Wednesday, March 7, 2007

Late but spirited, NovaVax enters avian flu vaccine race

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Charles E. Shoemaker⁄The Gazette
Rick Bright (left), vice president of global influenza programs, and CEO Rahul Singhvi say NovaVax’s avian flu vaccine will be superior to those produced by bigger biopharma companies.
Analysts say the odds are against NovaVax Inc. producing either the first or the best avian flu vaccine in case of a global pandemic.

But officials with the small biopharma company that’s moving to Rockville from Pennsylvania say they can beat the odds.

‘‘Our plan is to validate the technology through phase 1 and 2 clinical trials to demonstrate the safety and efficacy and to partner with big pharma or biotech companies because we are going for big market opportunities,” CEO Rahul Singhvi said in a recent earnings conference call. He told shareholders that the company’s vaccine technology and manufacturing would eventually prove to be superior to other methods.

The World Health Organization reports that 16 vaccine-makers, including some of the biggest pharmaceutical firms in the world, are already advancing vaccines against the deadly H5N1 avian flu virus in more than 40 human clinical trials in 10 countries.

So far, the NovaVax vaccine has protected ferrets and mice in pre-clinical tests.

The company plans to start human trials by midyear.

Instead of using a conventional method of culturing its vaccine in chicken eggs, NovaVax has developed a recombinant DNA technology called VLT to make vaccines from particles of flu viruses grown in cultures of insect cell cultures.

Positive test results on animals published in January and February show that NovaVax’s vaccines, for both the avian flu and seasonal flu, could deliver protection in humans to multiple strains.

Therein lies much of Singhvi’s confidence in his vaccines, because flu viruses mutate readily.

The avian virus ‘‘is an evolving strain and the government will be the customer,” Singhvi said. ‘‘Big pharma is into it. But with our recombinant technology we can quickly respond to the evolving strain. A vaccine with high fidelity, it is potentially cross-protective.‘‘

Flu vaccines made from cell cultures instead of eggs would provide failsafe manufacturing if the avian flu infects much of the nation’s chicken population, said Gary Nabel, director of the Vaccine Research Center at the National Institute of Infectious and Allergic Diseases in Bethesda. Most of the current, large-scale manufacturing of seasonal flu vaccine and the most advanced pandemic flu vaccine, from Sanofi-Aventis, are egg-based, he said.

‘‘With cell cultures, you also have more control over the timing of when you make the product,” Nabel said.

Ken Trbovich, a specialty pharmaceutical analyst for RBC Capital Markets, said Singhvi deserves credit for rescuing NovaVax from bankruptcy several years ago.

‘‘He made the most of those assets, but now he has a greater challenge to go forward,” Trbovich said.

Fear spawns rebirth

Trbovich said fear of pandemic flu has given NovaVax new life.

In the past five years, 277 human infections and 167 deaths have been linked to outbreaks of the H5N1 virus in poultry in 12 nations of Asia and Africa. The cases have heightened concerns for a human flu pandemic.

Although no cases of a human infecting another human have been reported, epidemiologists say vaccines would be the best option to stop the virus if it mutates into a contagious human strain.

Part of the new challenge for Singhvi, Trbovich said, is to ‘‘accelerate a business that is already behind the pack.” While Singhvi ‘‘tends to be excessively exuberant,” NovaVax’s animal data are impressive and the technology is intriguing, he said.

There is little chance that the company will be purchased by a larger pharma until it has had some clinical success, Trbovich said. But a partnership with a larger company is more likely because NovaVax will have difficulty paying for a complete set of clinical trials, he said.

For the third quarter of 2006, the company reported a net loss of $5 million, compared with a loss of $2.7 million for the same period in 2005. At the end of 2006, it had $75 million in cash.

‘‘Our revenues are not close to what we will need,” Singhvi acknowledged. ‘‘We are focused on proof of concept as quickly as possible, then there will be more investments.”

NovaVax has moved about 50 of its 70 employees from Malern, Pa., to a 50,000-square-foot laboratory and office space leased from Human Genome Sciences Inc. in Rockville.

The move is strategic, said Rick Bright, vice president of global influenza programs.

‘‘If we are to be successful company, we need to have most of our researchers under the same roof,” Bright said. Singhvi said being close to federal laboratories is also critically important.

But that proximity did not help NovaVax with the latest round of $132 million in federal funding for developing a pandemic flu vaccine. Swiss pharmaceutical giant Novartis received $55 million and GlaxoSmithKline received $63.3 million from the Department of Health and Human Services. And Iomai Corp., a relatively small biopharma in Gaithersburg, received a grant of $14.5 million to develop a skin patch that could be used with flu vaccines.

NovaVax immediately issued a statement to calm its investors, saying its flu vaccine program is ‘‘progressing as planned and will not be impacted by the latest round of government funding.‘‘

‘‘We figured that the government has taken a very low-risk approach to this,” Singhvi said. ‘‘The government is attracted to [large pharma], but it may not be the best strategy for them.”

This report originally appeared in The Business Gazette.