On the demand side, the hepatitis B space is one of the fastest growing spaces in global healthcare. Around 250 million people are chronically infected with HBV (the hepatitis B virus) right now. Just short of 670,000 people will die this year from complications that arise on the back of infection. This number is up from around 620,000 deaths last year and it’s expected to grow at a similar rate across the next five years.
While HBV associated deaths are rising, however, on the supply side, the market for hepatitis B drugs has essentially stagnated. No new treatments have hit the shelves in more than a decade, and both the vaccine side and the treatment (antiviral) side of the space are dominated by a slow moving incumbent – GlaxoSmithKline plc (ADR) (NYSE:GSK) and Gilead Sciences, Inc. (NASDAQ:GILD) respectively.
From a commercial perspective, then, things are stood still. Take a look behind the curtain, however, and there is a wave of development assets poised to hit the shelves, and in doing so, potentially bring the outdated sector up to speed.
Each of these development assets, and each of the companies responsible for their development, presents an investor with a slightly different exposure angle to the sector.
Here’s a look at three of the frontrunners right now, with a discussion as to what makes each attractive, or otherwise, as an allocation.
First up, Dynavax Technologies Corporation (NASDAQ:DVAX).
This is a company that many readers, and especially those with some degree of background knowledge in the hepatitis sector, will already be familiar with. It’s trying (very hard) to bring a drug called Heplisav-B to market, but to date, it’s not had much luck. This might be about to change, however. Before getting in to the why, a quick note on the drug. It’s a vaccine, so it’s aiming to compete with the above mentioned GSK’s lead asset in hepatitis B – Engerix B – and it’s trying to set itself apart from the competition through what’s called a ISS adjuvant. Current standard of care vaccines (such as Engerix) use an aluminum adjuvant to enhance the ability of the vaccine to elicit a response from the immune system. With Heplisav-B, Dynavax has taken Engerix, removed the aluminum adjuvant, and replaced it with ISS. Think of it as a sort of super-adjuvant.
Its strength is also its weakness, however. The FDA is concerned that the super adjuvant can cause certain autoimmune conditions, and the agency keeps declining approval based on this concern.
Anyway, this might all be about to change. The FDA is due to make a decision on the vaccine by an August 10 PDUFA, and as per the company’s most recent announcement, a review panel will sit down and discuss (and in turn, make a recommendation to the FDA concerning) Heplisav-B, on July 28.
There’s a pretty considerable risk associated with picking up an exposure to these two events (the first will offer insight into the outcome of the second), as DynaVax will collapse if the FDA turns the drug down again. However, as a binary exposure, and for someone willing to shoulder the risk of an FDA knockback, there’s a large upside on both an advisory panel recommendation for approval, and a subsequent FDA green light come August.
Next up, ContraVir Pharmaceuticals, Inc. (NASDAQ:CTRV).
ContraVir hasn’t been grabbing the headlines like DynaVax has, but while it’s a somewhat under the radar exposure, it’s just as interesting a play. The company is working on a treatment called TXL, which is at core, a reformulation of the current lead standard of care treatment in the chronic infection side of the space – the above mentioned Gilead’s Viread.
Viread works well, but it generally requires combining with other antivirals (similar to the way a patient doses for HIV therapy) and patients can quickly become resistant to the combination in question. There are also certain toxicity issues associated with chronic administration; the most common (and most serious) of which is renal failure. With TXL, ContraVir has taken Viread and added an enzyme called polymeraze. The science is relatively simple – polymeraze should increase the rate of uptake of the active compound in the drug (or in other words, increase bioavailability) and in doing so, reduce the amount of active compound that’s swimming around the body unused post-administration.
With less active compound going unused, the natural implication is that the toxicity of dosing should reduce, which in turn, should reduce the above mentioned tolerability issues. This one is in a phase II study right now, and data is set to be presented at the International Liver Congress in Amsterdam on April 20. If the data points to comparable efficacy between TLX and Viread, and just as importantly, if there are no major tolerability issues associated with the former, then ContraVir should run on the back of the presentation.
Finally, VBI Vaccines Inc. (NASDAQ:VBIV).
VBI is working on a new generation vaccine called Sci-B-Vac. It’s similar to the Dynavax asset in that it’s trying to build on the earlier generation assets in the space (Engerix) but that’s where the similarities end. While Dyanavax is switching out one adjuvant for another in its Heplisav-B efforts, VBI is doing away with the adjuvant altogether with Sci-B-Vac.
No adjuvant should translate to a reduced immune response – right? Well, yes, if all else remains the same, but with Sci-B-Vac, that’s not the case. Immune responses are rooted in the body’s recognition of antigens. Viruses express antigens, and when our immune system (and more specifically, the cells that make up our immune system) recognizes these antigens, the process of immune response is initiated. Some antigens elicit a stronger immune response than others, based on the fact that certain immune cells recognize certain antigens, but don’t recognize others. Building on this fact, then, the more antigens available for the immune cells to recognize, the stronger and more rapid the immune response should be.
VBI has taken this concept and used it to created a vaccine that expresses three separate hepatitis B antigens. For reference, both Heplisav-B and Engerix express just one hepatitis B antigen. The expression of three antigens negates the necessity for an adjuvant, and this helps to remove the risk that the drug might encounter the safety and tolerability concerns that Dynavax is facing when it comes up in front of the FDA.
Which brings us nicely to why this one is a near term catalyst play in the space.
The vaccine is already approved outside of the US, Europe and Canada, but VBI is working hard right now to get it on the shelves in these regions. As per the latest communication from the company, both European and Canadian healthcare regulatory authorities have expressed willingness to approve the vaccine in their respective regions on the back of VBI demonstrating safety and efficacy as part of a single phase III trial, so long as the company supports this pivotal trial data with data already collected from historic trials and past dosing in regions where Sci-B-Vac is already approved. This is great news, but the big news will come when the FDA expresses a similar willingness, as this will pave the way for the initiation of said pivotal study.
There’s a good chance Heplisav-B will pick up approval before Sci-B-Vac in the US, and this will likely weigh on sentiment a little near term. Looking beyond this, however, Sci-B-Vac has a strong case for superiority over both Heplisav-B and Engerix, and if it gets a regulatory green light in the three target regions discussed above, VBI could attract a large portion of the market in each.