Are There Any Small Biotechnology Companies With An Answer To The Zika Virus Question?

Feb. 4.16 | About: Hemispherx Biopharma, (HEB)


The Zika virus is an emerging human health concern and appears to be spreading rapidly through South America, the Caribbean, and Central America.

There is currently no vaccine against Zika, nor is there an effective treatment once a person is infected.

The World Health Organization met during the week of January 25, 2016 to begin to marshal world resources to manage the Zika outbreak.

What will the economic impact of Zika disease be on the Summer Olympic Games going on in Brazil during 2016?

Are there any favorable options for investors?

Let's Start with a Straightforward Question:

Are there any biotechnology or biopharma companies with a viable treatment or vaccine for the Zika virus right now?

The Apparent Answer Is:

At present, and probably through at least the end of 2016, possibly longer, there are no biotechnology or biopharma companies with a viable treatment or vaccine for the Zika virus.

This appears to be a fact - and facts like this are truly annoying things when potential investors are so obviously looking for a more satisfying answer. The medical and public health communities are also scrambling for answers to the emerging Zika problem. The epicenter of the Zika epidemic appears to be in Brazil. For those not aware, Brazil (specifically Rio de Janeiro) will soon be hosting the 2016 Summer Olympics, and is expecting a huge influx of tourists, and of tourist spending. Fear of Zika will only add to concerns that already existed in Brazil about other emerging diseases (for example Dengue Fever) that are causing significant human morbidity and some increased mortality in that region. A company that can produce an effective treatment or preventative against the Zika virus has a wide-open field ahead of it.

I will use the remainder of this article to review some of the characteristics of the Zika virus, to touch on its origin, its natural history and genetics, to attempt to review how it has recently emerged as an epidemic, and to give an overview of a selection of smaller companies that could be viewed as players on this field. I do not intend this to be an exhaustive listing.

What is Zika Virus, What is it Most Similar to, and Why Is This Virus Becoming a Significant Public Health Concern?

The Virus and Its Relatives:

The Zika virus was initially discovered in Uganda during 1947, and is a mosquito-borne virus in the genus Flavivirus. The genus Flavivirus includes several other viruses that cause human disease like Yellow Fever, Dengue Fever, Chikungunya, West Nile Fever, and (of course) Zika. Zika is transmitted by mosquitos in the genus Aedes, which have recently expanded in distribution and into new environmental zones. In part, the expansion of the ranges of these mosquitos and their easy adaptation to living with human communities helps to in part explain the recent expansion of the range of these Flavivirus diseases.

Members of the genus Flavivirus all have a similar structure (above) and possess a similar set of surface proteins. They require these surface proteins in order be recognized by and to gain entry into their target cells. The "E" and "M" proteins are names given to these two proteins (figure above). From what is understood about these viruses from studies of Dengue and West Nile, it is the "E" protein that appears to be directly involved in binding to and in recognizing the cell surface proteins that the viruses use to gain entry into target cells. These two proteins are also the most likely targets for vaccine development, or for antigen binding as they are exposed on the surface of the virus. In order to gain entry into target cells, these "E" proteins bind to another set of proteins on the target cell that is involved in Clathrin-mediated endocytosis (figure below). Once the virus gains entry to a target cell, it can initiate its infective cycle, begin reproducing, and cause disease.

Click to enlarge

Recent Developments in the Scope and Severity of Zika-related Disease:

Since the initial characterization of the Zika virus in the 1940s, its recognized geographic range had expanded slowly from Africa and throughout much Asia. Generally, Zika causes only mild symptoms in humans, and primarily was seen as a disease affecting wild primates. Zika reached Micronesia in the mid-2000s, and spread into Brazil during the last few years. During most of this time, cases of Zika were only reported sporadically and there was no sign of it developing into an epidemic problem. It was only during the past few years, as Zika expanded into South America, that it appears to have increased its epidemic potential. Zika is currently actively transmitted by mosquitos in at least 24 nations across Central and South America, Mexico, in the Caribbean, in Samoa and in the Cape Verde islands. A first case of Zika virus transmitted in the USA was very recently (February, 2) eported, although it appears that this particular infection was spread through sexual contact with an infected person, and not via a mosquito vector. This potential pathway for spread of the virus will need to receive additional study to determine the potential added danger of sexual transmission in its disease epidemiology.

The developing world-wide pandemic of Zika spread relatively quietly into Brazil and then into other South American, Caribbean, and Central American countries in large part because Zika has been a mild or asymptomatic Dengue-Fever like disease. Its direct impact didn't initially trigger Public Health Organization alarms. Many people who have antibodies against Zika have been essentially asymptomatic. When it is symptomatic, Zika causes a mild dengue-like disease characterized by muscle aches, fever, eye pain and a localized rash. The disease has not been shown to result in hemorrhagic fever or death in affected humans.

