Event – Dynavax looks for shot in the arm with positive Heplisav recommendation

It has been a long hard slog to get there, but Dynavax could be in the final stretch of a marathon battle to get its hepatitis B vaccine Heplisav to market. After one clinical hold and a scare about the consistency between batches that had held up progress, the drug is at last heading towards an FDA advisory panel in the middle of next month, ahead of what could be final approval on February 24.

Analysts, at least, are positive that the drug, which has so far outshone the nearest marketed competition in trials, will get the nod. If on the other hand the drug does get another knockback from US regulators, with such a long and rich history of dealing with disappointment, not to mention $160m in the bank, there are few companies better equipped than Dynavax to try one more assault on regulatory approval. 

Company  Dynavax
Product Heplisav
Market cap $736m
Product NPV $1.04bn
% of market cap 141%
Event type FDA advisory committee
Date November 15, 2012

Long time coming

Finally getting across the regulatory finishing line would give Dynavax a big boost. With only a phase II lupus product to its name and a three phase I projects that include a universal flu vaccine, Heplisav accounts for all of the group’s current value, so any hiccup next month will hit the shares hard.

A positive opinion would provide validation to the proprietary toll-like receptor 9 (TLR9) agonist technology on which the drug is built. Using a TLR9 agonist to enhance the immune response of the hepatitis B surface antigen of which Heplisav is made has allowed the drug to outperform the current market leaders, Engerix and Recombivax.

The addition of Dynavax’s novel adjuvant 1018SS has meant that Heplisav works faster, cutting the treatment time to two injections over one month, compared with three injections over six months for both Engerix and Recombivax HB.

Combine this with studies showing that patients on Heplisav have achieved seroprotection rates of 92% compared with 75% of patients taking Engerix and there is a pretty compelling case for approval for the drug, which is likely to capture a significant share of the hepatitis B market, perhaps rapidly becoming the standard of care.

Chequered history

Despite the consistently compelling trial data, approval has at times looked like a very distant prospect for Heplisav. In March 2008, Dynavax saw its shares plunge almost 60% after the regulator put the drug on clinical hold in healthy adults after the discovery of one patient in the treatment arm with Wegener's granulomatosis, a rare disorder causing inflammation of the blood vessels (Dynavax shares pay for double disappointment, March 19, 2008).

At the time EP Vantage argued that the punishment from the regulator looked harsh, given the number of patients who had received the drug without side effects and the more compelling fact that the disorder usually takes years to develop, meaning it was unlikely that month-long courses of two injections were to blame.

Then after the clinical hold was finally lifted in September 2009, less than a year later, the shares took another pounding when inconsistencies were found between test batches of the drug, indicating that Dynavax might struggle to scale up commercial production (Superiority not enough for Dynavax hepatitis B vaccine, July 21, 2011).

Brighter horizons

The company having overcome these obstacles, consensus forecasts for the drug stand at $779m in 2018; given that the Centers for Disease Control and Prevention recently expanded its HBV vaccine recommendations to include adults under the age of 60 with diabetes these could increase.

What does, however, remain unclear is the status of the hepatitis B surface antigen used in the drug. Analysts at William Blair & Company note that in the US GlaxoSmithKline and Merck & Co hold the licences to a suite of patents covering the recombinant production of HBsAg, which means that until they expire – 2018-20 –Dynavax might have to pay for a licence to commercialise Heplisav or decide to launch and sort out the IP issues later.

While William Blair believe that this is not an unsurmountable hurdle for Dynavax, if the drug does finally achieve regulatory approval only to be undone by patent wranglings this would indeed be a cruel blow.

If you want to contact the writer of this story please email Lisa Urquhart in London at [email protected]

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