VBI Reports Third Quarter 2014 Financial Results and Provides Update on CMV Vaccine Development

VBI Vaccines has filed operational and financial results for the three- and nine-month periods ended September 30th, 2014 on Form 10-Q with the U.S. Securities and Exchange Commission (“SEC”). The Quarterly Report on Form 10-Q is available on the SEC’s website at http://www.sec.gov and on VBI’s website at http://ir.vbivaccines.com under “SEC Filings.”

“The third quarter was transformative for VBI,” said Jeff Baxter, VBI’s President and CEO. “In addition to raising new capital, resulting in a strong cash position, and making our NASDAQ debut, it marked a period of focused progress across our two vaccine platforms. Our lead candidate, an innovative eVLP-based CMV vaccine, VBI-1501A, has progressed in line with our target milestones. Over the next twelve months, we plan to prepare several batches of VBI-1501A for toxicology studies and for our Phase I clinical trial, which is scheduled to start in Q4 2015.”

VBI is developing a prophylactic vaccine to prevent Cytomegalovirus (CMV) infection. CMV is a leading cause of prenatal developmental delays. Based on strong preclinical data, VBI has initiated work for GMP manufacturing of its lead candidate for use in formal preclinical and Phase I trials. Phase I data is expected in 2016, at which time VBI expects to demonstrate safety, tolerability, and also immunological proof of concept in humans.

Third Quarter Highlights

  • Completed initial listing on NASDAQ.
  • Consummated two equity private placements for gross proceeds of $16.25M.
  • Obtained a senior secured term loan facility for up to $6M, of which VBI was able to draw down $3M in the third quarter.
  • Developed and scaled-up methods for the manufacture and purification of VBI-1501A with GMP sub-contractors.
  • Engaged regulatory advisors and continued preparation of documents supporting the IND filing of VBI-1501A.

Company Contact

Jeff Baxter, President and CEO
Phone: (617) 830-3031 x125
Email: ir@vbivaccines.com

Investor Contacts

Robert B. Prag, President
The Del Mar Consulting Group, Inc.
Phone: (858) 361-1786
Email: bprag@delmarconsulting.com

Scott Wilfong, President
Alex Partners, LLC
Phone: (425) 242-0891
Email: scott@alexpartnersllc.com

Forward-Looking Statement Disclosure

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including statements regarding the efficacy of potential products, the timelines for bringing such products to market, and the availability of funding sources for continued development of such products. Forward-looking statements are based on management’s estimates, assumptions, and projections, and are subject to uncertainties, many of which are beyond the control of VBI. Actual results may differ materially from those anticipated in any forward-looking statement. Factors that may cause such differences include the risks that potential products that appear promising to VBI cannot be shown to be efficacious or safe in subsequent preclinical or clinical trials, VBI will not obtain appropriate or necessary governmental approvals to market these or other potential products, VBI may not be able to obtain anticipated funding for its development projects or other needed funding, and VBI may not be able to secure or enforce adequate legal protection, including patent protection, for its products. All forward-looking statements included in this press release are made only as of the date of this press release, and VBI does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which we hereafter become aware.

More detailed information about VBI and risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this press release, is set forth in VBI’s filings with the Securities and Exchange Commission (the “Commission”). VBI urges investors and security holders to read those documents free of charge at the Commission’s Web site at http://www.sec.gov. Interested parties may also obtain those documents free of charge from VBI. Forward-looking statements speak only as to the date they are made, and except for any obligation under the U.S. federal securities laws, VBI undertakes no obligation to publicly update any forward-looking statement as a result of new information, future events or otherwise.


CMV Organ Transplant Market Overview

Cytomegalovirus (CMV) is among the most common infections following solid-organ transplantation and hematopoietic stem cell transplant procedures, causing disease, transplant complications, and adverse outcomes.

By age 40, between 50 and 80 percent of U.S. adults will have had a CMV infection. Following the primary infection, the CMV virus typically remains dormant, but it can reactivate and cause illness in immunocompromised persons.

