Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Vascular Biogenics: 5,000% In 2-3 Years Conceivable

|About: VBL Therapeutics (VBLT), Includes: RHHBY

VBLT is developing a drug that's plausibly a better version of an existing one that does $6b in sales per year whose patent expires in 2019.

VBLT's drug is plausibly more potent, safer, and more synergistic with other cancer therapies.

It's a gene therapy that gets new blood vessel cells in the tumor microenvironment to commit suicide, starving the tumor.

And it appears to heat up the local immune response, potential synergizing with immune based approaches.

In 1Q18 we should get the results on their ongoing phase 3 pivotal trial in glioblastoma. That's soon.

There's a drug called Avastin that was developed by Genentech and approved in 2004 that's an antibody that binds and blocks VEGF-A (vascular=relating to vessels, endothelial=skin-like coating, growth, factor, A), preventing that growth factor - which is secreted by tumors - from triggering new blood vessel growth. It does $6b in sales per year! And so it is worth some multiple of $6b. Well, it's probably not really worth that much, in real human terms, because it doesn't work very well. It starves solid tumors for a bit. The tumor shrinks for a bit. And then, often around 6 months into treatment, the tumor often explodes, as it switches on some new pro-angiogenesis pathway, or changes its shape, becoming less like a solid ball, more like a tentacled squid, more surface area, easier to feed. And also Avastin is moderately toxic, as it blocks new blood vessel growth throughout the body, interferes with healing.

Avastin's patent expires in 2019.

Vascular Biogenics (VBLT) is valued at $130m. And has a phase 3 drug that's like Avastin and conceivably better. 

It's like Avastin because it blocks angiogenesis, but differently. Whereas Avastin inhibits - prevents, precludes - one particular angio pathway throughout the whole body, VBLT's drug VB-111 gets new angio cells to kill themselves, but only the ones in the neighborhood of the tumor. Specifically, it induces cell suicide only in environments enriched in TNF-a, an inflammatory factor secreted by some or most tumors.

(It's a gene therapy. They put a few genes in a virus. The virus is taken up by cells throughout the body. One of the genes is activated by events accompanying angiogenesis. It, in turn, activates a second one that expresses a sort of suicide receptor on the cell's surface. That receptor triggers suicide when TNF-a binds it.)

In the optimistic scenario it'll turn out that:

  • VB-111 is more potent than Avastin because there are fewer ways around it. Again, Avastin inhibits one particular angiogenic pathway, whereas VB-111 doesn't care what pathway trigger angiogenesis, it just suicides the new cell.
  • VB-111 is safer than Avastin because it acts locally.
  • VB-111 synergizes better with immune therapies because the combination of the "viral infection" and cell suicides heats up the local immune response. Indeed, even as a monotherapy, VB-111 patients who get fevers have better outcomes, as if VB-111 is dual mechanism, anti-angio and pro-immune. 

And what is the evidence against this optimistic scenario? 

Simply scarcity of data. In the 200+ patients with rGBM, ovarian, and thyroid cancers for whom we have VB-111 data, the general picture is the optimistic one. It looks like Avastin but a bit better and safer.

The other kind of evidence against VB-111 is also indirect: VBLT isn't collaborating with anybody. 

Imagine you're VBLT and you think you've got a better version of Avastin. You'd tell Roche (OTCQX:RHHBY) about it (they acquired Genentech). Roche would be interested - Avastin's patent expires in two years. And they'd collaborate, pouring resources into this thing, initiating more trials than VBLT can afford by itself, to figure out which patient subsets it works best in.

Or if Roche turned VBLT down, then VBLT could pivot and try to collaborate with a Roche competitor.

I can't imagine VBLT being so greedy that they didn't try this, because even 20% of a multi-billion dollar drug is game-changing for a $130m biotech company.

So the implication is no big drug companies were interested. Presumably there's a reason. Maybe they know something specifically wrong with VB-111. Or, more likely, people aren't very optimistic about anti-angio drugs anymore. Many countries aren't happy paying for Avastin because like I said, it hardly works. So even if VB-111 looks plausibly better than Avastin, the general approach just doesn't interest big pharma.

I dunno. But a drug that does $1b in sales per year for 10 years is worth at least $5b I think. A 10% chance of that happening is worth 0.10*$5b = $500m. 

How could the odds be worse than 10%? VB-111 is right now mid-way through a phase 3 pivotal trial n= ~250 in glioblastoma pitting VB-111 + Avastin vs. Avastin alone. If VB-111 shows a 3+ month survival benefit, and a fatter tail of folks surviving more than 18 months, and it's safe, then VB-111 could be approved in early 2018. The stock would soar, VBLT would raise some capital, and get to work on trials showing VB-111 should be used in a front-line glioblastoma setting; and they'd launch their phase 3 in ovarian cancer (22,000 new cases per year in the USA). And thyroid (60,000). 

If someone told me: make me 5,000% returns in the next 3 years I'd put all their money in VBLT. No stock I've ever come across looks as plausible a 5,000% bet as this one.

Disclosure: I am/we are long VBLT.