H1N1 Vaccines Get Green Light In U.S., But Is Anything Else Needed?

Here comes the swine flu again, but this time tens of millions of people could be immunized thanks to the first round of vaccines due in mid-October.

If the efficacy and safety data hold up, and upcoming trial data for children and pregnant women are equally impressive, the vaccine program is excellent news for public health. It's good news, too, for the first four vaccine makers to win FDA approval: Sanofi-Aventis, Novartis, CSL Biotherapies and AstraZeneca.

Their H1N1 vaccines were approved Sept. 15, making them the most obvious and direct beneficiaries of what some like to call the "swine-flu bubble." They're expected to supply 95 percent of the 195 million total doses ordered by the U.S. government. Novartis has the largest slice, with a $496 million contract.

The Obama administration said earlier this year it would spend $1.5 billion on its emergency H1N1 flu program, and other countries have followed suit (¹ (Also see "Flu Vaccine Funds From Gov’t Could Help Firms Upgrade Production Facilities" - Pink Sheet, 25 May, 2009.)). The 850 million to 900 million H1N1 vaccine doses that the World Health Organization estimates governments have pledged to purchase could add up to $6.3 billion in sales.

That's according to analysts at Boston investment bank Leerink Swann in a report issued Sept. 9. Relative to the rest of Big Pharma's business, however, H1N1 represents "a modest near-term revenue opportunity," according to Leerink's Seamus Fernandez.

The fifth firm with a U.S. vaccine contract, GlaxoSmithKline, has not yet received approval. GSK's main customer is the United Kingdom, which has ordered 132 million doses. Glaxo is working on an adjuvanted vaccine, while the other four U.S. suppliers do not include adjuvant.

The other obvious beneficiaries so far are Roche and Glaxo, the makers of antiviral medicines being stockpiled by governments. Whether smaller firms with vaccines and antivirals in development can also cash in remains to be seen; so far, any successes among smaller players have related to development and fundraising.

It's happier still for everyone if demand never peaks because H1N1, officially declared a pandemic in June, remains a relatively mild strain and ends its world tour this fall. So far, it has infected many people outside of the traditional flu season, but on the whole hasn't make them grievously ill. That's cold comfort to those who have died - more than 300 so far in the U.S., at least 3,200 worldwide - but compared to the regular seasonal flu that kills on average 36,000 people a year in the U.S. alone, H1N1 is not extraordinary.

But influenza is notoriously fickle and swaps genes constantly; hence the need for a new vaccine every year. Today's relatively mild H1N1 could mutate in unexpected ways. One possible outcome offered last month by the President's Council of Advisors on Science and Technology posited 30,000 to 90,000 U.S. deaths, many among younger people not usually laid low by the flu. (PCAST emphasized this was a "planning scenario," not a prediction.)

Governments are also stockpiling antiviral medicines that work to ease flu symptoms once a patient gets sick. Roche is the big winner for its blockbuster pill Tamiflu (oseltamivir), with Gilead Sciences grabbing a royalty that ranges from 14 to 22 percent of sales. GSK is also in the mix with Relenza (zanamivir), a nasal spray. Fears of resistance and other factors, however, could drive health officials to seek alternatives. In the short term, there aren't any, but a few biotechs are pushing quickly through the pipeline.

It remains to be seen how much, if any, of the vaccine or antiviral business will go to smaller biotechs. None has any significant purchase contracts, though a few are working to give the government what it wants.

On the vaccine side, Novavax of Malvern, Penn., has dosed ferrets with a recombinant H1N1 vaccine designed with what it calls "virus-like particle" technology. It has not begun human trials.

In April, Novavax sold $11 million in stock at 88 cents a share and used the proceeds to pay off debt early. Its stock then rose all summer, hitting a high of $7.79 on Sept. 1. On Sept. 15, Novavax said it would raise $10 million more in stock sales, and the stock is now trading below $5 a share.

With so much attention on the swine flu, doctors worry that antivirals will be overprescribed. "It's a matter of time until we see wild type resistance," said Sheldon Kaplan, head of the department of medicine at Texas Children's Hospital in Houston.

