​VBI Vaccines' Backers Set It Apart In The Infectious Disease Space

Samuel Rae  |

The infectious disease space is drawing a lot of attention in the biotech world right now, and a number of companies have been highlighted as promising potential exposures. Dynavax Technologies (NASDAQ:DVAX) is one, with its upcoming (December 15) PDUFA for its lead hepatitis B vaccine, Heplisav-B. Inovio Pharmaceuticals Inc (NASDAQ:INO) is another, with the focus for this one an immunotherapy designed to treat cervical dysplasia caused by human papillomavirus types 16 and 18.

There are plenty more out there, and for an investor looking to gain exposure to the infectious disease space as part of a balanced portfolio (i.e. very few companies or just one company with candidates in this arena) this scope makes it difficult to pick an allocation. There is a company that differentiates itself from others in the space however, and it's not entirely based on technology or approach. In both of these areas, it has certain advantages over competitors, but there is a secondary aspect that makes it more attractive than, say, one of the two above mentioned companies. The differentiator is institutional backing, and the company is VBI Vaccines, Inc. - Ordinary Shares (NASDAQ:VBIV).

Before getting into the names that support this company, and for those not yet familiar with VBI, here's a quick introduction...

VBI Vaccines' Origin Story

The company is the outcome of a merger between two biotech companies, VBI Vaccines and SciVac Therapeutics, the announcing of which first hit press back in October last year. The deal took a while to close, but in May 2016, the two entities announced completion, and VBI became a wholly owned subsidiary of SciVac, before SciVac changed its name to VBI Vaccines Inc.

Since the completion, the company has attracted a fair amount of attention based on its expansive pipeline, which in turn, is rooted in a proprietary technology called the eVLP Platform, where eVLP stands for envelope Virus Like Particles. There's plenty of great material available on the advantages of vaccines built using this platform, and this piece is designed to focus on the company's investors as opposed to its operations, but a brief introduction won't hurt.

eVLP platform vaccines are part of what is called the third generation of vaccines. Put simply, they mimic the natural makeup of the viruses they target very closely, and this greatly improves their immunogenicity, while also improving their safety profile. VBI has kicked off two lead campaigns, one targeting the cytomegalovirus (CMV) infection and second targeting a brain cancer called glioblastoma multiforme (GBM), with the former of these being the most advanced from a clinical perspective. It's got a long tail pipeline that includes RSV and Zika, and it currently generates what might be called its bread and butter revenues from a hepatitis B vaccine that SciVac developed pre-merger. The latter mentioned vaccine, Sci-B-Vac, is approved in 15 countries, has demonstrated safety and efficacy in over 300,000 patients, and is targeting approval in the US during 2017 based on some already well established safety and efficacy data.

So that's the company in a nut shell.

What we're interested in for the purposes of this discussion is VBI Vaccines' backers, and what these various entities/individuals have prior to their involvement in VBI Vaccines that warrants their highlighting in this capacity.

Breaking Down VBI Vaccines' Backers

First up, Perceptive Advisors. This one's biotech fund, the Perceptive Life Sciences Fund posted a 51.8% return and was the No. 1 performing hedge fund of 2015 according to Bloomberg News. It's been profiled on the biggest media outlets in the US – CNBC, Business Insider, Barron's – and consistently outperforms the major indices with its biotech picks. The brains behind the fund is CEO Joseph Edelmen, who started Perceptive back in 1999. In the years subsequent to its initiation, years when hedge funds were taking double digit percentage point hits on the technology crash, Edelmen logged treble digit percentage point gains on his biotech plays. Some of Edelmen's blockbuster plays are Amicus Therapeutics, Inc. (NASDAQ:FOLD), which Perceptive bought into throughout 2014 and which gained 634% between 2014's open and 2015's highs; and Sarepta Therapeutics Inc. (NASDAQ:SRPT), which is up more than 5,000% since 2012 and has more than doubled in the last month alone.

Next, Arch Ventures. Robert Nelsen, a name that many think should be a household biotech name but has – as yet – failed to garner said status, kicked off this fund, and it has since gone on to finance more than 30 companies, of which fifteen have now reached valuations of $1 billion or more (true as of end first quarter, 2016). Perhaps Nelsen, and in turn, Arch's, best known play is his early investment in Juno Therapeutics Inc (NASDAQ:JUNO), which went public in 2014, an IPO to which Arch contributed considerably, and is now worth more than $3 billion. Another less well known but still considerable play is bluebird bio Inc. (NASDAQ:BLUE), which Arch invested in back in 2011 as part of a series C that brought in $30 million, and is now worth $2.6 billion.

Nelsen made the Forbes Midas list earlier this year.

Third, Opko Health Inc. (NASDAQ:OPK) and Dr. Phillip Frost. For those not familiar with the latter, he's a billionaire healthcare entrepreneur that currently serves as CEO and Chairman of Opko, and through which he holds a 12% position in VBI Vaccines. Frost first became a well known name in healthcare by way of his founding of IVAX, which he sold to the $45 billion generics behemoth, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), for more than $7 billion.

This was far from his only win, however. Since this deal made him a billionaire, he has been buying and selling small caps across a wide range of sectors – deals that have helped him to balloon his personal net worth and, by proxy, the valuation of the companies in which he took an active position. Some of his small cap wins include Whitman Education and Key Pharmaceuticals, both of which returned 000's of percentage points in gains, as did his investment in North American Vaccines. Countless others have returned 00's of percentage point gains, positions like Rolapitant and Continucare.

He's also well known for self funding his active positions, generally by way of adding to his position through insider buys. Many investors track his insider buys to piggy back his gains. For a company like VBI Vaccines, having an activist billionaire on board is a great asset.

The takeaway here is that VBI Vaccines has a promising pipeline in with numerous shots on goal, and a proprietary technology that could change the face of vaccine administration, but it's also got a raft of backers that have proven track records in this space.

The author has no position in the companies mentioned within the article.

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