaccine candidate had proved seroprotective against all four strains in a clinical trial, but only brought about adequate seroconversion in three. In other words, this vaccine would likely have protected people from influenza infection, but in the case of one strain the test subjects didn’t quite make enough antibodies for the FDA's people to sleep easily at night. Novavax went back to the drawing board on its manufacturing process and expects to return to the clinic for another Phase II early this year. It will also start a clinical trial for a pandemic H5N1 vaccine in the first half of next year after favourable Phase I data came out in October 2012.
Influenza isn’t the only thing on Novavax’s agenda. It’s also got a vaccine against Respiratory Syncytial Virus (RSV) which is based on a micelle formed by RSV’s F protein. Micelles, you’ll recall from chemistry class, are molecules that can arrange themselves in a spherical form in aqueous solutions because they’re bipolar – hydrophilic at one end, hydrophobic at the other. The common theme with Novavax’s VLPs is that a micelle is, like a VLP, the kind of three-dimensional protein the immune system will take notice of. The difference between RSV and influenza is the damage a good vaccine can do to drug sales. RSV made Synagis a blockbuster, and, with Novavax having generated favourable data so far, the business development folks at AstraZeneca will have to be on their toes if they want to keep this franchise.
Let me leave you with a thought on Novavax and influenza. Unlike the cervical cancer story post Gardasil, influenza isn’t going away any time soon – the influenza antigens shift around too frequently to make that possible. We may, however, be on our way to cutting the death rate from influenza to just about nothing through ease of vaccine manufacture that could tie in with more rapid identification of new strains. Another infectious scourge dealt with, another billion-dollar company created, and perhaps a few older vaccine companies forced out of business would be three happy outcomes of all this. Worth doing some homework.
Stuart Roberts, Australian Life Sciences consultant, with global focus
+61 (0)447 247 909
Twitter @Biotech_buzz
About Stuart Roberts. I started as an equities analyst at the Sydney-based Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group (ASX: BFG) 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.
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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.
Stuart
ReplyDeleteAny views on Biota? It's an anti-influenza therapeutic company now Nasdaq listed (BOTA), also with BARDA funding. As you know, it has a long Australian history.
Neuraminidase inhibitors are an Australian invention. They overcome most of the issues of vaccination for influenza. It makes little sense to try to vaccinate the whole community every year against a disease that mutates unpredictably each year. Problem is worse during a pandemic when time is against you.