On November 15, 2012, the FDA will hold an advisory committee meeting for Dynavax's (DVAX) Heplisav, an investigational vaccine for all known subtypes of hepatitis B virus (HBV). In this report, we discuss the current market for HBV vaccines, together with relevant scientific literature and recent clinical trial results. Although we believe Heplisav will receive a positive vote at its upcoming advisory committee meeting, we remain somewhat concerned that Heplisav carries safety risks that may prevent its approval. Given the possibility that advisory committee panel members will share our concern, we see Dynavax as a fairly risky investment.
Dynavax is a clinical-stage biopharmaceutical company developing preventative and curative treatments for infectious and inflammatory diseases. Its lead product candidate, Heplisav, is a phase III investigational hepatitis B vaccine for adults between 18 and 70 years of age. Heplisav's active components consist of hepatitis B surface antigen (HBsAg) and 1018 immunostimulatory sequence (1018 ISS). Notably, current FDA-approved HBV vaccines also include HBsAg. The novelty of Heplisav is 1018 ISS, a short DNA sequence that serves as an adjuvant. In other words, 1018 ISS enhances protective immunity by activating the immune system. It carries out this function by interacting with an immune-cell receptor named Toll-Like Receptor 9 (TLR9). Due to 1018 ISS, Heplisav achieves earlier and higher protection than currently licensed hepatitis B vaccines, and does so with fewer doses.
Below we provide three reasons why Heplisav should be favorably reviewed by its advisory committee. Afterward, we outline our concerns.
Heplisav contains state-of-the-art technology
1018 ISS is novel because of the way in which it enhances immune responses to co-administrated antigens. It enhances immune responses in two ways. First, 1018 ISS promotes the production of antibodies against HBsAg, which is a trait shared among all effective hepatitis B vaccines. Second, 1018 ISS initiates cell-mediated immunity. This is an effect that cannot be fully achieved by HBsAg alone. Cell-mediated immunity is highly important for vaccination against viruses, which reside inside infected cells and consequently can be fairly inaccessible to antibodies. Additionally, for structural reasons, antibodies sometimes have difficulty binding to viruses. One example illustrating the importance of cell-mediated immunity involves human immunodeficiency virus (HIV). Many HIV-infected individuals succumb to acquired immune deficiency syndrome (AIDS), despite having high levels of anti-HIV antibodies in their blood.
Dynavax originally published on the adjuvant role of 1018 ISS in 1997. Its findings were further supported by another publication that has been cited more than 850 times. Moreover, the type of technology used in Heplisav is gaining attention from other biotech and pharmaceutical companies. The technology is also being applied toward other diseases. For example, DNA-based adjuvants have recently been evaluated for the influenza virus and cancer.
Heplisav has higher efficacy than existing HBV vaccines
Dynavax has completed four clinical trials comparing Heplisav with Engerix-B. In each of these trials, relative to Engerix-B, Heplisav protected a significantly greater proportion of subjects (95% vs 81% in healthy adults 18 to 55 years of age; 90% vs 70% in healthy adults 40 to 70 years of age) with fewer doses (two doses vs three doses) and in a shorter amount of time (one month vs six months). In addition, trial data showed that Heplisav has a safety profile similar to that of Engerix-B. Furthermore, similar percentages of patients experienced adverse events, and these adverse events were generally mild in nature. Based on these data, we expect that, if approved, Heplisav will displace Engerix-B and become the market leader.
Heplisav fills a large gap in the effort toward preventing HBV
Engerix-B and other FDA-approved HBV vaccines are clearly imperfect. They have complicated and extended dosing schedules (three doses at 0, 1, and 6 months, or four doses at 0, 1, 2, and 12 months). Patients have difficulty adhering to these schedules. Given Heplisav's high efficacy after only two doses and within a narrow time frame, Heplisav would directly address this burden. Additionally, advanced age, obesity, renal failure, chronic liver disease, and immune suppression can significantly reduce the effectiveness of current HBV vaccines. Importantly, for these hyporesponsive patients, Heplisav is substantially more effective than other HBV vaccines. Thus, from a public health standpoint, Heplisav has multiple advantages over other hepatitis B vaccines.
Heplisav may be associated with serious autoimmune risks
Although 1018 ISS is critical for the efficacy of Heplisav, it may also be a "deal breaker." Adjuvants such as ISS work by enhancing the immune system, thereby boosting immunity against foreign organisms. However, with this enhanced immunity often comes an increased probability of autoimmune disease, which results when the immune system mistakenly identifies some parts of the body as foreign. When this occurs, the immune system attacks the body's own cells.
The FDA has an extremely low tolerance for risks regarding adjuvants. Notably, GlaxoSmithKline's Cervarix for human papillomavirus is the only FDA-approved vaccine containing an adjuvant other than the traditional adjuvant, named alum. Thus, it is not surprising that in 2008 the FDA placed a clinical hold on Heplisav after a serious case of autoimmune disease (Wegener's granulomatosis) arose in a patient who received the vaccine. The FDA eventually lifted this hold. Although clinical trial results suggest that Engerix-B and Heplisav have a similar safety profile, Heplisav may be associated with a pronounced degree of autoimmune disease that would only become apparent after widespread use. The fate of Heplisav thus depends on whether the Advisory Committee regards the single incidence of Wegener's granulomatosis as an outlier or as an indication of underlying safety risk.
The Outcome of Heplisav's Advisory Committee Meeting Will Determine the Future of Dynavax
Nearly all of Dynavax's product candidates rely on the same ISS technology found in Heplisav. These additional ISS-based products include an asthma vaccine that will soon begin phase I clinical trials, an influenza vaccine that has completed phase I trials, as well as a next-generation hepatitis B vaccine that has also completed phase I trials. If the Advisory Committee views Heplisav as unsafe, Dynavax will have enormous difficulty gaining approval for its other vaccines. This outcome would be disastrous for Dynavax shareholders, who could see the stock price return to the sub-$1 level, as occurred after the FDA placed a clinical hold on HEPLISAV in 2008. Conversely, if the Advisory Committee allays safety concerns about Heplisav, Dynavax's entire pipeline will become dramatically more valuable, and its stock price may increase precipitously. Stated succinctly, the future of Dynavax and its shareholders depends strongly on the outcome of this advisory committee meeting.
In many respects, Heplisav is superior to Engerix-B and other HBV vaccines. The efficacy of Heplisav is high, both for normal patients and for patients historically less responsive to vaccination. However, before the Advisory Committee can recommend Heplisav, it must determine that the benefits outweigh the risks. The benefits of Heplisav are clear. Unfortunately, the risks are a bit less straightforward. Nevertheless, we expect a positive, though potentially restrained, vote during the upcoming advisory committee meeting.
This article was written and contributed by Kan Chen on behalf of Beacon VP Investments.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.