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Does This Upstart Pose a Threat to GlaxoSmithKline?

By Todd Campbell - May 3, 2016 at 8:40AM

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Dynavax Technologies hopes to win the FDA go-ahead for a new hepatitis B vaccine later this year.

SOURCE: GLAXOSMITHKLINE PLC.

GlaxoSmithKline plc (GSK 0.97%) generates more than $1.2 billion per quarter selling vaccines that are used to treat infectious disease, and one of GlaxoSmithKline's top-selling vaccines is Engerix-B, a vaccine used to prevent the spread of hepatitis B.

Last quarter, Engerix-B helped generate $194 million in GlaxoSmithKline hepatitis vaccine revenue. However, Engerix-B's revenue stream could be in jeopardy if the FDA gives a go-ahead to Dynavax Technologies Corporation's (DVAX 5.09%) HEPLISAV-B, a new hepatitis B vaccine that may work better than Engerix-B.

A massive market
Hepatitis B is one of the most common diseases worldwide. An estimated 240 million people have hepatitis B, and as a result, hepatitis accounts for roughly 80% of all primary liver cancers. Because hepatitis B is widespread and it can lead to serious liver disease in up to 40% of hepatitis B patients, global health agencies have been using Energix-B to slow its spread.

Arguably, the greatest need for hepatitis B vaccination is in developing regions of the world, but there's still a big need in developed countries, too. According to the CDC, there are up to 1.4 million chronic cases of HBV in America and another 13.3 million cases in Europe. Given those figures, it's not surprising that sales in the U.S. -- where prices tend to be higher -- accounted for 45% of GlaxoSmithKline's hepatitis vaccine revenue last quarter. For its part, the EU represented 35% of GlaxoSmithKline's hepatitis sales.

A need for improved options
Hepatitis B can be readily transmitted from person to person, and the hepatitis B virus can survive outside the body for at least seven days. Despite currently available prevention efforts, up to 20,000 new cases of hepatitis B are estimated to occur in the U.S. every year. 

One reason new cases of hepatitis B continue to occur is Engerix-B's high patient burden. The vaccine's dosing regimen includes three doses that are given over a six-month period, and that extended schedule leads to poor adherence rates that leave people less protected than they might otherwise be. As many as 50% of patients eligible for hepatitis B vaccination fail to follow through with the entire three-dose regimen.

SOURCE: DYNAVEX TECHNOLOGIES

To address the adherence problem, Dynavax Technologies created HEPLISAV-B, a combination of a hepatitis B surface antigen and a proprietary Toll-like receptor 9 agonist. By including this agonist, HEPLISAV-B only needs to be dosed twice over just one month.

In addition to reducing patient burden, HEPLISAV-B significantly increase protection against hepatitis B when compared head-to-head to Engerix-B.

Specifically, trial results show that 95% of people receiving HEPLISAV-B were seroprotected, versus 81% of patients receiving Engerix-B. Similarly, 99% of HEPLISAV-B trial participants between age 18 to 39 were seroprotected, versus 93% of patients receiving Engerix-B. And rates in older patients, who typically don't respond as well to vaccination as younger patients, also improved. Ninety-five percent of patients between age 40 to 70 were seroprotected, versus 79% of patients receiving Engerix-B.

Uncertainty remains
HEPLISAV-B's advantages imply that it could displace Engerix-B as the standard in hepatitis B vaccination. However, the FDA will need to give Dynavax Technologies drug a green light for that to happen, and that's not a lock.

Dynavax Technologies already attempted and failed to convince regulators to give HEPLISAV-B an OK in 2013. However, the FDA rejected its application for approval, citing a need for more safety data. In requesting that safety data, the FDA seemed most concerned with making sure that there wasn't an increase in autoimmune-disease adverse events. 

Dynavax Technologies responded with additional studies, and results from those studies led to a second filing for approval in March. Soon thereafter, the FDA requested that individual safety data be sent along in addition to the integrated safety data that was previously provided in its filing. The company has fulfilled that request, but the FDA has determined that the additional information is a major amendment to HEPLISAV-B's filing, and therefore, it pushed back its timeline for a decision from September to mid December. 

How the FDA will interpret the individual data sets in light of the potential advance in treatment regimen is anyone's guess. But if they do determine that HEPLISAV-B is as safe as Engerix-B, then GlaxoSmithKline may lose out to the tune of nine figures in sales annually. 

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