Investing in biodefense companies

and a non-human primate model)

In addition to Smallpox, Bavarian Nordic is also developing a vaccine against Anthrax, (pre-clinical stage), HIV (phase I/II), and Measles (phase I/II). It has a vaccine program against breast cancer (phase I/II) and prostate cancer (phase I/II).

CJ Corporation in Republic of Korea has developed cell-culture derived Smallpox vaccine (CJ-50300) that is in phase III in South Korea. Other companies that have had smallpox programs in the past include DynPort and Vaxgen. Two licensed vaccines for smallpox are currently in the CDC Strategic National Stockpile [SNS] - ACAM2000 (Acambis) and “wetvax” (sanofi aventis (SNY)). The Sanofi-Aventis vaccine is an old vaccine that was somewhat mysteriously found in a freezer in 2002, and donated by the company to the government. Desai says that as far as he knows, it is not in production. The SNS contains more than 300 million doses of live vaccinia virus smallpox vaccine, or enough to immunize every person in the United States. The Department of Health and Human Services (HHS) contract for the MVA vaccine will add 20 million doses, or enough to treat 10 million people with compromised immune systems (the vaccine requires a two-dose regimen per person). About 95 percent of people are protected within 10 days of getting a single smallpox vaccination. Smallpox vaccination up to 3 days after someone is exposed to smallpox virus will prevent or reduce the severity of smallpox in most people. Vaccination 4 to 7 days after exposure will likely offer partial protection. Solid protection lasts for 3 to 5 years after first vaccination. Solid protection after revaccination lasts about 10 years. Partial protection lasts longer, but people need to be revaccinated if too much time has passed.

Drugs

Siga Technologies (SIGA) is developing ST-246, SIGA’s leading smallpox antiviral candidate. The compound works by blocking the transmission of the virus from cell to cell, and is not a vaccine. SIGA’s ST-246 has shown evidence of safety and high levels of efficacy against poxvirus disease in multiple animal trials, as well as continued success in human safety studies. On 27 March 2008 the company announced that it had finished its phase I studies and the drug was found to be safe. Daily dosing was feasible, and PK in blood was comparable to that in monkeys at which it was effective against smallpox. As a result of success in early trials and in one emergency compassionate use case, the FDA has designated ST-246 for “fast track” status. Other compounds Siga is developing are in the pre-clinical stage and they include drugs for Ebola/Marburg, Lassa Fever and Junin. SIGA’s anti-bacterial program includes development of a new class of agents to combat varieties of Staphylococcus, Streptococcus, Enterococcus, and others that are highly resistant to existing antibiotics.

Of the three companies mentioned above, only Siga trades in the United States. Its all time high, in 2001, was around $8/share. It trades around $2.88 at present. Acambis does not trade on NASDAQ or NYSE. Its high at £370 was in late 2003, and now trades around £114. Bavarian Nordic also does not trade in the United States — its high was around 600 DKK (Danish Krone) in January 2007 in the Copenhagen market. It now trades around DKK 227.

Desai suggests that it would be risky to buy any of these companies based solely on Smallpox. Each of the three companies, however, develops dugs pr vaccines for other diseases. That is where he finds them to be more attractive, especially Siga’s pipeline for drugs targeting resistant bacterial infections. Keep in mind that on 4 June 2008, Novartis announced a deal to acquire Protez Pharmaceuticals for up to $400 million. The attraction seems to be Protez’s PZ‐601, a compound that has a unique broad-spectrum of activity that could offer better coverage over existing injectable antibiotics, especially multi‐drug resistant bacteria, including MRSA. “Not bad for a company that was founded only in 2003,” desai says.