Since Zika itself causes only relatively mild symptoms in most people and has not been associated with significant human mortality; why is it then that organizations like WHO and the CDC have taken their recent emergency actions concerning Zika virus and its spread?.

The focus of the concern from a human health standpoint comes from realization that women exposed to the Zika virus during pregnancy may have a significantly increased chance of having children with a birth defect known as microcephaly. Since this last November there have been at least 4100 reported cases of microcephaly in Brazil. During 2014, there were only about 140 total reported cases of microcephaly in Brazil; a dramatic increase in this condition that is very closely correlated with the increased recognition of the Zika virus in this country. Similar increases in microcephaly are being reported from a variety of other Central American and Caribbean nations. This condition causes profound defects in brain development, and in many cases the affected children will die very young, or require intensive care throughout their lives.

There is also an upswing in Guillain-Barré syndrome in these countries that may be linked to the upsurge in Zika infection. Guillain-Barré syndrome was associated with Swine Flu immunizations in the United states during the mid-1970s, and is a rare autoimmune disorder that can lead to life-threatening paralysis.

So - to get back to a variation on my initial question: If nobody has an effective vaccine or treatment for Zika now -are there any traded companies who could develop treatments or vaccines in the foreseeable future?

The World Health Organization met during the week of January 25, 2016 to discuss options and to work to coordinate efforts among health and scientific communities to combat the Zika virus. During that week two of the world's major vaccine producing companies GlaxoSmithKline (NYSE:GSK) and Sanofi Pasteur (NYSE:SNY) announced that they were looking into what it would take to begin developing a Zika vaccine. However, both of these pharmaceutical giants are only at the very early stages of vaccine design, and each suggests that they will not have an effective and safe vaccine for Zika for a year or more. A few other, smaller, companies have indicated that they will be working on development of a Zika vaccine or treatment. Some of these smaller companies are indicating that they will have a potential product that could be available for emergency use by the Fall of 2016. For the remainder of this article I will focus on four of these smaller biopharma companies that receive relatively low analyst coverage.


Inovio Pharmaceuticals (NASDAQ:INO) - why might INO be considered a viable contender to produce a treatment for Zika?

Inovio has a base technology (SynCon® immunotherapy technology) centered on a plasmid DNA (pDNA) delivery system with closed circles of injected DNAs that code for antigen target proteins. Once the pDNA is taken up by the target cells, it can then produce that encoded antigens. INO uses this system to deliver antigen targets against cancers or infective diseases that can then activate strong T-cell immune reaction responses. Inovio couples their SynCon constructs with an electroporation delivery technology to get their constructs into target tissues. INO's primary focus is in HPV-related cancers and pre-cancers, but they also have programs under development for a variety of human viral diseases.

INO is an interesting case. INO has an existing partnership with a South Korean company (GeneOne) and has previously announced that they are collaborating with GeneOne in developing a vaccine against MERS (Middle-East Respiratory Syndrome) virus, and against Ebola virus. On January 25, 2016 - true to what appears to be their form, INO announced that they would be working with GeneOne to develop a vaccine against Zika. Both of the DNA-based vaccines against MERS and Ebola are indicated in this same PR currently undergoing preclinical testing - in preparation for Phase I testing. In fact - a quick review of the Inovio corporate website indicates that Inovio has yet to get any of their prospecting vaccines or treatments for infectious diseases past Phase I testing.

Added as Edit: INO's MERS and Ebola vaccine candidates have reached Phase I testing - my thanks to the readers who have vigorously pointed out my error.

As pointed out in a recent (and justifiably skeptical in my opinion) Seeking Alpha article - "This is the third time in two years that INO and GeneOne collaborate [on a new vaccine candidate] right in the middle of an emerging media frenzy. These are too many coincidences for me, and that thought informs my take on the situation. [my clarification added]

I find myself in general agreement here with Mr. Santos (the author of that article). While INO may be good for a trading bounce or two while the Zika virus crisis remains in the news, there is no obvious track-record that suggests that INO and their South Korean partner will be able to deliver a vaccine against Zika in a useful time-frame. The fact that their existing vaccine candidates against MERS and Ebola are apparently still mired in pre-clinical testing and are not yet being positioned for Phase I testing more than a year after each was similarly PRed, is not a point in their favor. It is doubtful that INO can deliver a Zika vaccine in a useful time-frame.

I don't intend to disparage the long-term potential of INO - as their DNA-based vaccine platform does appear to have great potential. I just don't think that potential is going to be realized for investors in the short-term (within the next year or two) by developing a vaccine against Zika.

