Israeli start-up BiondVax Pharmaceuticals Ltd. recently raised $4.5 million in its first financing round. Yossi Ben-Yossef's Kadima High Tech, Dr. Eric Messika's Coronis Partners and private investor Ido Greenberg led the round
BiondVax was founded in 2002 by four entrepreneurs: Prof. Ruth Arnon, whose research underpins the company, and who heads its science advisory board; president and CEO Dr. Ron Babecoff, who has ten years experience in the pharmaceutical industry; former chairman Isaac (Itzik) Devash, who provided the company's initial financing; and COO & VP business development Adv. Rami Epstein. Babecoff and Devash first met while serving in the IDF. Yeda Research and Development Co. of the Weizmann Institute of Science is a shareholder.
BiondVax is developing a composite vaccine against flu that promises to revolutionize the field. The vaccine is based on research led by Prof. Arnon. Devash says the market is huge. "300 million people worldwide are vaccinated against flu every year, and current vaccines are no more than 50% effective. The estimated size of the market is $1.5 billion. The global economic damage from flu is far higher, estimated at $70 billion, including $25 billion in the US. In addition, there is the risk of global pandemics, which would cause far more damage. Many people worldwide believe that the next tsunami will be a flu pandemic."
BiondVax's progress has been gradual, in order to establish the company under conditions that its entrepreneurs deem ideal. Babecoff says, "We've learned that the tools available to entrepreneurs wanting to found drug development companies are limited. Incubators offer $500,000 in support over two years, which is not enough for a company in this field to achieve important milestones, which is why most of them have disappeared. We believe that in Israel, companies such as ours should not try to compete against the largest companies.
"We should aim at consolidating a science database, bring companies to the clinical trials stage, and pass the torch to leading pharmaceutical companies. That's what we've done. We're already talking with large pharmaceutical companies, which have shown great interest. Large pharmaceutical companies have slashed their R&D departments, since they aren’t involved in the academic research stage, because it's too remote from the market. On the other hand, they're definitely interested in concepts that have passed the initial testing stages."
Babecoff says that this model could also be more logical for investors. "A large investment is necessary to go through the entire regulatory process, and it takes ten years. We chose the relay race model. Investors don't have to pledge tens of millions of dollars over ten years, but make investments of a three to four-year period. I think that our added value is precisely in this stage - to take a successful academic concept to the preliminary development stages."
Devash says, "We were stunned when we examined the mergers and acquisitions market in our industry. We found that a company that developed a flu vaccine that had had reached the clinical trials stage had been acquired for $1.5 billion."
Flu mutates every year
Vaccines try to stop the spread of flu by injecting dead or weakened variants of the flu virus into a person's bloodstream, in order to induce the immune system to recognize the virus's protein shell (capsid) and create appropriate antibodies.
How is this done? Drug makers insert selected flu strains into huge numbers of chicken eggs. After incubation, the eggs are opened and the viruses extracted. These viruses are then purified to create three viral strains for a new vaccine. An ordinary flu season lasts two to three months, affecting 5-20% of the world's population.
Prof. Arnon is no businesswoman; she initiated her research for other reasons. "Flu is a disease known to everyone. It kills infants and the elderly. What makes the flu virus unique, compared with other viral diseases, is that it mutates its immunogenic structure every year. As a result, a vaccine developed to treat last year's flu will not necessary be effective against this year's flu. Every year, before the flu season starts, it is necessary to study this year's virus."
Arnon says that the source of new flu viruses is Southeast Asia, where tests are conducted in an effort to predict this year's virus.
Arnon began her research in the 1970s, by asking whether it was necessary to use a whole egg yolk, or if only small parts were needed to create flu vaccines. "The question was whether there a part of the yolk that created the antibody reaction. We identified one peptide, comprising 20 amino acids, that creates the antibody reaction. We artificially created this peptide, and discovered that if it is injected in a certain way, antibodies that kill the virus are created. We saw the possibility of creating a vaccine based on a particular part of the yolk."
The next targets: HIV and typhus
Arnon says that researchers chose to work on the flu virus out of convenience. "At that time, I wasn’t planning to develop a flu vaccine. It was convenient for us to work with the flu virus because its protein structure was known. It was also easy to work with because both rats and horses are sensitive to it."
Tests on rats whose immune systems were destroyed and replaced with human white blood cells (leukocytes) proved that the vaccine was 100% effective, compared with a 100% mortality rate among unvaccinated rats. Current vaccines have an effective rate of 30-50%.
This stage of the research was promising for three reasons: the vaccine compound was not based on the virus itself, but was synthetic; the compound was designed to be inhaled, rather than injected; and BiondVax hopes that it will be effective for more than one flu season. However, these are still only hypotheses that will have to be verified by human clinical trials. Arnon adds that the compound may have to be changed to adapt to different populations.
Arnon says the platform might also be good for other diseases besides flu. "Other viruses change their protein shells, including HIV, typhus, West Nile Virus, and bilharzia (Schistosomiasis), each one is unique. In general, research on vaccine compounds slowed with the use of antibiotics. We believe that vaccines are better for treating a disease that has already broken out, but social pressure for vaccine discovery plummeted when antibiotics were discovered as an effective treatment of disease."
The baton is now being passed to development and production staff. Babecoff says, "We plan to bring the company to the next station in the first stage of clinical trials. In other words, we'll test the flu vaccine on 150 people. As soon as we pass this stage, we'll pass the baton and concentrate on other vaccines. Our objective is to reach clinical trials within 18 months, and conclude them within two years. The main task before us is to create the material for use in the clinical trials, a cleaner material than the material Arnon and her team used in the lab."
With the completion of BiondVax's financing round, Prof. Michel Revel, an Israel Prize laureate and developer of Rebif, and former Tel Aviv University president has joined the scientific advisory board. Teva director Prof. Moshe Many has joined the company's board. Prof. Avner Rotman was appointed chairman.
Published by Globes [online], Israel business news - www.globes.co.il - on April 6, 2005