Could These 3 Biotechs Help Fight the MERS Virus?

MERS (Middle Eastern Respiratory Syndrome) has now spread to 16 countries since first appearing in Saudi Arabia in 2012. MERS causes similar symptoms as SARS (Severe Acute Respiratory Syndrome) -- including a fever, cough, and shortness of breath -- but is nearly three times as deadly with a 30% fatality rate. Both MERS and SARS are caused by coronaviruses, which can infect both humans and animals.

The MERS coronavirus. Source: Wikimedia Commons.

More than 500 cases of MERS have now been reported worldwide, with the U.S. reporting its first case in April. That's a sharp rise from last November, when only 153 cases were confirmed across nine countries. The WHO recently stated that the spread of MERS is a "serious concern" but not yet an "emergency," stating that it did not "see increased evidence for person-to-person transmissibility."

However, a recent report from Columbia University, King Saud University, and EcoHealth Alliance confirmed that the MERS virus originated from camels and could possibly be spread by touch like SARS. SARS infected over 8,200 people and killed 775 during a 2002-2003 outbreak.

There are no approved vaccines or treatments for MERS, but three biotech companies -- Inovio Pharmaceuticals (NASDAQ: INO  ) , Novavax (NASDAQ: NVAX  ) , and Nanoviricides -- are currently developing vaccines for the disease.

Inovio's approach to MERS: Synthetic DNA
Back in November, Inovio announced that preclinical tests of a vaccine for MERS showed "robust and durable" immune responses in mice.

Like most of Inovio's other pipeline candidates, the experimental MERS vaccine was constructed from synthetic DNA which is thought to be potentially safer than traditional vaccines. Synthetic DNA vaccines replicate the virus' DNA footprint to elicit an immune response, but they are not alive, cannot replicate, and cannot spread within host cells. Inovio's MERS vaccine reportedly induced levels of antibodies and T cells -- both crucial in clearing infections caused by the virus -- to rise in mice.

Inovio does not have any marketed products. Its most advanced treatment, VGX-3100, is currently in phase 2 trials for cervical dysplasia -- abnormal changes to surface cells on the cervix that can lead to cervical cancer. Inovio plans to release top-line data from that trial in mid-2014, which is considered the next big catalyst for the stock.

Inovio's most notable partner is Roche (NASDAQOTH: RHHBY  ) , which signed a deal worth up to $412.5 million with the company last September to co-develop two therapeutic vaccines for prostate cancer and hepatitis B.

Novavax's approach to MERS: Recombinant DNA
Novavax, which mainly focuses on producing vaccines for influenza and RSV (Respiratory Syncytial Virus), has also been developing an experimental MERS vaccine. However, like Inovio's vaccine, Novavax's vaccine hasn't advanced beyond animal trials yet.

Like Inovio, Novavax also avoids using weakened or killed viruses in its vaccines. Whereas Inovio creates vaccines with synthetic DNA, Novavax pieces together viruses with recombinant DNA, piecing together DNA from various sources (usually surface proteins of a virus or pathogen) to create customized vaccines to elicit specific immune responses.

Novavax's most prominent backer is the U.S. government. In March 2011, the Office of Biomedical Advanced Research and Development Authority awarded Novavax a contract valued up to $179 million to develop recombinant vaccines for the prevention of seasonal and pandemic influenza.

In late April, Novavax reported positive top-line data from a phase 2 trial for its RSV-F vaccine for women of childbearing age, causing shares to rally 18% in a single day. The stock has rallied nearly 100% over the past 12 months.

Nanoviricides' approach to MERS: Bind and dismantle
Nanoviricides is smaller than Inovio and Novavax, but it offers a radically different way of combating MERS.

Rather than develop vaccines, Nanoviricides is developing drugs that bind to viruses with virus-binding ligands in an effort to dismantle them. On May 5, Nanoviricides announced that its experimental MERS vaccine, built on that virus-binding technology, was ready for animal testing.

Nanoviricides currently has six main pipeline candidates for influenza, eye viral diseases, HIV, herpes, and dengue -- but none of these candidates have advanced to clinical trials yet. Investors should also note that unlike Inovio and Novavax, Nanoviricides is not backed by any major pharmaceutical or government collaborators.

The Foolish takeaway
Inovio, Novavax, and Nanoviricides are three companies to watch as health officials across the world struggle to understand MERS. If any of these treatments show promise, they could receive accelerated approvals due to the urgent need to treat the disease, especially across the Middle East. Of course, it's important to note that all three of these companies are clinical (or pre-clinical) stage biotechs, so they are not for the faint of heart, and investors may be better served staying on the sidelines and watching these companies.

