Future Vaccine Growth Could Come From Recent Biotech Entrants – Tufts

The potential to create novel, innovative products has made the vaccine market more attractive in recent years, drawing new entrants as well as a resurgence of interest from traditional vaccine manufacturers, Tufts Center for the Study of Drug Development Director Kenneth Kaitin suggests.

"Vaccines is one area where many companies are looking and saying, 'you know if we make this part of our portfolio, we have a good opportunity to come up with a product that nobody else has got on the market.' The perfect example is the approval of [Merck's Gardasil ] for cervical cancer," Kaitin said in an interview with "The Pink Sheet."

"There's a huge market potential for these products because so many other companies have been out of this area for so long that if you could be one of the leaders, early leaders in this area you have a good opportunity to make a wise business decision and have a profitable product," he pointed out.

Several companies with a vaccines component have been taking advantage of the space left in the vaccines arena, building their vaccines business at the same times that other firms exit.

According to a report on the vaccine R&D issued by the CSDD, the vaccines landscape is "in flux" as the companies involved and the pathogens targeted change. Although the number of companies involved hasn't changed, the composition has had significant turnover: "twenty-one (55%) of the companies that studied new vaccines in the 1990s were no longer doing so in the 2000s due to shifts in their R&D priorities," the July/August Impact Report states.

Kaitin said that companies dropped out because "they couldn't sustain any kind of reasonable growth" due to development and liability challenges. "The reason why the companies of the past dropped out is that...many of those companies were focusing on childhood diseases and some of the more traditional vaccines that have over the years demonstrated a considerable degree of difficulty reaching the marketplace."

At the beginning of this decade, however, "when opportunities arose for smaller biotech companies to get involved in the vaccine area for bioterrorism countermeasures, that generated a lot of new interest and now we're seeing many of those companies bringing products into early development," Kaitin said.

While biotechs are joining the fray, large pharma companies continue to dominate the market, including Merck, Sanofi-Aventis, GlaxoSmithKline, Wyeth and Novartis with its recent purchase of Chiron (see ¹ (Also see "Novartis’ New Vaccine Division Takes On Evolving Market" - Pink Sheet, 31 Jul, 2006.)).

Several of these major pharmaceuticals have played up the role of vaccines in their business in the last couple years, emphasizing their vaccine pipelines and manufacturing capacities.

At the beginning of the year, CEO J.P. Garnier touted that GSK was tied with Sanofi as the top vaccine manufacturer, noting that GSK "came from nowhere, but through the power of innovation, we conquered our place under the sun" (² (Also see "GSK Takes “Blank Check” Approach To Pursuit Of Biotech Agreements" - Pink Sheet, 16 Jan, 2006.), p. 17). Sanofi has said that it intends to double its vaccine arm in the next five years (³ , p. 9).

Merck has had three major vaccine approvals already this year - the human papillomavirus vaccine Gardasil , Rotateq for rotavirus and the shingles vaccine Zostavax (⁴ (Also see "Gardasil Clears FDA, But Dosing May Pose Administrative Challenges" - Pink Sheet, 12 Jun, 2006.), p. 3).

During their second quarter earnings release, Merck reported that its vaccine business grew 41% quarter over quarter, and GSK announced its vaccine segment was up 17% (35% in the U.S.).

The Tufts CSDD report also notes that, similar to the turnover in vaccine firms, there has been significant change in target selection, with 40% of the vaccines being studied in the 2000s targeting pathogens that were not targeted in the preceding decade.

"The trend towards looking at new pathogens is in large part stimulated by the current interest in neglected disease as well as organisms that could be components of a bioterrorism attack," Kaitin said.

Vaccine development has expanded modestly in the past five years, the report finds. "The number of anti-infective vaccines entering clinical study averaged 14 per year during 2000-05, a slight increase over the 12-per-year rate of the 1990s."

Overall, the vaccine pipeline is mostly filled with products in the early phases of development. According to the report, over half of the anti-infective vaccines in clinical development are in Phase I and a third are in Phase II.

Although vaccine approvals picked up in the last year, with three approvals thus far in 2006 and four in 2005 (compared to none in 2004 or 2003, two in 2002, one in 2001 and one in 2000), and a number of vaccines under review at FDA or slated for submission by year-end, vaccines have fallen behind other biologics in terms of approvals.

Fifteen new vaccines were approved from 1996 to 2005, fewer than one-fourth of the number of new biopharmaceuticals approved in the same period, CSDD Senior Research Fellow Janice Reichert noted in an article in the July issue of Trends in Biotechnology. [Editor's Note: Trends in Biotechnology and F-D-C Reports, publisher of "The Pink Sheet," are both owned by Reed Elsevier.]

Thus far, there hasn't been much change in the types of vaccines reaching the market. "The distribution of antiviral, antibacterial and other anti-infective vaccines in clinical development was consistent between 1990-99 and 2000-05, with antiviral products comprising the majority," the CSDD vaccine report states. Antiviral vaccines also had a higher approval success rate.

Certain products were excluded from CSDD's analysis for practical reasons. In particular, flu vaccines were not included because they do not follow the standard development and approval process.

While the Impact Report discusses advances in biotechnology over the past 25 years that "have greatly expanded the choices available for vaccine composition and method of production," it may still be quite some time before that translates into increases in the number of vaccines entering the clinic.

"I would have to say it could be 10 years before advances in the science translate into significantly more vaccines in the clinical pipeline," Reichert said.

Kaitin agreed that increases will take time, noting that while future possible growth in vaccine development could be spurred by products from biotechs new to the area, "it's easily going to be another five to seven or eight years before we start seeing the results of all of this activity."

The new emphasis on vaccine development, by new players and old manufacturers alike, is more focused on identifying innovative vaccines than in previous periods. During 1996-2005, when 15 new vaccines were approved, "only four of the 15 vaccines were indicated for a previously unmet medical need," according to the Trends article.

The HPV/cervical cancer vaccines (Gardasil and GSK's upcoming Cervarix ) can certainly be viewed as the next wave of innovative vaccines. Merck's shingles vaccine Zostavax was also a first-of-its-kind approval. A smallpox vaccine, Acambis' ACAM2000, is currently undergoing FDA review.

The "twin threats of the global spread of infectious diseases and potential bioterrorism" may also drive vaccine development in new areas, Reichert told "The Pink Sheet." Government support, especially National Institutes of Health funding, has "encouraged small firms to work on new/innovative vaccines," she said.

Bioterror concerns, global health threats such as pandemic flu, and the flu vaccine shortages in recent years have served to raise the profile of the vaccine market, and fostered new debate on the government's role in funding and purchasing.

Reichert attributed the low level of novel vaccines to a lack of market incentives. "Few new vaccines have been approved in the past 10 years owing, at least in part, to the lack of incentives for the development of such products," she maintains in the Trends article.

"Low return on investment also adversely affects innovative vaccine development. Vaccine research, development and manufacturing requirements are similar to those of therapeutics, but vaccines generally are cheaper and are administered in smaller and fewer doses compared to most therapeutics, particularly those for chronic conditions," she said. "Therefore, investment in vaccine product development is less attractive than that for therapeutics."

Innovative vaccines also carry a higher level of risk than incremental improvements for previously approved vaccines, Reichert added. Safety is especially a concern with vaccines. Another factor is that the market for innovative vaccines is unclear - unlike childhood vaccines with government recommendations where the market is "well established and understood," she noted.

To further investment in innovative vaccines, Reichert suggested that the Vaccine Injury Compensation Program be expanded "to include innovative vaccines intended for any age group." She also suggests creating "incentives for vaccine development intended for small U.S. markets."