Vical Inc. (NASDAQ:VICL) - why might VICL be considered a viable contender to produce a treatment for Zika?

VICL (like Inovio) has a base technology centered on a plasmid DNA (pDNA) delivery system with closed circles of injected DNAs that encode a protein of interest. Once the pDNA is taken up by the target cells, it can then produce that encoded protein. VICL intends to use this system to deliver a range of infectious disease vaccines, cancer vaccines and therapeutic proteins, and to deliver growth factors to stimulate tissue repair.

The other piece of VICL's core technology is a novel lipid-based formula adjuvant (Vaxfectin®) intended to enhance delivery and uptake of their pDNAs into their target cells. Vical has already begun to use this adjuvant in a vaccine candidate against cytomegalovirus infection that has completed a Phase III test. The results of this Phase III study have not been posted. Vical has also entered into a license with Bristol-Myers Squibb to use Vaxfectin and their DNA immunization technology for therapeutic use in humans.

What Makes VICL Relevant as a Zika play? During 2012 VICL did work with a tetravalent dengue vaccine (TVDV) as a plasmid DNA-based infectious disease treatment. They conducted a Phase I clinical test for the prevention of all 4 dengue virus serotypes. Vical manufactured TVDV under contract with the Naval Medical Research Center (NMRC), who conducted the Phase 1 testing of this vaccine. The test also used Vical's proprietary adjuvant formulation, Vaxfectin®, to increase uptake and immune responses.

U.S. Navy Advances Dengue DNA Vaccine Using Vical's Vaxfectin® Adjuvant -"Under a prior Collaborative Research and Development Agreement (CRADA) with Vical, NMRC developed a tetravalent DNA vaccine (TVDV) containing genes encoding the pre-membrane (prM) and envelope or "E" proteins for all four serotypes of dengue virus."

While the results of this basic safety testing appeared promising, I cannot find evidence that it has been continued after the Phase I testing. Phase I results were reported as completed during December 2013. The fact that Vical has done some work with developing a vaccine against the related Dengue viruses could give them a head start in vaccine development for Zika. However, VICL should also only be considered as a longer-term or speculative play, with a window to produce an effective vaccine against Zika of a year or more.

Hemispherx Biopharma, Inc. (NYSEMKT:HEB) - why might HEB be considered a viable contender to produce a treatment for Zika?

HEB is a biopharma that has been around for a number of years, and that has a very up & (mostly) down history. I have a small holding of HEB that I acquired at the beginning of 2015 when pre-clinical results were announced that suggested that HEB's Ampligen showed high efficacy against Ebola virus. I - regretfully - still hold this small position. Share prices have dropped from my entry point at ~$0.22/share down to the current trading range of around $0.09/share since early 2015.

HEB produces sets of candidate treatments for viral and immune disorders. HEB's primary products are their Alferon N Injection® (interferon) and an experimental synthetic double-stranded RNA (dsRNA) molecule (Ampligen® - poly I:poly C12U) that is being developed as a general treatment to suppress viral diseases. Ampligen has been used with mixed success as a treatment for Chronic Fatigue Syndrome, or CFS, and was considered safe enough and efficacious enough in Phase I and Phase II testing to progress to a long & ongoing Phase III Clinical Trial as a treatment for CFS.

Ampligen was also used with some success in pre-clinical testing against Ebola virus at the end of 2014 and early 2015. Ampligen has been used in a large number of early clinical trials, but as yet has not been approved by the FDA as a treatment for any specific disease or medical condition. This lack of FDA approval is one of a long list of reasons why Hemispherx continues to stagnate as an investment into 2016.

In a recent PR, HEB announced that they would be expanding the use of their experimental Ampligen drug as an early onset antiviral treatment for a range of viruses, including Zika. Hemispherx's previous pre-clinical studies of Ampligen indicate that Ampligen has shown activity against member of the flavivirus family. Now HEB intends to pursue testing of Ampligen against Zika. There are no published details as yet as to how HEB intends to pursue these studies, and not even a rough timeline for this has been published. Interested potential investors and traders should keep a watchful eye for progress by HEB on this front.

HEB might have one advantage here over their competition (INO, VICL and even over GSK and SNY) - Ampligen already exists, no additional set-up R&D would need to be done, and Ampligen could be made available for pre-clinical testing against Zika very rapidly if that an appropriate clinical partner to do that testing can be found. HEB is worth watching as a market play against Zika this Spring and Summer. Prospective investors should always maintain a healthy dose of skepticism before committing their investment money to HEB. However, if a working partnership with a credible clinical partner is announced, HEB could see a very sizable price appreciation during 2016 as speculators join in.