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Read/Post Comments (17) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 17, 2014, at 7:49 PM, wacobear wrote:

    I wonder why this article did not mention Cubist Pharmaceuticals - CBST - who has been working on bug for sometime

  • Report this Comment On May 17, 2014, at 8:19 PM, framus wrote:

    At this time, TODAY, NVAX is the only one with the money, technology and the ability to manufacture on a large scale in record time.

  • Report this Comment On May 17, 2014, at 11:47 PM, TMFSunLion wrote:

    @wacobear -- I haven't seen read press releases or reports about Cubist which suggest that it is working on MERS-CoV. Perhaps you are thinking of MRSA?

  • Report this Comment On May 17, 2014, at 11:47 PM, TMFSunLion wrote:

    "seen read" = "read" :)

  • Report this Comment On May 18, 2014, at 1:36 AM, SwingStockSurfer wrote:

    Complete, thoural and recent overview of Novavax was just published on Seeking Alpha. The article can be found here:

  • Report this Comment On May 18, 2014, at 4:41 AM, StevenLissner1 wrote:
  • Report this Comment On May 18, 2014, at 5:09 AM, George64T wrote:

    The best pharma NOVAVAX


  • Report this Comment On May 18, 2014, at 10:03 AM, longctso wrote:

    Leo, check out Cytosorbents, they have a product to treat MERS call Cytosorb. It works by moderating the cytokines that causes organ failure and ultimately death.

  • Report this Comment On May 19, 2014, at 1:27 AM, theNextThing wrote:

    More reads on MERS

    Saudi Arabia’s government is talking to pharmaceutical companies about developing a vaccine against the MERS-coronavirus as the kingdom is hit with another outbreak. / middle east

    ………the antibodies generated by the vaccine in 100% of mice (20 of 20) were able to neutralize or completely block actual infection of MERS virus in the cells, demonstrating the protective potential of this vaccine……….

  • Report this Comment On May 19, 2014, at 2:04 AM, theNextThing wrote:

    I ‘d like to see INO pursue MERS vaccine development with Saudi Arabian Ministry of Health is that in relatively “Urgent or Pandemic” situations, the clinical trial periods can be “shortened” for the immediate use.

    Since INO already has proven the concept of its efficacy in the animal testing(preclinical) in November 2013, it may be qualified to be used in Saudi Arabia with shortened human clinical trial. (Especially, Saudi Arabian Ministry of Health does not have the same requirement as the FDA.)

    (INO Mers Vaccine Preclinical Testing Announcement, Nov. 20, 2013)

    (Article about MERS on / middle east, April 28, 2014)

    I can see TWO options :

    1. Saudi Arabian Ministry of Health can use INO”s MERS vaccine on “camels” first.

    (Since evidence implicate “camels” are the most likely source of infection.)

    2. Run a short efficacy clinical trial on human until near the Ramadan(pilgrimage scheduled for July) & Hajj(annual pilgrimage scheduled for October)

    If all goes expected, in relatively short period of time, INO can demonstrate that INO’s powerful & broadly applicable SynCon Platform was invaluable in developing vaccines to save many lives. (especially in urgent situations due to the flexibility of SynCon platform.)

  • Report this Comment On May 19, 2014, at 11:53 AM, BigKahuna wrote:

    NNVC is a joke. Every year since 2005 they announce a new disease they are going to cure - the flu, dengue fever, rabies - yet none of their drug candidates ever make it to clinical trials.

    The best claim so far was that Nanoviricides had a "functional cure for AIDS". So why aren't they pushing its development?

    This was the NNVC "pipeline" in 2005 - on track for three approved drugs by 2009:

    Yet none of them have even been tested for toxicity. The only pipeline here is an endless stream of press releases and stock promotions.

    Please research the history of companies you discuss before giving them credence here.

  • Report this Comment On May 19, 2014, at 12:15 PM, TMFSunLion wrote:

    @BigKahuna: I clearly state in the article that NNVC does not have any major backers, none of its pipeline candidates have ever advanced to clinical trials, and caution is advised with the stock.

  • Report this Comment On May 19, 2014, at 8:04 PM, Benjii wrote:

    NNVC management has taken well over $15M out of this company through incredibly shady and convoluted self dealings:

    1) one of the ceo's companies get's over $2M/year to do the lab work

    2) another of the CEO's companies bought the facility (with NNVC shares sold) and NNVC is paying for the construction and all equipment.