That's the nature of the flu virus, so it makes little sense for humans to boost the chance of that resistance by overprescribing, he said: "Some people argue that maybe if we treated everyone it would help decrease the spread," but the risk of speeding up resistance - not to mention spending money unnecessarily - should outweigh that argument.

Of course, drug makers will continue to promote their products. Tamiflu maker Roche touted studies at the recent Interscience Conference on Antimicrobial Agents and Chemotherapy microbiology conference in San Francisco that Tamiflu improved survival of patients with H5N1 - the so-called avian flu - compared to patients left untreated, and it reduced deaths by 37 percent in severely at-risk patients with the seasonal flu compared to those who received no antiviral treatment.

Roche's aptly-named pandemic task force leader David Reddy prefaced the conference with the warning that "people who don't have severe symptoms don't generally require antivirals" and that "prophylaxis" - giving the drugs proactively before someone appears ill - "should be reserved for people in contact with the virus."

With so much of the world's stockpile invested in Tamiflu and Relenza, alternatives would be welcome. The biotech best poised to capitalize is BioCryst Pharmaceuticals in Birmingham, Ala. Its antiviral peramivir is under consideration for emergency-use approval to add to the government's stockpile.

Like Tamiflu and Relenza, it's a neurominidase inhibitor, but it's administered intravenously, not in a pill or nasal spray, which could be crucial for severely ill patients. BioCryst has signed up Shionogi & Co. as its Japanese partner, which plans to file for approval there before the end of the year.

Like other public flu-associated biotechs, its stock has enjoyed the halo effect of H1N1 and is up more than four-fold since April. But its reliance upon peramivir and the government as a customer is a sticking point. The firm just announced, albeit rather stealthily, that if it gets a government order for peramivir, it might not be profitable. The admission was actually a disclaimer tucked into the forward-looking statement in a Sept. 15 press release.

BioCryst is notable for another reason: it's the crown jewel in venture firm Kleiner Perkins Caulfield & Byers's $200 million pandemic fund, which the investment firm launched in 2006. It's the only fund dedicated to emerging infectious disease (the full name is the "Pandemic Preparedness and BioDefense Initiative") and has nine companies in the portfolio, two of which are public: BioCryst and Novavax.

The fund launched with a goal of 10 to 12 investments and the hope of enticing other investors to the sector. It has made at least 10 investments by participating in a second round with portfolio firm Juvaris BioTherapeutics, which is working on a universal flu vaccine. Kleiner partners did not return requests for comment.

Beyond H1N1, vaccine makers are also seeing a bump in seasonal flu vaccine sales (see ² (Also see "Amid Swine Flu Hype, Seasonal Flu Vaccinations Are Off To Swift Start" - Pink Sheet, 21 Sep, 2009.)). U.S. health officials from HHS secretary Kathleen Sebeluis on down take every opportunity to remind Americans to get a regular flu shot, although it's not a unanimous recommendation around the world.

A flu specialist at Quebec's National Institute of Public Health said his province hadn't yet officially determined whether to recommend a seasonal flu shot in addition to the H1N1 vaccine, because H1N1 quickly became the dominant strain in the Southern Hemisphere and to date is showing the same dominance in recent Northern Hemisphere cases.

With all the talk of vaccines and antivirals, what many doctors and experts would like to see is a rapid diagnostic that can distinguish between different strains of flu or between the flu and other bugs that provoke flu-like symptoms.

"There is a role to play for reliable, inexpensive diagnostic tools in the clinic," said Jennifer Nuzzo, an epidemiologist and an associate with the University of Pittsburgh Medical Center's Center for Biosecurity. "With a test you can rule things in or out."

Current rapid tests have earned the criticism of the Centers for Disease Control, whose officials have noted their high rate of false negative results. More reliable testing could also cut down on the consequences of panicky decisions during a pandemic.

For example, Nuzzo said, "There could be a lot more bugs out there we're lumping in as the flu," which leads to overprescription of antivirals and in turn to viral resistance. And for anyone who's been quarantined, an accurate test might be the difference between being detained for a couple days and getting on a plane.

- Alex Lash ( ³ [email protected] )