Nanoviricides Inc. (NYSEMKT:NNVC) - why might NNVC be considered a viable contender to produce a treatment for Zika?

NNVC is a company I have reviewed extensively for Seeking Alpha. For those interested in viewing the corporate details for NNVC outside of the scope of this article, I invite you to review my contributor history. I personally have a significant long holding in NNVC purchased in phases since 2009; with my latest purchase occurring only a few weeks ago.

NNVC does not have a program directed at developing antivirals against Zika. In fact, management has to this point not given any indication that they intend to develop an antiviral candidate (a 'ZikaCide') against Zika. NNVC is currently focused on two other antivirals that it is preparing for Clinical testing - a topical preparation for treating Herpes virus infections of the eye (HerpeCide), and an intravenous treatment for complicated cases of Influenza (FluCide). As a pre-revenue biopharma with limited funds and limited resources, I as a current investor in NNVC fully support NNVC's lack of Zika-based action to date.

So - why then do I include NNVC in this set of companies?

NNVC has done considerable pre-clinical development of a DengueCide (anti- Dengue Fever) antiviral in collaboration with Dr. Eva Harris at UC Berkeley. The contract with the Dr. Harris has been extended quietly over the last few years, but that work has taken a back seat to the FluCide and HerpeCide programs since 2013. During 2013, NNVC applied for and received an Orphan Drug designation for their Dengue Fever treatments from the European Medicines Agency. Long-term plans for NNVC still include development and marketing of a DengueCide drug, once the HerpeCide and FluCide drugs are into clinical testing.

Dengue is not Zika. However, the structural similarities of these related viruses, and particularly their "E" binding proteins are relatively conserved. These viral proteins cannot readily change their 3-D structure, as that structure is required in order to bind to the cellular targets the virus must bind to in order to gain entry and begin an infection. NNVC's drugs' viral specificity is gained by those drugs mimicking the structure of the viral target on its host cell and 'tricking' the virus to bind to the nanomicelle, rather than to its intended target cell. Once the virus binds to the nanoviricide, that nanoviricide can envelop and mechanically destroy that virus particle.

If Zika and Dengue use the same coat protein (the "E" protein) to fool their target cell, then a ligand bound to one of NNVC's anti-dengue drug candidates may also be able to bind to the Zika virus and may also be able to destroy Zika.

It is unknown whether, or not, the ligands that were developed to bind to Dengue virus particles could bind to Zika virus. However, it would be a straightforward process for NNVC to test this hypothesis should they be inclined. It would also require that NNVC decide that a distraction from their focus on the HerpeCide and FluCide drug candidates is of benefit to the corporate bottom line.

The biggest current limitations to NNVC being able to provide a cure to Zika are: 1) The fact that it is currently unknown whether the DenguCide drug candidates can effectively recognize and bind to Zika virus, and 2) That NNVC still is working on scaling up production batch sizes and currently can only manufacture ~500 g of any of their drug candidates. This production scale would not provide enough ZikaCide to meet demand if the Zika epidemic is as large as it appears to be. Also - management is focusing its attention elsewhere at present.

NNVC is not likely a candidate to produce an effective Zika treatment during 2016, and probably won't be doing so in 2017 ether barring a significant change in corporate focus. There are numerous other reasons to want to be an investor in NNVC. However, waiting for NNVC to develop a cure for Zika is not currently one of those reasons.

So - What Is My Take Home Message?

If there is a take home message it is most simply put this: There is not likely to be an effective biotechnological solution for Zika during 2016. Any biotechnological solutions to Zika are going to be either stumbled into unexpectedly, or will be the result of a year or two of biotechnology companies grinding away on the problem. The most effective control measures are going to be the 'old fashioned' control measures that focus on controlling mosquito populations that vector diseases like Zika, and that work to limit exposure of humans (and particularly pregnant women) to those mosquitos. The most effective means of control of the disease may be liberal use of insecticides, and diligent community public health efforts to minimize the temporary water sources that the mosquitos that vector Zika require to reproduce.

One interesting solution focused on mosquito control that I have not focused in on as part of this article is deployment of Genetically Modified Mosquitos. There is a British company (Oxitec, a subsidiary of the biotech firm Intrexon -XON) that has produced a GMO line of mosquitos. The males of these mosquitos are engineered to include a modified gene that causes their offspring to die at the larval stage. GMO males mosquitos that have been released in test areas of Brazil have resulted in a decline in mosquito populations in those areas of 90%.

It's going to be an interesting year or so while we come to grips with the Zika issue, and while we wait for longer-term solutions to be developed.

Disclosure: I am/we are long NNVC, HEB, CVM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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