Given their immunocompromised state, recipients of organ and stem cell transplant are at particular risk of suffering CMV-related complications. Despite improved CMV awareness and monitoring by transplant physicians, and management with antiviral drugs, the incidence of CMV complications remains high, with estimates ranging from 20 to 70 percent in the first year following transplantation.

CMV complications commonly include pneumonia (shortness of breath, cough), GI disease (abdominal pain, bleeding, diarrhea), CNS disease (altered mental status, cognitive dysfunction), and retinitis (blurring or loss of central vision, scotomata). The type of CMV complications vary by patient population – for instance, CMV pneumonia is more common following stem cell transplant procedures, and CMV retinitis is more common in among persons living with HIV/AIDS.

Complications also relate to the indirect effects of CMV on the patient’s immune system, with a myriad of studies showing that CMV disease increases the incidence of graft rejection, graft injury, and graft failure. Secondary fungal and bacterial infections are also common. CMV infection and disease is associated with longer hospital stays and increased care costs.

Transplant Society Recommendations

In December 2008, a panel of CMV and solid-organ transplant experts met with the Infectious Diseases Section of The Transplantation Society to develop consensus guidelines for managing CMV. First published in 2010, and later revised in 2012, topics covered include CMV diagnosis, risk assessment, prevention, and treatment.

The Transplantation Society recommends that CMV screening be performed before transplantation to guide the treatment approach. The Transplantation Society also suggests that physicians consider administering antiviral medications to patients most at-risk.

To reduce the impact of CMV disease, antivirals are usually begun following the transplant procedure and continued for three to six months or longer. Several antivirals have been evaluated including acyclovir, valacyclovir, ganciclovir, and valganciclovir. Valganciclovir is increasingly being used as the preferred medication for treatment.

Despite significant advances in the prevention and management of CMV, The Transplantation Society has suggested that an effective CMV vaccine, like the one VBI hopes to produce, could satisfy the large need for preventing CMV infection or reactivation post-transplantation.

VBI is developing a prophylactic vaccine to prevent CMV infection – based on preclinical data, VBI has initiated work for GMP manufacturing of its lead candidate for use in formal preclinical and Phase I trials.


CMV Organ Transplant Market Overview

Cytomegalovirus (CMV) is among the most common infections following solid-organ transplantation and hematopoietic stem cell transplant procedures, causing disease, transplant complications, and adverse outcomes.

By age 40, between 50 and 80 percent of U.S. adults will have had a CMV infection. Following the primary infection, the CMV virus typically remains dormant, but it can reactivate and cause illness in immunocompromised persons.

Given their immunocompromised state, recipients of organ and stem cell transplant are at particular risk of suffering CMV-related complications. Despite improved CMV awareness and monitoring by transplant physicians, and management with antiviral drugs, the incidence of CMV complications remains high, with estimates ranging from 20 to 70 percent in the first year following transplantation.

CMV complications commonly include pneumonia (shortness of breath, cough), GI disease (abdominal pain, bleeding, diarrhea), CNS disease (altered mental status, cognitive dysfunction), and retinitis (blurring or loss of central vision, scotomata). The type of CMV complications vary by patient population – for instance, CMV pneumonia is more common following stem cell transplant procedures, and CMV retinitis is more common in among persons living with HIV/AIDS.

Complications also relate to the indirect effects of CMV on the patient’s immune system, with a myriad of studies showing that CMV disease increases the incidence of graft rejection, graft injury, and graft failure. Secondary fungal and bacterial infections are also common. CMV infection and disease is associated with longer hospital stays and increased care costs.

Transplant Society Recommendations

In December 2008, a panel of CMV and solid-organ transplant experts met with the Infectious Diseases Section of The Transplantation Society to develop consensus guidelines for managing CMV. First published in 2010, and later revised in 2012, topics covered include CMV diagnosis, risk assessment, prevention, and treatment.

The Transplantation Society recommends that CMV screening be performed before transplantation to guide the treatment approach. The Transplantation Society also suggests that physicians consider administering antiviral medications to patients most at-risk.

