Dynavax will determine during the first quarter of 2009 whether to proceed on its own with development of its hepatitis B vaccine Heplisav. The Berkeley, Calif., biotech announced Dec. 19 that its partner Merck & Co. was calling it quits on their co-development deal. All rights to Heplisav return to Dynavax; the firm will not seek to repartner the vaccine until it has a less risky proposition to offer.

"If at the end of the day the regulators conclude that we cannot go forward, or impose restrictions or limitations and requirements that are not feasible or commercially unacceptable because they would be more expensive than the market would support, then we would not proceed with the product," Dynavax's Chief Business Officer Michael Ostrach said in an interview.

Ostrach said Heplisav has numerous advantages when compared with the current standard of care: GlaxoSmithKline's Engerix-B. "We provide much more protection than the existing comparator product earlier and with fewer injections over a shorter period of time," he said.

Heplisav clinical development has been on hold in the U.S. since March after a single healthy volunteer in a German study was diagnosed with Wegener's granulomatosis, a rare blood vessel inflammation (¹ Also see "Merck’s Heplisav Gets FDA Clinical Hold" - Pink Sheet, 17 March, 2008.). It is not on clinical hold outside of the U.S.

In October, FDA notified the Merck and Dynavax that it would not consider approving the vaccine for healthy adults but that the risk/benefit profile for a second proposed population, persons with end-stage renal disease, still might be reasonable with further study.

Vaccine's fate tenuous

Although Dynavax's executives are adamant that they will continue to push forward development of Heplisav, the drug's fate - and the company's chances of inking another partnership around it - depend heavily on the inclinations of an ultra safety-conscious FDA.

"It's reasonable to assume there's a benefit here, and it's unfortunate that a single SAE could derail that, but we understand that the regulators have to be convinced there is an appropriate risk balance," Ostrach said.

"We think the data we have developed so far [for] this product in terms of its efficacy and convenience makes it an extremely attractive opportunity, but of course we have to make sure we have resolved the issues involving safety the FDA has raised."

Meanwhile, the company intends to proceed with filings in Europe and is in discussions with regulators there about requirements. Ostrach said he anticipates conducting a second large Phase III study to add to the safety database for an EU marketing application. A positive Phase III study with safety data on 2,500 participants already is completed and reported (² Also see "Heplisav Phase III Data Good, But Timing Of Complete Response Still Unclear" - Pink Sheet, 6 August, 2008.).

Eventually, the plan is to try again with healthy adults in this country, Ostrach said, "but clearly that's something that will require considerable discussion with the FDA because they're not convinced at this point."

The company announced a deal with GSK Dec. 18 that gives the U.K. drug maker options on a suite of early-stage developmental drugs based on Dynavax's Toll-like receptor technology. The $10 million upfront payment from GSK should help soften the loss of the Merck collaboration (³ Also see "GSK, Dynavax To Partner On TLR Compounds In Autoimmune, Inflammatory Disease" - Pink Sheet, 18 December, 2008.).

Dynavax projects its total cash will be $65 million at the end of 2008. At the end of the third quarter, the company reported operating expenses of $51.3 for the first nine months of 2008. At its current burn rate - barring serious retrenching or a cash infusion from another partnership - Dynavax has roughly a year's cash on hand.

-Shirley Haley (s.haley@elsevier.com)

Merck Returns Heplisav To Dynavax After FDA Rules Vaccine Too Risky For Healthy Adults

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