Earlier this week, Baxter (NYSE:BAX) announced positive phase 1/2 clinical trial data of its Vero cell-based seasonal influenza vaccine. While the 940-subject clinical trial demonstrating strong immunogenicity for the new vaccine is certainly good news, the continued development of the production technology is probably the more important item for investors to take from the announcement.
The results put Baxter back on track after it had to stop a phase 2/3 clinical trial for its PreFluCel influenza vaccine in late 2004. The trial was voluntarily stopped after a larger than expected number of patients experienced a mild fever.
The most recent clinical trial had a much improved side effect profile, likely due to its change from whole virus to split virus. The split virus process breaks up the viral particles with detergent and allows for lower dosing than whole virus to get the same immune response.
Baxter plans to begin an 11,000-person phase 3 trial later this year. Because immune responses are fairly consistent from person to person, it seems likely that the phase 3 trial results will parallel the recently announced results. Even with a conclusive phase 3 trial, FDA marketing approval is still a ways away. That gives competitors GlaxoSmithKline (NYSE:GSK), Sanofi-Aventis (NYSE:SNY), and Novartis (NYSE:NVS) at least one and possibly two flu seasons before they need to worry about competition from Baxter.
The Vero-cell technology uses cell culture to produce the virus instead of producing it in chicken eggs. The most distinct advantage of production in Vero cells over the traditional 1940s method is that it doesn't require animal inputs, which can be limiting and also a source for contamination, as AstraZeneca (NYSE:AZN) has recently learned. The production process is also quicker and more consistent.
Baxter also uses the Vero-cell technology to produce its H5N1 bird flu vaccine that is in phase 3 clinical trials. It has contracts with the U.S. and Australian governments to develop and provide vaccine in case of a pandemic outbreak. The Vero-cell technology provides an additional benefit over egg-based production for the pandemic flu, in that it doesn't require the virus to be modified to grow in eggs. That allows for faster production of the vaccine once the pandemic virus is identified.
While it's near impossible to determine when a pandemic will occur, one will happen eventually. My guess is that things are going to get a bit hairy when it does, so owning some stocks that will do well under adverse conditions sounds like a pretty good hedge to me.
More influenza Foolishness for birds and people:
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor recommendation. The Fool's disclosure policy has an immune system that doesn't need a flu shot.
