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NicVAX® (Nicotine Conjugate Vaccine)

NicVAX® (Nicotine Conjugate Vaccine) is an investigational vaccine designed as an aid to smoking cessation, as well as an aid to prevent relapses of a treated smoker leading to long-term abstinence.

NicVAX represents an extension of our conjugate vaccine technology that allows us to address a significant unmet medical need. We believe that broad commercialization of NicVAX requires large-scale sales and marketing programs focused on primary care physicians. As such we have secured an option and license agreement with GlaxoSmithKline (GSK), one of the leading global pharmaceutical companies. GSK has also depth of vaccine development and commercialization as well as smoking cessation expertise that should be an asset in our effort to successfully bring NicVAX to market.

Nicotine is a small molecule that upon inhalation into the lungs quickly passes into the bloodstream and subsequently reaches the brain by crossing the blood-brain barrier. Once in the brain, the nicotine binds to specific nicotine receptors resulting in the release of stimulants, such as dopamine, a chemical linked to pleasure and to addiction. NicVAX is designed to stimulate the immune system to produce antibodies that bind to nicotine in the bloodstream and prevent it from crossing the blood-brain barrier and entering the brain. With a reduced amount of nicotine reaching the brain, fewer stimulants are released and the pleasurable, positive-reinforcing effects of nicotine are diminished, thereby making it easier to quit smoking. Pre-clinical studies with NicVAX have shown that vaccination prevents nicotine from reaching the brain and blocks the effects of nicotine, including effects that can lead to addiction or can reinforce and maintain addiction, in animals. NicVAX, in combination with quit-counseling, has been clinically demonstrated in smokers, who sincerely want to quit, having a better chance of breaking their smoking addiction.

Nicotine addiction is difficult to treat effectively. Once a person becomes addicted, it is extremely challenging to achieve and sustain abstinence. Withdrawal symptoms, environmental cues, and stress can all trigger relapse. We believe NicVAX has advantages over existing treatment therapies because the anti-nicotine antibodies limit the ability of nicotine to enter the brain. Moreover, these anti-nicotine antibodies persist for six to 12 months following vaccination. This is important due to the extremely high relapse rate that has been observed when a smoker attempts to quit smoking. The majority of smokers being treated for nicotine addiction using current therapies resume their addiction shortly after they stop the therapy. Thus, we believe that NicVAX gives smokers a fighting chance to end the seemingly endless addiction/relapse cycle that plagues the great majority of smokers trying to quit.

In September 2005, we were awarded a $4.1 million grant by the U.S. National Institute on Drug Abuse, or NIDA, partially offsetting our funding requirements for the NicVAX development program.

Following the award of the NIDA grant, we formed a scientific advisory panel to provide us guidance on clinical trial design and clinical development plans for NicVAX.

On November 7, 2007, we announced the successful completion of our Phase IIb trial of NicVAX® (Nicotine Conjugate Vaccine), the company's innovative and proprietary investigational vaccine being developed to treat nicotine addiction and prevent smoking relapse. At the 6 month primary end point we observed a statistically significant number of subjects in the high anti-nicotine antibody responder group who met the trial's primary endpoint of eight weeks of continuous abstinence between weeks 19-26. The final 12-month data confirmed the highly significant trends seen in the previous data at six months and nine months for both smoking cessation and long-term smoking abstinence.

In December 2008, we reached agreement with the U.S. Food & Drug Administration (FDA) on a Special Protocol Assessment for pivotal Phase III clinical trials. The Special Protocol Assessment is a process by which sponsors and the FDA agree on the design and size of clinical trials. It is intended to form the basic foundation to support approval of a New Drug Application. We also received scientific advice from the European Medicines Agency (EMA) in June 2009 regarding requirements for marketing authorization submission as it relates to the appropriate design of Phase III trials and safety data base. This advice helps to ensure the performance of appropriate clinical studies so that no major objections regarding trial design are likely to be raised during evaluation of the marketing authorization application. EMEA is responsible for the scientific evaluation of applications for European marketing authorization for medicinal products.

