On March 5, 2020 VBI Vaccines Inc. (Nasdaq: VBIV) ("VBI"), a commercial-stage biopharmaceutical company developing next-generation infectious disease and immuno-oncology vaccines, reported a corporate update, its outlook for 2020, and financial results for the fourth quarter and twelve months ended December 31, 2019 (Press release, VBI Vaccines, MAR 5, 2020, View Source [SID1234555215]).

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Annual Note from Jeff Baxter, President and CEO:

"Over the last 18 months, VBI has transformed into a company committed to changing the landscape of hepatitis B (HBV) by improving prevention and working to develop a functional cure. HBV is a significant global public health issue with an increasing disease burden – by example, the acute HBV infection rate in the US increased by 20.7% in 2015, rising for the first time since 2006, with the sharpest increases occurring largely in states that have been impacted most by the ongoing opioid epidemic1. More than that, HBV is often an asymptomatic virus – it is estimated that as many as 67% of people with chronic HBV in the US are unaware of their infection status2. All of this underlines the importance of vaccination against HBV.

"Our trivalent hepatitis B vaccine, Sci-B-Vac, has successfully completed the pivotal Phase 3 program, demonstrating its ability to safely and rapidly elicit robust immune responses, conferring seroprotection in adults, including those who have been harder to protect, namely older adults, diabetics, and obese individuals. We are now working with the FDA and other regulatory agencies to prepare for submissions of regulatory approval applications in the US, Europe, and Canada, beginning in the fourth quarter of 2020. We believe Sci-B-Vac has the potential to be an efficacious, safe, and cost-effective option for all adults seeking protection against HBV.

"While we believe prevention is always better, and more cost-effective, we also recognize the importance of a cure for HBV. Recent estimates of people chronically-infected with HBV worldwide range from 240 million to 350 million, with over 2 million in the US alone3; globally, more than 2 billion people have ever been infected with HBV, acutely or chronically4. The race to develop a functional cure for HBV is competitive, but we believe consensus amongst experts is building that an immunotherapeutic would be needed to achieve long-term immunologic control and restore the body’s defense against HBV. With our new trivalent formulation that enhances T-cell response, we believe VBI-2601 (BRII-179) is well-positioned to be the immunotherapeutic component of a functional cure. Initial data from the ongoing Phase 1b/2a clinical study for VBI-2601, conducted with our partner Brii Biosciences (Brii Bio), are expected in the second half of 2020.

"In our other programs, we are integrating our cytomegalovirus (CMV) expertise with our proprietary enveloped virus-like particle (eVLP) technology to develop therapeutic cancer vaccines and prophylactic vaccines. Our lead eVLP program, VBI-1901, targets the most aggressive form of adult brain cancer, glioblastoma (GBM), a CMV-associated solid tumor. GBM is a devastating disease leaving patients with few treatments options. Encouraging data from the ongoing Phase 1/2a study in recurrent GBM patients were presented throughout 2019, with demonstrated correlations between immunologic responses, tumor responses (assessed through MRI scans), and clinical responses (survival data). As a testament to the strength of the early data, we entered into a collaboration with GlaxoSmithKline (GSK) to clinically evaluate the combination of VBI-1901 with GSK’s proprietary AS01B adjuvant system, a highly-innovative adjuvant system that has contributed to positive results in GSK’s shingles vaccine, Shingrix. We expect additional data from Part B of the ongoing Phase 1/2a study throughout 2020. We hope to continue to see encouraging results from VBI-1901 as we work hard to provide meaningful benefit to these patients.

"There were numerous clinical milestones throughout 2019, but we believe 2020 will be an even more transformational year for the company. The VBI team in the US, Canada, and Israel are working hard to address significant unmet medical needs, and we believe this dedication and focus on successfully achieving fundamentals will drive shareholder value. We appreciate the continued shareholder support as well as that of our partners and volunteers who participate in our clinical trials, and we look forward to continued advancement and achievement in 2020 and beyond."

Recent Key Program Achievements and Projected Upcoming Milestones:

Sci-B-Vac: Trivalent Prophylactic HBV Vaccine

●June 2019 and January 2020 : Announcement of positive top-line results from both pivotal Phase 3 studies which, combined, showed:

oNon-inferiority of seroprotection rate (SPR) in all adults ≥ age 18 compared with Engerix-B;
oSuperiority of SPR in adults ≥ age 45 compared with Engerix-B;
oHigher SPR in all key subgroup analyses of adults ≥ 18 years, including by age, gender, body mass index, diabetic status, and smoking status, compared with Engerix-B;
oHigher SPR at all time points compared to Engerix-B and, in CONSTANT, non-inferiority of SPR after 2 doses of Sci-B-Vac compared with 3 doses of Engerix-B in adults age 18-45 years;
oLot-to-lot manufacturing consistency; and
oSafety and tolerability consistent with the known safety profile of Sci-B-Vac, with no new safety risks identifies and no safety signals observed.

