Protein Sciences Corp. has faced its share of challenges over the years.
The Meriden-based biotech firm has warded off a hostile takeover, involuntary bankruptcy and a failed $100 million bet on an AIDS vaccine.
But now company executives from the 30-year-old privately-held firm are bullish on the future, thanks to a new, eggless flu vaccine it’s developed that is the first of its kind on the market.
In January, Protein Sciences received Food and Drug Administration approval to sell its vaccine — called Flublok — to 18 to 49 year olds. Flublok is unique because it’s made without a chicken egg or live virus, and can be produced much more rapidly than a traditional vaccine.
The company will ship 250,000 doses for the upcoming flu season, which is expected to generate millions of dollars in revenue.
Protein Sciences anticipates regulatory approval for the vaccine’s use in people 50 years and older next year.
Flublok, which is 20 years in the making, could be a game changer for the company, officials say. It has already helped Protein Sciences raise tens of millions of dollars in research funds, and regain profitability.
Two insurance companies have also agreed to cover the vaccine treatment, giving it more credibility in an untested marketplace.
“This is the big star product,” said Manon Cox, Protein Sciences’ president and CEO. “This is going to be the fuel to keep the development engine going and we will make it a success. It’s just a question of how long it takes us.”
Flublok is currently made in Protein Sciences’ Meriden headquarters and will be distributed to hospitals and pharmacies initially. The company’s Pearl River, New York facility — formerly owned by Wyeth Pharmaceuticals — has four times more capacity to meet supply when demand picks up.
The company expects to sell up to five million doses in 2014.
At $32 for a single dose, the vaccine is priced a notch above the $10 to $25 for a conventional egg-based flu vaccine. But its price is well below egg-free vaccines for hepatitis and human papilloma virus, priced in the $100 to $200 range, Cox said.
Wayne Hachey, a retired U.S. Army colonel who heads the company’s governmental and clinical affairs team in Washington, D.C., said Flublok’s price premium reflects its purity, and costs involved in the development process.
Unlike conventional vaccines created in chicken eggs, Flublok is free of egg protein, and all the other ingredients not essential to the vaccine itself including antibiotics, latex, formaldehyde and the mercury preservative thimerosal.
Instead, Protein Sciences only uses a small piece of the virus that’s required for immunity — the hemagglutinin, or HA protein. To do this, scientists extract the genetic information that tells cells how to make the HA protein. The gene is then placed into cultured insect cells that grow in bioreactors.
The cells help produce hundreds of copies of the HA protein, allowing for large quantities of vaccines to be produced quickly, purified and then packaged into Flublok.
“The new technology offers the potential for faster startup of the vaccine manufacturing process in the event of a pandemic, because it is not dependent on an egg supply or on availability of the influenza virus,” said Karen Midthun, director of the Center for Biologics Evaluation and Research at the FDA.
That speed to market gives Flublok a competitive edge over traditional flu vaccines, Cox said. It’s also why the Biomedical Advanced Research and Development Authority (BARDA) in 2009 awarded Protein Sciences $147 million to help bring Flublok to market more quickly.
Cox said Protein Sciences wouldn’t have survived without the government funding, since access to private capital is a challenge for fledgling bioscience and pharmaceutical firms that often have high development costs and slow returns initially. To date, Protein Sciences has received $300 million in grants and private funding, while revenue in 2012 was $32 million.
Even cash-rich big pharma companies have stayed away from making egg-free flu vaccines, Cox says, because the traditional low cost, high volume revenue formula has been working well for them.
“Even though 150 million doses of influenza vaccines are sold each year, manufacturers were not interested in innovation because it’s a commodity product,” Cox explained.
Protein Sciences has been profitable since 2009, Cox said, because the BARDA contract pays for the flu vaccine development work. Also, there’s money trickling in from milestone fees, including $1 million from Merck as a result of Flublok’s FDA approval.
The company also has other moneymaking businesses. Sales in its research antigens business, for example, totaled $2 million last year. Its GeneXpress division, which undertakes product development for companies who use Protein Sciences’ technology, raked in $8 million a year ago.
A challenge Protein Sciences faces with Flublok is finding a reliable customer base.
Its product is new, unfamiliar, and has a price premium. It could also be difficult convincing a relatively healthy age group, for whom Flublok was approved, to get vaccinated.
Cox said the vaccine’s target market includes the more than 600,000 Americans who are allergic to eggs. They also want to target the “Whole Foods” crowd, or people who prefer organic products that don’t contain chemicals or antibiotics.
In June, the Advisory Committee on Immunization Practices, which advises the Centers for Disease Control and Prevention, recommended Flublok for adults with an egg allergy, which should give them more credibility in the market, Cox said.
She added that the vaccine has received favorable responses from allergists and physicians.
Prasad Srinivasan, an allergist in Glastonbury, said he sees significant potential for Flublok for egg allergy patients. That’s because desensitizing those individuals for a traditional flu shot could cost up to $1,000.
“If an egg-free flu vaccine becomes available a lot of people with egg allergy, who don’t want to go through this time-consuming and expensive process, will begin to get vaccinated,” Srinivasan said, adding that he thinks $32 is a “very reasonable” price for the vaccine.
Srinivasan said he also expects insurance companies to jump on board, which has already started to happen.
Both Anthem Blue Cross and Blue Shield and Aetna have agreed to cover Flublok. Cox said she also expects the Affordable Care Act, which demands more preventative care, to boost use of its vaccine.
The FDA approval process for Flublok was far from smooth — the application was rejected twice. The company had to perform additional studies to prove the safety of using insect cells in the development process.
But the company isn’t unfamiliar with facing challenges.
In 2009, Protein Sciences survived an involuntary bankruptcy filed by three of its creditors including Maryland biopharama firm Emergent BioSolutions Inc. Emergent tried to acquire Protein Sciences in 2008 and provided the company with a $10 million loan. The deal, however, went south quickly, ended up in litigation, and eventually a bankruptcy lawsuit.
A New York judge eventually dismissed the case.
The saving grace?
Protein Sciences’ former CEO and now chairman Daniel Adams put in his own money and arranged for a collaborator in Japan to wire $10 million to pay Emergent off.
And Robin Robinson of BARDA pushed for Protein Sciences to finish developing the Flublok vaccine, pumping millions of dollars into the firm.
The company has been on a much steadier track since then.
“Whether through placing orders for U.S. stockpiles for pandemic vaccines, or through CDC recommendations, the government has a very big interest in keeping us around and making us successful,” said Cox.
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