In September 2009, we received a $10 million grant from the National Institute on Drug Abuse (NIDA), part of the National Institutes of Health, to further support the continued development of NicVAX, and we initiated the first of two pivotal Phase III trials in November 2009.

Subsequently, we entered into a worldwide option and licensing agreement for NicVAX with GlaxoSmithKline Biologicals, closed this agreement in March 2010 and initiated the second Phase III trial.

Medical and Economic Impact of Smoking

Smoking is a global healthcare problem. The WHO estimates that there are 1.3 billion smokers worldwide today and more than five million tobacco-related deaths each year. If current smoking patterns continue, smoking will cause some 10 million deaths each year by 2020. According to the CDC, tobacco use is the single leading preventable cause of death in the U.S., responsible for approximately 443,000 deaths each year.

Smoking is the primary causal factor for at least 30% of all cancer deaths, for nearly 80% of deaths from chronic obstructive pulmonary disease, and for early cardiovascular disease and deaths.

Lung cancer, the leading cause of cancer death among men and women, kills about 157,000 Americans a year. A greater number of people die of lung cancer than of colon, breast, and prostate cancers combined. Smoking is the primary risk factor for lung cancer causing about 80% of lung cancer deaths.

Dr. Margaret Chen, WHO Director General stated in the 2008 WHO Report on the Global Tobacco Epidemic that, “Reversing this entirely preventable tobacco epidemic must now rank as a top priority for public health and for political leaders in every country of the world”.

In addition, it is estimated that smoking results in an annual health-related economic cost of approximately $192 billion. The CDC estimates that, among the 45 million adult smokers in the U.S., 70% want to quit, but less than five percent of those who try to quit remain smoke-free after 12 months.

Market Potential

The smoking cessation Rx market is young and growing. Datamonitor estimates that the market will grow at a compound annual growth rate of 11% and will reach approximately $3.8 billion by 2018. Datamonitor forecasts that nicotine vaccines will account for $2.1 billion of these sales.

The successful launch of Chantix/Champix by Pfizer in 2006 – the world’s leading smoking cessation prescription therapy validated the commercial pathway for NicVAX.

Competition

Existing products in the smoking cessation marketplace mainly consist of three general categories of therapeutic approach: (a) direct nicotine replacement therapy; (b) anti-depressant therapy; and (c) nicotine receptor partial agonists.

(a) Nicotine replacement therapies (NRTs) represent a first generation approach to assisting smokers to quit by substituting a less harmful form of nicotine than inhalation by smoking. NRTs are mildly effective and support smoking cessation in combination with behavioral modification counseling. NRTs come in gums, patches, lozenges and inhalers. Many forms of NRTs are currently available over the counter.

b) Zyban is the only anti-depressant which is FDA approved specifically to aid smoking cessation that acts mainly through a reduction in craving and withdrawal symptoms.

(c) Pfizer Inc.’s Chantix® product, a nicotine receptor partial agonist, represents a new class of prescription therapeutic that blocks nicotine from interacting with the nicotine receptor in the brain and has defined a new standard of care. More recently, it has been reported that Chantix causes some untoward neuropsychiatric side effects including suicides, suicide ideations and other psychotic behaviors. This has led the FDA to require Pfizer to add a “boxed warning” on the Chantix label.

Product candidates in development include selective glycine receptor antagonists (GlaxoSmithKline; Phase II) and other nicotine-derived therapeutic vaccines. Nic-002 (Phase II), TA-Nic (Phase II) and Niccine (Phase II) are nicotine-derived therapeutic vaccines being developed by Cytos Biotechnology/Novartis Pharmaceuticals, Celtic Pharmaceuticals and Independent Pharmaceutica, respectively. NicVAX is the only smoking cessation vaccine in Phase III development and as such is more advanced than the other three vaccines.

Recently, Cytos announced that an interim analysis showed that Nic-002 did not achieve its primary end point of smoking cessation in a Phase II study.

Clinical Trials

In February 2006, the U.S. Food and Drug Administration granted Fast Track Status to NicVAX for use as a therapeutic for smoking cessation.

Clinical Trial Information

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