●Q2 2020 : Pre-BLA discussions expected with the FDA.
●Q4 2020 : Submission of applications for regulatory approvals in the US, Europe, and Canada expected to begin.

VBI-2601 (BRII-179): HBV Immunotherapeutic Candidate

●November 2019 : Initiation of enrollment in Phase 1b/2a study in patients with chronic HBV infection. The Phase 1b/2a is a randomized, controlled study designed to assess the safety, tolerability, antiviral, and immunological activity of VBI-1901 (BRII-179). The study is expected to enroll up to 65 patients and is sponsored by our partner Brii Bio.
●H2 2020 : Initial human proof-of-concept data expected from Phase 1b/2a study.

VBI-1901: Cancer Vaccine Immunotherapeutic Candidate

●June 2019, November 2019, and March 2020: Encouraging data from the ongoing Phase 1/2a clinical study of VBI-1901 in recurrent GBM patients were announced, demonstrating that:

oVBI-1901 is well-tolerated at all doses tested, with no vaccine-related safety signals observed;
oTwo patients in the high-dose cohort of Part A experienced a 60% reduction in the size of the primary tumor;
oIn the high-dose cohort of Part A, vaccine response correlated with clinical response, with a 12-month overall survival (OS) rate of 83% (n=5/6) for vaccine responders vs. 33% (n=3/9) for non-responders – vaccine responders also saw a 6.25-month improvement in median OS (14.0 months) compared with vaccine non-responders (7.75 months); and
oEarly tumor and immunologic responses in Part B aligned with responses and benefit observed in Part A.

●September 2019 : Announcement of collaboration with GSK to clinically evaluate VBI-1901 in combination with AS01B as a second arm in Part B of the ongoing Phase 1/2a study in first-recurrent GBM patients
●February 2020 : Enrollment initiated in VBI-1901 + GSK’s AS01B study arm
●Q2 2020 : Expanded immunologic, tumor, and clinical data expected from Phase 2a VBI-1901 + GM-CSF study arm
●Q4 2020 : Initial immunologic and tumor response data expected from Phase 2a VBI-1901 + AS01B study arm

Financial Results for the Three and Twelve Months Ended December 2019

●Cash Position: VBI ended the fourth quarter of 2019 with $44.2 million cash and cash equivalents compared with $59.3 million as of December 31, 2018.
●Net Cash Used in Operating Activities: Net cash used in operating activities for the full year 2019 was $48.7 million, compared to $45.5 million for the same period in 2018.
●Cash Used for Purchase of Property and Equipment: The purchase of property and equipment in 2019 was $3.7 million, compared to $6.0 million in 2018, and was primarily in Rehovot, Israel, as part of the modernization and capacity increase of the manufacturing facility. As part of this process, manufacturing at the facility in Rehovot, Israel, was temporarily shut-down in 2018 and re-commenced in May 2019. Following completion of the modernization and capacity increase, VBI received the certificate of Good Manufacturing Practice (GMP) compliance from the Israeli Ministry of Health in January 2020.
●Revenue: Revenue for the three months ended December 31, 2019 and for the full year 2019 was $0.6 million and $2.2 million, respectively, compared to $2.7 million and $3.4 million for the same time periods in 2018, respectively. The decrease in revenue was due to decreased named-patient product sales in Europe in 2019. Additionally, there was a decrease as a result of the license revenue earned as part of the License Agreement with Brii Bio in 2018, but this was offset by an increase in R&D services revenue in 2019 as part of the same agreement with Brii Bio.
●Research and Development (R&D): R&D expenses for the fourth quarter and full year 2019 were $4.3 million and $26.3 million, respectively, compared to $10.1 million and $38.5 million for the same periods in 2018, respectively. The decrease in R&D spend in 2019 was primarily due to a decrease in costs as the Phase 3 program for Sci-B-Vac neared completion.
●General and Administrative (G&A): G&A expenses for the fourth quarter and full year 2019 were $3.8 million and $14.1 million, respectively, compared to $9.9 million and $20.5 million for the same periods in 2018, respectively. The decrease in G&A expense in 2019 was primarily due to a $6 million payment made in 2018 to re-obtain Sci-B-Vac distribution rights in Asia, with no similar payment made during 2019. Other variances include decreased administrative expenses and the re-allocation of expenses from G&A back to Cost of Goods in 2019 related to the temporary Rehovot facility closure.
●Impairment Charge: There was an impairment charge of $6.3 million in 2019 related to goodwill, compared to $0.3 million in 2018.
●Net Loss: Net Loss and net loss per share for the year ended December 31, 2019 were $54.8 million and $0.46, respectively, compared to a net loss of $63.6 million and a net loss per share of $0.97 for the year ended December 31, 2018.