Spring Bank Pharmaceuticals Inc. (SBPH, Financial) announced positive initial Phase II results for its new antiviral hepatitis B (HBV) treatment SB-9200. Shares have recorded all-time highs, up as much as 28% on the news.
One may wonder why a disease for which there are already multiple effective vaccines and treatments needs another one, and why investors would bid shares up nearly 30% on Phase II news like this.
Here’s SB-9200 in context, and why, if it succeeds, it could quickly become a blockbuster like some of its HBV competitors despite a crowded treatment market.
In the 1970s a microbiologist at Merck & Co. Inc. (MRK, Financial) named Maurice Hilleman built on the early work of a geneticist, Dr. Baruch S. Blumberg, to create the first vaccine for hepatitis B. The FDA approved the vaccine in 1981. In 1986, it was withdrawn from the market and replaced with what is historically known as the first-ever recombinant vaccine – a yeast-based HBV vaccine, developed by Pablo DT Valenzuela, in his then-role as research director of Chiron Corp. Chiron was acquired by Novartis AGÂ (NVS, Financial) in 2006. These events are arguably two of the most important steps forward in health care in recent history and have served to dramatically reduce the rate and spread of HBV in developed nations.
This hasn’t solved the problem entirely.
Through access issues and nonvaccination and for a variety of other reasons, hepatitis B remains a major issue globally. Research suggests there are more than 240 million people globally living with chronic hepatitis B and that the condition causes more than 1 million deaths per year from related liver failure and liver cancer.
The current standard of care treatment regimen for chronic hepatitis B sufferers is antiviral therapy. In similar fashion to that of the HIV standard of care treatment, the goal of this type of therapy is the inhibition of viral reproduction. Reduced or inhibited reproduction results in a reduced viral load that leads to a slowed (not stopped) progression in liver-related complications that arise through long-term HBV exposure.
Antivirals are effective for slowing disease progression, but there are a couple of major issues with this sort of treatment.
The first, and primary, is resistance. Nearly all chronic hepatitis B sufferers will become resistant to a particular antiviral over time, in much the same way as HIV sufferers find particular antivirals aren’t able to effectively reduce viral load after extended treatment periods.
The second is toxicity and side effects. Take Gilead Sciences' (GILD, Financial) Viread, for example. Viread has long been the gold standard in chronic hepatitis B antiviral therapy, but it has a pretty nasty tolerability profile associated with it. The inefficient delivery of its active compound, tenofovir, leads to buildup in the blood, which leads to kidney issues, bone weakening, liver damage (even though that is what it is ultimately there to stop) and more.
So what's the answer?
Gilead picked up an approval for a second antiviral, a drug called Vemlidy, in November 2016. Vemlidy is similar in its antiviral mechanism to Viread (almost exactly the same, in fact), but it delivers the tenofovir to liver cells far more efficiently than its predecessor. This allows for a dramatically reduced dosing level and a cleaner toxicity profile. Because of the similarity in mechanism, though, there's no benefit to combining the two drugs, and there's a very high chance that a patient who is resistant to one will be resistant to the other.
So Vemlidy only solves half the problem.
The other half of the problem requires an alternate approach to suppression.
There are a few ways to do this. The gold standard is inhibition of what's called cccDNA. This is often referred to as an indestructible minichromosome, and it's responsible for the virus' ability to continue to produce virus particles in infected liver cells, even in people being treated. Right now that's a long way off. The research arm of the Hepatitis B Foundation is working on it, but it's nowhere near the clinic.
The second approach is to go after the virus with a different mechanism of antiviral action. Viread inhibits nucleoside reverse transcriptase, an enzyme that facilitates viral replication. Vemlidy does the same. There's also evidence that a combination of two or more antivirals, or an antiviral and an asset with an alternative mechanism, could contribute to increased suppression, meaning not only might an alternate approach reduce the risk of resistance, but it might also improve the efficacy of the regimen.
For biotechnology companies, this approach is the next big opportunity in hepatitis B therapy, and of course, it's not gone unrecognized. A number of companies are working on this sort of alternate mechanism approach right now.
That’s where Spring Bank and SB 9200 come in. Its mechanism of action targets the clearance of what's called HBSAG. HBSAG is the surface antigen of the hepatitis B virus and it is currently used as the indicator of presence and severity of HBV infection.
As mentioned, the company just put out data from a Phase IIA study. SB-9200 demonstrated a statistically significant reduction in HBV DNA at week 12, which was the primary efficacy endpoint as compared to placebo. SB-9200 will be trialed for the extremely lucrative HCV market as well, and Spring Bank is aiming to achieve a functional cure for the virus.
Spring Bank is one of a number working to this aim, but for the company that manages to get to market with an asset of this type, there's a billion-dollar opportunity to serve as a mono or combo therapy alongside current standards of care.
Disclosure: The author does not own any of the stocks discussed in this article and does not intend to open a position in any stocks discussed within the next 30 days.