To reduce the impact of CMV disease, antivirals are usually begun following the transplant procedure and continued for three to six months or longer. Several antivirals have been evaluated including acyclovir, valacyclovir, ganciclovir, and valganciclovir. Valganciclovir is increasingly being used as the preferred medication for treatment.

Despite significant advances in the prevention and management of CMV, The Transplantation Society has suggested that an effective CMV vaccine, like the one VBI hopes to produce, could satisfy the large need for preventing CMV infection or reactivation post-transplantation.

VBI is developing a prophylactic vaccine to prevent CMV infection – based on preclinical data, VBI has initiated work for GMP manufacturing of its lead candidate for use in formal preclinical and Phase I trials.




VBI at BIO-Europe in Frankfurt, Germany

Adam Buckley, VBI’s Vice President of Operations, will be attending the BIO-Europe Conference being held this week in Frankfurt, Germany. Mr. Buckley is representing VBI in BIO-Europe’s Partnering Program. To learn more about VBI and its Thermostable LPV™ and eVLP technology platforms, or to schedule a meeting, please contact Mr. Buckley by email at abuckley@vbivaccines.com.

BIO-Europe is among Europe’s largest partnering events serving the biotechnology industry. The conference attracts established and emerging biotech companies, academic innovators, and a range of investors.


Researchers Explore Impact of CMV on Aging and the Immune System

With funding from a five-year, $2.3M NIH grant, researchers at the University of Arizona College of Medicine are studying how cytomegalovirus (CMV) may impact immune system function as we age.

Dr. Janko Nikolich-Žugich, M.D. Ph.D., Chair of the University of Arizona Department of Immunobiology, believes that CMV may cause long-lasting defects in how the immune system responds to infection. In his research, Dr. Nikolich-Žugich describes the immune system as “highly integrated”. He believes that small dysregulations in signaling and cell to cell communication could translate into major deficiencies in overall immune response. The defects may weaken our ability to defend against common viruses, like the flu, as we grow old.

Commenting on a study published by his team this September in the The Journal of Immunology, Dr. Nikolich-Žugich noted that, “Our research group recently showed that infection with only CMV, and no other acute or persistent viruses, causes defects in immune responsiveness to other infections and causes alterations in the naïve T cell receptor repertoire and impaired effector T cell responses.”

T cells are a type of white blood cell that play a key role in adaptive immunity, the system that regulates the body’s response to pathogens. The NIH-sponsored research will seek to elucidate the mechanism by which CMV affects naïve T cell responses, as well as the impact persistent CMV infection has on our immune system. In the U.S., 50 to 80 percent of adults are infected with CMV by the time they are 40 years old.


Researchers Explore Impact of CMV on Aging and the Immune System

With funding from a five-year, $2.3M NIH grant, researchers at the University of Arizona College of Medicine are studying how cytomegalovirus (CMV) may impact immune system function as we age.

Dr. Janko Nikolich-Žugich, M.D. Ph.D., Chair of the University of Arizona Department of Immunobiology, believes that CMV may cause long-lasting defects in how the immune system responds to infection. In his research, Dr. Nikolich-Žugich describes the immune system as “highly integrated”. He believes that small dysregulations in signaling and cell to cell communication could translate into major deficiencies in overall immune response. The defects may weaken our ability to defend against common viruses, like the flu, as we grow old.

Commenting on a study published by his team this September in the The Journal of Immunology, Dr. Nikolich-Žugich noted that, “Our research group recently showed that infection with only CMV, and no other acute or persistent viruses, causes defects in immune responsiveness to other infections and causes alterations in the naïve T cell receptor repertoire and impaired effector T cell responses.”

T cells are a type of white blood cell that play a key role in adaptive immunity, the system that regulates the body’s response to pathogens. The NIH-sponsored research will seek to elucidate the mechanism by which CMV affects naïve T cell responses, as well as the impact persistent CMV infection has on our immune system. In the U.S., 50 to 80 percent of adults are infected with CMV by the time they are 40 years old.


