A Breakthrough for Biotech

By Janice Castro.

It is not often that companies cheer the news that a competitor has beaten them to market with a hot new product. But something like that happened last week when the Food and Drug Administration announced that it had approved commercial production of a new vaccine against hepatitis B, a virus that causes an incurable and sometimes fatal liver disease and strikes an estimated 200,000 new victims every year in the U.S. Developed by Merck, the New Jersey-based pharmaceutical giant, in partnership with Chiron, a small (1985 sales: $6 million) biotech firm in Emeryville, Calif., the product is the first genetically engineered vaccine approved for human use. "We're delighted that FDA has expressed such a positive view about the usefulness of recombinant technology for vaccines," said Stephen Sherwin, the director of clinical research in immunology at South San Francisco-based Genentech, a rival biotech company. "It's another example of the technology yielding real benefits," said Dr. Thomas White, vice president for research at Cetus, another Emeryville company. "The approval is good for the industry."

Merck, which funded much of the research and has licensed Chiron's technology for the new product, will sell the hepatitis B vaccine under the name Recombivax HB. The vaccine will join a handful of pioneering products of recombinant DNA, or gene splicing, that have reached the market, including human insulin (1982), human growth hormone (1985) and alpha interferon (1986). The FDA approval of Recombivax HB is expected to give a big boost to the public image of an industry that has been more promising than profitable. Said Chiron President Edward Penhoet: "We think this vaccine will usher in a whole new generation of vaccines."

Indeed, at least three other companies -- Genentech, Biogen and Genetic Systems -- are developing their own versions of genetically engineered hepatitis B vaccines. Researchers at a number of firms are also working on vaccines for acquired immunodeficiency syndrome, herpes, other forms of hepatitis and some types of cancer.

Recombivax HB is made by inserting a gene from the hepatitis B virus into yeast. The yeast cells then multiply rapidly and manufacture large amounts of a protein from the virus. This protein forms the basis of the new vaccine, which triggers an immune reaction when injected into humans.

The vaccine is the second developed for hepatitis B. But the other one, introduced in 1982 and also marketed by Merck, is somewhat less desirable because it must be made from the blood of infected individuals. Though there have been no reported cases of infection stemming from Merck's blood-based vaccine, the possibility that diseases such as AIDS and hepatitis B could be transmitted in blood products always exists. Recombivax HB eliminates that possibility, however slight.

For the time being, both vaccines will cost patients $110 for a course of three inoculations. After the development costs for Recombivax HB are recovered, however, it may become cheaper than the blood-based alternative. Reason: the prolific yeast will make it easier to mass-produce Recombivax HB.

Chiron's Penhoet says that his company's success in beating much larger competitors to the milestone Government approval came from "hard work and being cleverer." Teaming with Merck (1985 sales: $3.5 billion), which offered ample research and marketing resources, did not hurt either. For every dollar spent to discover and develop a biotechnology product in the laboratory, a small company like Chiron would need to spend $2 or $3 to market it successfully.

The new vaccine is expected to generate $100 million in annual sales. But Chiron, which lost $3 million last year, does not intend to record substantial profits over the next few years. Instead, the company plans to inject most of its earnings into laboratory research in hopes of coming up with more gene- splicing break-throughs.

With reporting by Linda Kramer/Portland and Dick Thompson/Washington