    3) NNVC will lease it back from the CEO (or purchase from the ceo the facility.

    4) the ceo's wife is the company's CFO.

    5) they will not have tox completed in '14, though it was claimed to have started in '13, that was not the "formal" fox .

    This is a cash cow for the CEO and president and will likely never bring a product through tox. let alone to market.

    You should have cautioned that the red flags are too numerous to count and though this company has madde claims about MERS, they have NEVER had a single article published or any other outside agency confirm their claims.

    You are putting a scam in with 2 credible companies.

  • Report this Comment On May 19, 2014, at 8:44 PM, Rawnoc1 wrote:

    NNVC is quite well positioned here with a complete anti-viral platform whereby new candidates can be formulated in very short order compared to traditional timelines for new drugs. The MERS candidate, for instance, only took them a few weeks to develop and is now already awaiting testing at 2 world class facilities, ViroClinics (of Erasmus fame) and Public Health England. Expect results there by the end of the year. But FluCide is their primary candidate and they should finish preclinical testing on that candidate by early next year followed by initial clinical trials in Australia also in 2015. Due to the extremely non toxic nature of NNVC's cides, this candidate (as well as others) are almost certain to be designated as a Breakthrough Therapy by the FDA and thus qualify for accelerated review and approval. Based on the history of Tamiflu and Relenza sales, 2 drugs that are largely ineffective, FluCide alone would be worth north of $10 B. That would be followed by 5 other major drugs currently in the pipeline to include Dengue, Herpes, HIV, and Hepatitis C. This is the only stock I own and I am rarely wrong when it comes to biotech. Look for an exploding stock price as events unfold later this year and especially into 2015.

  • Report this Comment On May 19, 2014, at 9:25 PM, Rawnoc1 wrote:

    "1) one of the ceo's companies get's over $2M/year to do the lab work"

    He is referring to TheraCour, the company that controls the IP that is licensed to NNVC. A pretty paltry sum for development especially when you consider that NNVC has spent a grand total of only about $45M and has half a dozen major drugs in the pipeline. In an industry where it typically takes hundreds of millions to develop a single major candidate this is quite impressive and is a testament to the company's frugality.

    "2) another of the CEO's companies bought the facility (with NNVC shares sold) and NNVC is paying for the construction and all equipment."

    This structure was set up to conserve cash and spare shareholder dilution at a time the company could least afford it. Dr. Diwan and a few other investors foot the bill for the facility with their own money (and personal loans), quite a vote of confidence. Contrary to the statement above, NNVC is NOT paying for the construction. The company has been able to raise capital on much more favorable terms since this arrangement was made (recently raising $20M at over $5/share), confirming the wisdom in structuring the financing of the new facility in this way at that time.

    "3) NNVC will lease it back from the CEO (or purchase from the ceo the facility."

    Given the current strength of the balance sheet, they will probably purchase.

    "4) the ceo's wife is the company's CFO."

    Formerly the CEO of Signature Brands, she is eminently qualified.

    "5) they will not have tox completed in '14, though it was claimed to have started in '13, that was not the "formal" fox"

    Preliminary (dose range finding) tox has already been completed and showed absolutely no toxicity at Max Feasible Dose, a level that is estimated to be more than 100X the espected therapeutic dose. GLP tox is planned to start by the end of Q2 (next month). What is a formal fox?

    "This is a cash cow for the CEO and president and will likely never bring a product through tox. let alone to market."

    I think you could improve on your research method.

    " they have NEVER had a single article published or any other outside agency confirm their claims."

    They have had numerous third party validations, including the highly esteemed Dr. Eva Harris at UC Berkeley (Dengue); TheVac, LLC, LSU; Northeastern Ohio Medical University; USAMRIID; Feinstein Institute; National Institute of Hygiene and Epidemiology, Viet Nam; and Southern Research Institute, Alabama among others.

  • Report this Comment On May 19, 2014, at 11:04 PM, chubby123 wrote:

    I love NNVC!

  • Report this Comment On July 01, 2014, at 9:22 PM, chris293 wrote:

    Who are Rawnoc1 and chubby123, people with no information or stocks to their names. Questionable comments or maybe some pump and dump types. This goes along with 'if you say it enough, some fools will believe it' and of course lose their money. Beware!

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Leo has covered the crossroads of Wall Street and Silicon Valley since 2012. Follow him on Twitter for more updates!

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