About a month ago, I published this piece here at GuruFocus. It covered a biotechnology company called VBI Vaccines Inc. (VBIV, Financial), highlighting a then-recent press release that served to offer a degree of insight into what I have long regarded as a potential major inflection point for the company.
The inflection point in question relates to a pivotal program rooted in VBI's lead asset, a hepatitis B drug called Sci-B-Vac. I won't spend too much time going into the science behind the drug here, as it is something I have covered in detail in my previous coverage of the stock. Anybody looking to catch up on the nitty-gritty should check out the piece linked to above or the company's own description of the vaccine's underlying technology, available here.
To briefly outline the situation, this is a hepatitis B vaccine that is already quite widely used and is approved in a number of regions globally. It's a so-called third-generation vaccine that builds on the construction of first- and second-generation vaccines in an attempt to improve on the latter two types' immunogenicity. It does this by including multiple antigens associated with the hepatitis B virus against which it is trying to induce seroprotection in patients. The more antigens expressed by a vaccine, the more antibodies (or, perhaps more accurately, types of antibodies) the immune system of the patient in question produces. The more types of antibodies circulating, the more dramatic, in theory at least, the immune response associated with infection.
The company has plenty of evidence in place that this vaccine works and can be administered safely across the full spectrum of patient demographics, with this evidence deriving from both a mid- to late clinical trial program and the live vaccinations already administered in patients within regions in which the drug is already approved. This evidence isn't enough on its own, though, to underpin regulatory applications in the three major markets for the hepatitis B vaccine – the U.S., Canada and Europe.
In my previous coverage of this one, I highlighted that VBI had just announced that the Food and Drug Administration (FDA) in the U.S. had expressed its willingness to accept one global phase 3 program as the basis of a New Drug Application (NDA) that would also be used as the basis of registration applications in Canada and Europe. Both regulatory agencies in the aforementioned Canada and Europe had already expressed a similar willingness, and my highlighting of the company at that time was rooted in the opportunity to pick up an exposure to VBI ahead of the initiation of the program in question.
And it wasn't just because this is a drug with hundreds of millions of dollars in potential peak sales. What I regard as more important than sales potential (at this stage, at least) is the ability of the company to conduct one global program and use that program to potentially pick up approval in three major developed markets. For small to mid-biotechnology companies like VBI, the necessity to conduct multiple programs is an incredible burden on capital resources that – generally – have to come from issuing equity. Limiting the pivotal stage to just one program reduces the overall cost considerably, which removes a large portion of the risk associated with an exposure to this company ahead of any FDA decision. At the same time, the fact that it could still lead to an approval in the U.S., Europe and Canada means the reward remains constant.
In other words, the single, global program limits risk without limiting reward.
So why am I coming back to this one now?
Last month, VBI announced the protocol for the phase 3 program and, with it, gave investors and wider markets a highly detailed look at what to expect during the coming 24 months. This is something that wasn't possible before getting a green light for a single global program from all three regulatory agencies. It is also something that markets have been looking for for a long time as information with which to ascertain just how much the trial in question might cost and when it might return catalysts that could boost share price and start to reward shareholders that were willing to pick up an exposure ahead of program initiation.
What did we learn?
The company reported that the phase 3 program will consist of two phase 3 trials, each of which is designed to demonstrate the safety and efficacy of Sci-B-Vac in adult subjects ages 18 and over.
The first, which is called PROTECT, will have two primary endpoints – one set up to demonstrate that the vaccine is not inferior to the current standard of care treatment in this space, Engerix-B, and a second to demonstrate that Sci-B-Vac is superior to Engerix-B in patients aged 45 years and older.
The second, which is called CONSTANT, is designed to demonstrate the consistency and quality of the vaccine across a number of different lots and will have one primary endpoint – to demonstrate lot-to-lot consistency of immune response as measured by geometric mean concentration (GMC) of antibodies.
From a time frame perspective, we know that the company intends to initiate both clinical trials at some point during the second half of 2017, which gives us something to work with as far as when we can expect topline readouts from the studies concerned. The study will be 15 months in duration, and I expect enrollment (to a total of 4,800 patient) should be relatively quick. Why? Because this is a global study meaning geographical limitations shouldn't be a problem, and it's a vaccine trial, meaning the company isn’t actually going to vaccinate people that already have a hepatitis B infection, which means incidence rate limitations also won't be a factor.
Let's say enrollment takes three months (and this is conservative, it should be much quicker), and the company doesn't initiate the trial until December this year (again, conservative), we should see enrollment completion at some point in February. With a three-month enrollment period and a 15-month time to completion, the trial should complete at some point around February 2019, with the late first quarter being an outside estimate. VBI isn't the kind of company that is going to hold on to data for very long before reporting it meaning, by the first quarter of 2019, we should know how well the drug works in its target populations and, as a result, we should have a good idea of whether it is in line for approval in the US, Europe, and Canada.
Add a 10- to 12-month submission turnaround, and we could be looking at Sci-B-Vac on the shelves in these three regions by early 2020.
Disclosure: This author holds no positions in the stock mentioned.
