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A Much-Needed Long Awaited Game Changing Vaccine

Summary

Hepatitis B is a contagious disease that is in the spotlight for worldwide eradication.

Heplisav has been deemed safe in 3 pivotal Phase III trials. Its superior efficacy is not even in question.

The vaccine's risk benefit profile makes it very hard for the FDA to reject it the second time round.

DVAX is at an all-time low and represents a golden opportunity for a multi-bagger.

Dynavax (NASDAQ:DVAX) is a clinical stage biopharmaceutical company that develops novel products using toll-like receptor technology for the prevention and treatment of infectious, inflammatory and neoplastic conditions. The company's lead product candidate, HEPLISAV is a hepatitis B vaccine that targets adult patients. This vaccine has taken investors through a roller coaster ride of 3 pivotal Phase III trials and once already through the FDA, so to end up yet again with a second chance for approval in the next 6 months.

The company's lead product has demonstrated unequivocal superior efficacy to one of the current vaccines in the market supplied by GlaxoSmithKline (NYSE:GSK) especially in the adult hypo-responsive population including patients with diabetes and renal disease. As I am sure investors are aware, one of the main advantages of this vaccine is that it is given in only two doses a month apart as opposed to the traditional hepatitis B vaccine that is given in 3 doses over 6 months. Compliance rates for the latter have been as low as 55% in some studies demonstrating a clinical need to solve this problem.

In this article, I will provide some background about the hepatitis B virus, its clinical significance and impact in the healthcare world. I will go through the clinical trials to make an independent evaluation of the safety profile of HEPLISAV, discuss the FDA's Complete Response Letter and evaluate the likely outcome in or before December.

Hepatitis B

Hepatitis B is a significant and relatively common infection that causes severe morbidity and mortality. Its main mode of transmission is sexual or through needle sharing. It is estimated that 2 billion people have been infected with hepatitis B worldwide. Around 350 million have chronic, lifelong infections. Hepatitis B is the cause of up to 50% of primary liver cancers. Hepatitis B is 10-fold more virulent than the Hepatitis C virus and around 100-fold more virulent than the HIV virus.

The general rule of thumb is that you have a 30% chance of contracting hepatitis B from a known carrier. That number goes down to 3% for hepatitis C and 0.3% for HIV. Vaccinating adults is imperative for what is and should be a worldwide initiative to eradicate this virus. Currently, hepatitis B vaccination is recommended to all new-borns in the United States. We have eradicated small pox and supposedly polio through worldwide vaccination, and hepatitis B has been proposed to be next on the list.

This virus is of extreme importance in public health. Hepatitis B virus causes chronic liver disease, liver cirrhosis and potentially liver cancer. The most sick and costly patients in the healthcare industry are patients with end stage liver disease. Their mortality in some cases is 50% in one year, going up to 75% in 3 months in severe cases. These are devastating consequences for an illness that is potentially preventable.

Currently, up to 2.2 million people are estimated to be living with chronic hepatitis B in the US alone. The potential for transmission is still extremely significant especially taking into account the virulence of this virus. Patients with the highest risk of exposure are men who have sex with men, people with multiple sexual partners, injection-drug users, dialysis patients, diabetics, travelers to endemic areas and patients with chronic liver disease and HIV.

The first clinical trial of HEPLISAV (DV2-HBV-10) involved 2,427 patients receiving the novel vaccine and the Engerix-B GSK vaccine in a ratio of 3:1 respectively. During the tail end of that trial, a rare autoimmune event of Wegener's granulomatosis occurred, a severe autoimmune disease that affects the sinuses, lungs and kidneys. The progression of the disease is such that it can eventually cause bleeding into the lungs and kidney failure requiring dialysis. This event was thought to be possibly related to the HEPLISAV vaccine and led to the halt of the vaccine's development program. Subsequently, Merck (NYSE:MRK) terminated its relationship with Dynavax retiring all its rights to the HEPLISAV vaccine.

After thorough analysis of the safety data, the clinical hold was lifted in 2009 and Dynavax proceeded to conduct another Phase III trial (DB2-HBV-16) to replicate its data from the first one. In that second trial of 2,449 patients randomized in a 4:1 ratio, similar rates of adverse events were obtained in both groups. In addition, there was no evidence of Wegener's granulomatosis or any ANCA associated diseases (explained later).

Dynavax filed a Biologics License Application in 2012 armored with the combined data from those 2 Phase III trials only to get rejected by the FDA for lack of sufficient safety data. The Vaccine and Related Biological Products Advisory Committee voted 13 to 1 for the proven efficacy of the vaccine. The committee...


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