New Phase IV Data On VBI Vaccines, Inc. (VBIV) HBV Vaccine Show It Can Carve Out A Market From GlaxoSmithKline PLC (ADR) (GSK)

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No stock is ever a sure thing, but that doesn’t mean you can’t get asymptotically close to one. Following the announcement by VBI Vaccines, Inc. (NASDAQ:VBIV) that its 3rd generation hepatitis B virus (HBV) vaccine Sci-B-Vac passed a post-marketing Phase IV trial flawlessly as expected, VBI has proven yet again that Sci-B-Vac not only works, but is the most advanced and effective HBV vaccine available today.

But the data were never the question with Sci-B-Vac and VBI. It is well known that Sci-B-Vac works and that it is superior to GlaxoSmithKline PLC (ADR) (NYSE:GSK) 2nd generation standard of care Engerix B vaccine. Sci-B-Vac has been tested in over 20 clinical trials already on over 4,500 patients, is standard of care in Israel, and is already approved in 15 countries. The question has always been, assuming that it gets marketing approval in the United States and Europe, how will it carve out a sizeable market share from Engerix B? The answer is embedded within the initial results of this most recent trial.

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The Phase IV study tested Sci-B-Vac on 88 seronegative people, meaning without any previous immunity to HBV. The vaccination schedule for both Sci-B-Vac and Engerix B is a dose at baseline, one, and then six months following initial dosing. Trial data revealed that after only three months, seroprotection Sci-B-Vac was a remarkable 100%. That’s impressive, but it’s not necessarily what will carve out an initial market for the vaccine in the US and Europe. The key is seroprotection after the second dose at month 2, which achieved a seroprotection rate of 92%.

Why is 92% at month 2 more crucial than the 100% figure? Because the seroprotection rate for Engerix B at month 2 is only 40-60%. That translates to a period of 5 months where up to a majority of people who have just taken their second dose of Engerix B are still be susceptible to the virus and could become a vector for its spread.

That 5-month vulnerability window may not be a critical issue for the average person who does not come into contact with blood and other biological hazards on a daily basis, but it is critical for public sector health workers and first responders who do, and especially for the governments that employ them. The situation is much more exacerbated in Europe, currently experiencing a refugee crisis very few of whom are vaccinated against HBV at all.

While Engerix B is fine for 0-20 year olds and VBI does not intend to wrestle that market away from Glaxo, it is looking to make Sci-B-Vac the standard of care for health workers, as the advantages of and even the necessity for Sci-B-Vac for this group are clear.

A second market that Sci-B-Vac can take is in immunocompromised patients and other low or non-responders to 2nd generation vaccines like Engerix B. The reason that Sci-B-Vac is more effective in immunizing previous low or non-responders is that it is manufactured from mammalian cells as opposed to yeast cells, making it more recognizable to the human immune system. It also contains antigens against all three HBV surface proteins including the S-1 protein through which HBV injects itself into a liver cell in the first place.

Taken together, the markets that VBI is targeting are estimated at between $600M and $1B in annual revenue.

It’s a big potential market, and VBI Vaccines, Inc. (NASDAQ:VBIV), of course, isn’t the only company to recognize this fact. However, right now, it looks like it’s ahead of the curve. The fact that the vaccine is already approved in a number of countries has afforded VBI the opportunity to construct a wealth of safety and efficacy data; data that will be used to underpin an application in the US, and that its competitors have had to (or will have to) spend considerable amounts of time and capital to replicate.

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