Newsday - January 19, 2003
Laurie Garrett, Staff Writer

If the initial results indicate even a modicum of success, investors will react swiftly, said Robert LeBoyer, a senior biotechnology analyst at InvestBio in New York City.

"There'll be a stampede to buy the shares," LeBoyer said. "People will blindly go and buy it not knowing very much about it."

VaxGen's stock closed at $19.50 on Friday.

Though the announcement by California-based VaxGen is likely to produce enthusiasm on Wall Street, AIDS experts and vaccine scientists view the product with a mix of skepticism and even disdain.

Some experts have argued that the vaccine could be harmful, either because of potential biological effects or because recipients would believe they're protected against HIV infection and consequently engage in risky sex and drug use.

VaxGen executives, independent observers and critics agree that the product offers protection to less than a third of those who receive it. The long-awaited clinical trial results involving 5,000 sexually active gay American men and 400 women, a third of whom received a placebo, will reveal its degree of effectiveness.

In advance of the release, VaxGen executives have been working toward what they hope will be a warm market reception, orchestrating publicity and meetings with stock analysts.

"This is huge," said Paul Sonz, who manages Sonz Partners, a Florida-based hedge fund that invested in VaxGen before it went public. "There are very few times that you can be involved in something that could effectively change conditions in the world."

VaxGen officials say they will release the results before March, at 4 a.m. on a Monday. Though the trials were planned with the U.S. Centers for Disease Control and Prevention and have funding from that agency and the National Institutes of Health, the announcement will not adhere to the longstanding tradition of presentation at a scientific conference.

"We're going to announce initially just the top-line data," or headline results, VaxGen spokesman Jim Key said. "And then, at the next scientific conference, we're going to release all of the data."

VaxGen chief executive Lance Gordon has been telling analysts and investors that a vaccine that protected just 30 percent of recipients would be a tremendous boon to poor, HIV-ravaged countries. (In contrast, the measles vaccine used in the United States is more than 95 percent effective, and the hepatitis B vaccine protects nearly 90 percent of recipients.)

On Jan. 8, Gordon told analysts at a J.P. Morgan gathering about a target of only 20 percent efficacy, prompting VaxGen critic John Moore - a prominent HIV immunologst working at Cornell Weill Medical Center in Manhattan - to snipe that "the bar is lowering further and further, until basically you trip on it. I don't expect the vaccine to work."

Key said in an interview that the company hopes to achieve at least 30 percent effectiveness, but that Gordon is ready to file for FDA licensing if a 20 percent level is revealed when the data are unsealed.

The VaxGen product, called AIDSVax, was developed by Dr. Philip Berman, a molecular biologist then working at the San Francisco-based biotech company, Genentech. During the late 1980s and early 1990s, Genentech conducted preliminary tests of the vaccine, a genetically engineered product composed of bits of the type of HIV found most commonly in this country. A 1990 trial using two chimpanzees showed it protected against infection from a genetically identical, laboratory-made virus.

In 1994, NIH scientists reviewed the test data and decided AIDSVax showed insufficient promise to proceed into federally funded clinical trials. Genentech then dropped AIDSVax.

But an angry employee - former CDC scientist Dr. Donald Francis - along with the vaccine's inventor, Berman, persuaded the company to give them license to the product and $1 million in start-up money. In 1995, they founded VaxGen, which soon became a darling of high-tech investors. Last year, VaxGen grew from a single-product company to one with federal contracts for development of vaccines against anthrax and smallpox.

"They said none of this could be done," Francis said in a recent interview. "But we raised the private-sector money, did the trials - we have another clinical trial under way in Thailand in drug users ... and here we are."

The results of the Thai study, to be released at the end of this year, are expected to provide a better picture of the vaccine's effectiveness, because it involves a population at very high risk of HIV infection - intravenous drug users - living in a country with a serious epidemic.

Wall Street's response is expected to reflect VaxGen's spin on the numbers, analysts say, because several hours may pass before scientists in the United States can study and respond to the pre-dawn announcement.

Trial results are supposed to be blinded - kept secret to everyone except a small group of independent scientists on a data safety management board - until statistical analysis is completed. But Gordon, addressing J.P. Morgan investors, indicated that the annual rate at which participants became infected with HIV was 3.6 percent - meaning that more than 9 percent of the participants became infected over the three years of the research. He also said that 95 percent of volunteers in the study stuck with it for the full three years, a level highly unusual in research, which he said would give the findings "strong statistical power."

Francis argues that even a low margin of protection would still make the vaccine worth using in countries with high HIV infection rates. But the UNAIDS Programme in Geneva has opposed use of a vaccine with less than 30 percent efficacy, and the FDA has indicated it expects to see a minimum of 35 percent before considering licensing.

Johns Hopkins Medical School researchers Tom Quinn and Ron Gray have found, based on work in Uganda, that a vaccine would have to be at least 50 percent effective to offset the impact of behavioral changes among recipients. Gray told the International AIDS Conference in Barcelona last summer that the value of vaccination would be "completely washed out" by people's increased sexually risky behavior.

Huntly Collins, new director of the New York-based AIDS Vaccine Advocacy Coalition, said the use of a vaccine with low effectiveness would "be a disaster because it won't work, and it will be one more indication to the people in the developing world that western science is not to be trusted."

Newsday reporter Randi Marshall contributed to this story.

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