VBI Vaccines, Inc. – Ordinary Shares (NASDAQ:VBIV): Breaking Down The Upcoming Phase III Program

VBI Vaccines, Inc. – Ordinary Shares (NASDAQ:VBIV) now has a clear route to market for its lead development asset, a hepatitis B vaccine called Sci-B-Vac. The drug is already approved in certain regions globally and is a standard of care therapy in Israel, but in the markets where the real money is (the US, Canada, and Europe) it remains non-commercially available. VBI has spent the last twelve months readying the asset for a pivotal clinical program that could serve as the final step along the development pathway and – as per the company’s latest release – this step is now underway.

The hepatitis B market

With the release in question, management has outlined the protocol and design of a phase III program that will serve to underpin registration submission with the US Food and Drug Administration (FDA), the European Medicines Agency (EMA) and Health Canada (HC). Analysts suggest that the hepatitis B market will expand to be worth $3.5 billion by 2021. Of this $3.5 billion, eight major markets account for nearly 75% of the total figure – the US, Canada, the UK, France, Germany, Italy, Spain, and Japan. An approval from the FDA, the EMA and HC would allow VBI Vaccines (NASDAQ:VBIV) to target seven out of these eight regions, meaning the company would be going after a market worth somewhere in the region of $3.15 billion, with this calculation based on the assumption that each of the eight regions account for an equal portion of the total market, which is very conservative.

The importance of the just announced program, then, is clear.

A look at the clinical program – overview

Using the company’s just released protocol, here’s a breakdown of what the company is planning to conduct and how it plans to do it.

The program is a phase III global program that will enroll around 4,800 patients spread across the three target regions – the US, Europe and Canada. It’s set up to include two separate phase III studies, the data from which VBI will collate at completion and submit to the relevant authorities. The ability to base three submissions on a single program (the two trials) shouldn’t be overlooked here. Phase III trials are expensive. For a company like VBI Vaccines (NASDAQ:VBIV), which is at the smaller end of the biotech spectrum, research and development costs can be a make or break input. One program means one third of the cost, which means investors are being asked to take on a much-reduced risk (primarily rooted in reduced capital requirement mitigating the necessity to raise funds via an equity raise and – in turn – reducing the risk that the company will dilute shareholders to any substantial degree) when they pick up an exposure to this program.

The clinical program – the first phase III study

The first of the two phase III studies is designed to pitch Sci-B-Vac against the current standard of care vaccine in the hepatitis B space, GlaxoSmithKline plc (ADR) (NYSE:GSK)’s Engerix-B. If the company is going to get Sci-B-Vac approved as a hepatitis B vaccine in its major target regions, it’s going to need to show that the asset can induce seroprotection in standard population patients – in this instance, defined as healthy subjects aged 18 years and over. There’s also an added focus, targeting patients aged 45 years and older (more on this shortly).

There are two primary endpoints in place.

The first primary endpoint is geared towards the necessity to prove that Sci-B-Vac is as good as Engerix-B in ages 18 years plus, with the endpoint hit defined as Sci-B-Vac demonstrating non-inferiority to the standard of care drug as measured by the the seroprotection rate induced four weeks post final dosing (total administration involves three doses of each vaccine).

The second primary endpoint is designed to show that Sci-B-Vac can outperform Engerix-B in patients ages 45 years plus. This is an endpoint that markets are going to be watching incredibly closely because, if hit, it will create a major differentiation between the two vaccines involved in the study, favoring Sci-B-Vac. VBI has long pitched its vaccine as having the potential to be a better option for immunosuppressed patients. These are patients that, for a variety of reasons, have a sub-optimal immune system. When the immune system doesn’t work optimally, it won’t create the antibodies that are at the root of the mechanism of action (MOA) of prophylactic vaccination. By including more hepatitis B specific antigens in Sci-B-Vac than there are in Engerix-B, VBI Vaccines (NASDAQ:VBIV) is hoping to increase the number and variety of antibodies that form post-administration. This, in theory, should improve the degree of seroprotection for this immunosuppressed category of patients. In this instance, and with this study, the immunosuppressed group is over 45 years, with the immunosuppression rooted in age.

The clinical program – the second phase III study

That’s the first study. The second study is a lot to lot study that, again, compares VBI’s asset with Engerix-B. Patients in this one will be randomized to receive either Sci-B-Vac or Engerix-B, with three out of four patients receiving the former. The Sci-B-Vac patients will be further split into three groups, each of which will receive a version of the vaccine from a particular lot.

The primary outcome of this study is to demonstrate that the geometric mean concentration (GMC) of antibodies is the same across each lot of Sci-B-Vac. It’s basically a quality control arm. While the company hasn’t specifically served up its reasoning behind including this type of study in its program, it’s reasonable to conclude that the regulatory authorities across the target regions requested it so as to ensure that the drug can be produced in varying geographies and can be transported from one region to another without deteriorating in quality. If this is the case, it’s a small price to pay for the ability to conduct one global study and to use the results of this study to apply for approval in three major regions.

In addition to the GMC of antibodies across the three lots, the company will also measure the safety and efficacy of the three lots as compared to one another and to Engerix-B as a secondary endpoint. The assumption here is that this data will be used to reinforce the data collected from the first of the two phase IIIs as and when VBI submits for registration.


The initiation of this program is something that VBI shareholders have been waiting for patiently for the last twelve months. That the company now has its protocol in place and some solid timeframes to work with (initiation during the second half of 2017, fifteen months to trial completion) makes VBI Vaccines (NASDAQ:VBIV) a far less speculative exposure than it was just a few weeks ago and, as a result, the company will likely benefit from an inflow of speculative volume rooted in investors taking a position ahead of the trial’s initiation and eventual outcome.

VBI is not without its risks, of course. This is development stage biotechnology and the future success of the company in hepatitis B relies on an upcoming binary event (the outcome of this phase III program) being favorable. If it’s not, VBI will struggle to reestablish a presence in this sector going forward. With that said, the existence of real world data from the nations in which this drug is already approved and the data set that the company has put together to date (which includes safety and efficacy data from more than 2000 patients) serves to reduce this risk considerably.

Disclosure: The author has no positions in any of the stocks mentioned.

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