Big Pharma Again Taking Shot At Vaccines

• Peter Benesh
• On 6:26 pm EST, Tuesday November 3, 2009

The news lately has been all about H1N1. Serious as the swine flu pandemic is, the vaccine is pretty ordinary from a scientific point 15f view.

The trick is making enough of it fast enough and getting it delivered where it needs to be in sufficient amounts.

Beyond H1N1, vaccines are becoming a high-priority category for big biopharma companies.

Low prices, high costs and fear of lawsuits drove most Big Pharma firms out of the vaccine business in the 1980s and 1990s. They're back.

On Oct. 15, Pfizer (NYSE:PFE - News) closed its $68 billion acquisition of Wyeth. One of Wyeth's big products is a vaccine called Prevnar, to prevent meningitis and several types of infections in children. Prevnar sales are expected to hit $3 billion this year.

On Sept. 28, four events took place to usher Big Pharma back deeper into the vaccine field.

Abbott Laboratories (NYSE:ABT - News) announced that it would buy the drug unit of Belgium's Solvay for $6.6 billion. Solvay makes Influvac, a flu vaccine that opens the door for Abbott's entry into the vaccine market.

Abbott will leapfrog the conventional flu vaccine, which is based on the slow and contamination-vulnerable method of growing virus cultures in eggs. Abbott got Solvay's Dutch plant for making flu vaccine from cells (rather than eggs), an emerging technology.

The same day, Johnson & Johnson (NYSE:JNJ - News) bought 18% of Dutch biotech Crucell, which is working on a universal flu vaccine.

Merck (NYSE:MRK - News) that day got the rights to sell Australia-based CSL's Afluria flu vaccine in the U.S.

And GlaxoSmithKline (NYSE:GSK - News) signed a 10-year, $2.2 billion deal to provide Brazil with its Synflorix pneumococcal vaccine. Vaccines are a point 15f entry for drugmakers into emerging economies.

Vaccine technology itself is emerging from prevention to treating people who are already ill.

Targets include cancer, HIV-AIDS, hepatitis, tuberculosis, malaria, lupus, rheumatoid arthritis and others. One goal is a therapeutic vaccine against Alzheimer's disease.

Science has created vaccines to prevent many life-threatening diseases, including polio, measles, mumps and chicken pox. Add to that list seasonal influenza and, of course, swine flu. Companies making injected H1N1 vaccine for the U.S. are Novartis (NYSE:NVS - News), GlaxoSmithKline and Sanofi Pasteur, a unit of Sanofi-Aventis (NYSE:SNY - News). MedImmune, a unit of AstraZeneca (NYSE:AZN - News), and Australia's CSL Biotherapies make an inhaled vaccine.

Vaccines get the immune system to produce antibodies to fight diseases before they strike. Vaccines contain weakened disease antigens -- the components of a disease that cause it to attack the immune system. Weakened, the antigens can't cause the diseases, but they can trigger the body's immune response.

The new thrust is to get vaccines to trigger the body's immune response even after disease has struck, says Albert Wertheimer, director of Temple University's Center for Pharmaceutical Health Services Research.

"To call them vaccines is too narrow," Wertheimer said. "They're really biologics."

Biologics are based on proteins and molecules that act in specific ways on an individual's genetic structure. They're the backbone of what's commonly called personalized medicine.

"Vaccines are the nexus of personalized and preventative medicine," said Mick Kolassa, chief executive of consulting firm Medical Marketing Economics.

He says science is taking what it learned in the three decades of biotech and applying it to vaccines.

One example of a therapeutic vaccine is Dendreon's (NasdaqGM:DNDN - News) Provenge. It's for men whose prostate cancer has resisted hormone therapy (chemical castration). So far, Provenge has proved that it can extend life in about one in three cases. It cranks up the immune system to fight the disease after the cancer has taken hold.

Provenge's science could lead to a vaccine to prevent prostate cancer, but that's a long way off.

The market has high hopes for Dendreon. In March, Dendreon shares traded near 2.50. Positive test results announced in April for Provenge, Dendreon's only product so far, sent shares soaring to an all-time high near 30. The stock now trades near 26.

There's plenty of blockbuster action in preventative vaccines. Zostavax, recommended by the Centers for Disease Control for people over 60, prevents shingles. It costs about $185 per dose. Zostavax is a Merck product. Sales for 2009 will likely hit $300 million.

Gardasil, also from Merck, is a vaccine for girls against human papillomavirus, a leading cause of cervical cancer. Gardasil costs about $375 for three shots. Sales are likely to exceed $1 billion for 2009.

Competition is building in the vaccine world. GlaxoSmithKline's Cervarix, also for HPV, won approval from a Food and Drug Administration advisory panel in September. Approval to start selling the drug is all but certain.

More diseases will be candidates for treatment by vaccines, says Les Funtleyder, an analyst at Miller Tabak. The biggest challenge is to mass produce flu vaccine quickly, as the swine flu situation attests.

If avian flu, or H5N1, strikes, old technology won't work. Avian flu kills the egg medium. There is no vaccine.

For now, all U.S. flu vaccines are cultured in eggs. Europe has approved some flu vaccines made from cells. The key is to make flu vaccine from cells instead of eggs for the U.S. market. "The prize for the company that can do that on a commercial scale will be enormous," Funtleyder said.

Companies working to do this include Glaxo, Merck, Abbott, Sanofi Pasteur and Novartis.

Buzz up!