Universal CMV Screening of Newborns Faces Systemic Challenges

Congenital CMV infection often goes undetected because the majority of affected infants do not present symptoms at birth; routine screening of newborns could allow infected infants to receive better care.

The first law in the U.S. mandating CMV testing took effect in Utah last July. It requires urine or saliva tests for newborns who fail two infant hearing screenings. Lawmakers in Connecticut and Illinois have introduced similar legislation in 2014, but in both states, the bills have so far failed to pass.

Newborn screening tests for illnesses that, while rare, can be treated or managed to minimize impact. Each state runs its own newborn screening program, with the types of testing varying from state to state. In addition to mandatory hearing tests, states rely on a dried blood spot assay which screens for multiple conditions in parallel. While CMV is among the most common congenital infections in the U.S., outside of Utah, CMV testing is not yet required by law.

Challenges to CMV screening are largely practical – CMV viral load is low in blood, and as a result, it is a poor fit for the routine blood tests that are a fixture of newborn screenings today. CMV is best detected using saliva or urine-based assays – however, screening based on urine or saliva has the considerable disadvantage of requiring the establishment of an infrastructure for collecting and transporting specimens – mandating a new and distinct test for all infants would require sweeping legislative changes and could face resistance from an already strained healthcare delivery system. Adding to the challenge, because CMV is a congenital infection, a proper diagnosis can only be made if the CMV virus is detected within a week of birth.

Researchers estimate that, because of onset later in life, only about half of the hearing loss resulting from congenital CMV infection is detected by universal newborn hearing screening. As a result, much of the hearing loss and many other CMV-related disabilities remain undetected for years after birth and are never linked to congenital CMV infection, and are therefore not optimally managed.

Lacking mandatory testing, hospital administrators may consider adopting voluntary screening for congenital CMV, along with a standardized follow-up procedures to monitor the impact of early diagnosis. Each year, approximately 5,000 U.S. infants will develop permanent problems due to CMV, some of them severe, including deafness, blindness, and mental retardation.


Universal CMV Screening of Newborns Faces Systemic Challenges

Congenital CMV infection often goes undetected because the majority of affected infants do not present symptoms at birth; routine screening of newborns could allow infected infants to receive better care.

The first law in the U.S. mandating CMV testing took effect in Utah last July. It requires urine or saliva tests for newborns who fail two infant hearing screenings. Lawmakers in Connecticut and Illinois have introduced similar legislation in 2014, but in both states, the bills have so far failed to pass.

Newborn screening tests for illnesses that, while rare, can be treated or managed to minimize impact. Each state runs its own newborn screening program, with the types of testing varying from state to state. In addition to mandatory hearing tests, states rely on a dried blood spot assay which screens for multiple conditions in parallel. While CMV is among the most common congenital infections in the U.S., outside of Utah, CMV testing is not yet required by law.

Challenges to CMV screening are largely practical – CMV viral load is low in blood, and as a result, it is a poor fit for the routine blood tests that are a fixture of newborn screenings today. CMV is best detected using saliva or urine-based assays – however, screening based on urine or saliva has the considerable disadvantage of requiring the establishment of an infrastructure for collecting and transporting specimens – mandating a new and distinct test for all infants would require sweeping legislative changes and could face resistance from an already strained healthcare delivery system. Adding to the challenge, because CMV is a congenital infection, a proper diagnosis can only be made if the CMV virus is detected within a week of birth.

Researchers estimate that, because of onset later in life, only about half of the hearing loss resulting from congenital CMV infection is detected by universal newborn hearing screening. As a result, much of the hearing loss and many other CMV-related disabilities remain undetected for years after birth and are never linked to congenital CMV infection, and are therefore not optimally managed.

Lacking mandatory testing, hospital administrators may consider adopting voluntary screening for congenital CMV, along with a standardized follow-up procedures to monitor the impact of early diagnosis. Each year, approximately 5,000 U.S. infants will develop permanent problems due to CMV, some of them severe, including deafness, blindness, and mental retardation.