Biotech firm bets big on first products

UNIVAX ON THE CUTTING EDGE

December 09, 1992|By Liz Bowie | Liz Bowie,Staff Writer

ROCKVILLE -- In the realm of biotechnology companies, Univax Biologics Inc. seems like a sprinter among a pack of joggers.

Just two years ago, the company seemed unremarkable. It was one of the dozens of tiny biotech companies in Maryland squeaking by with fewer than 20 employees and visions of turning a scientific discovery into a product.

Today, Univax has a cutting-edge science that is taking off. In two years, it has grown to a staff of 110, has five products in clinical trials, raised $44 million in its first public offering and opened a pilot manufacturing plant this summer. Even at that pace, the company can't afford to relax, because it still doesn't have a product on the market or revenues.

The fast pace was a way for Univax's chief executive, Thomas Stagnaro, to try to cut some of the risk out of a company and industry that is full of risk.

"I didn't want to be a company that was going to wait six to eight years to get a product to market,"he said.

So he bought licenses from academic institutions and companies that had developed new vaccines but didn't have the money to take the products to market. He also tried to diversify. "I expected some failures, so I wanted a basket of products," he said.

Univax's primary business is developing vaccines for infectious diseases. But don't think of the company as producing only injectable vaccines for mass use; it also specializes in making hyperimmune intravenous immunoglobulins, or as Mr. Stagnaro calls them, "immunity in a bottle."

Univax hopes to use a process, which it has perfected, to make a new line of hyperimmune immunoglobulin products, each one of which could provide instant short-term immunity for a few high-risk patients.

The process works like this: The company injects a vaccine into healthy volunteers and waits for them to develop antibodies -- warriors of the immune system that develop to fight a virus or disease. The volunteers then donate blood plasma, which is purified until just the antibodies are left. The antibodies are then turned into a product called an H-IGIV.

The key advantage to this process is that it provides immunity immediately. Most vaccines don't take effect for about a month, too long for a patient at risk of developing sepsis or infections common to patients with cystic fibrosis, HIV and Hepatitis B.

Sepsis, for instance, is a bacterial infection that kills -- usually quickly -- about 100,000 people a year, mostly patients who are hospitalized with other illnesses.

The immunoglobulin for sepsis could become the company's most profitable product if Univax gets it to market. Even though its cost might be $500 a dose -- a lot for about three weeks of protection -- it is less than the average $1,500-a-day cost of intensive care that would be needed if a patient developed the infection.

Mr. Stagnaro argues that even if the immunoglobulin is effective in only half the patients who receive it,it would be cheaper for society to give the immunoglobulin to all 400,000 patients at risk of developing the infection than to pay the additional cost of care.

Besides the H-IGIVs, the company is developing vaccines to combat staph infections common in high-risk patients, such as those on kidney dialysis and with AIDS.

The company has a range of products under development, some of which will be ready to market within the next year or two, others that may not be available for five years or longer, said Joseph Edelman, a biotechnology analyst with Prudential Securities.

Univax may never become another Amgen, one of the largest and most successful biotechnology companies in the country. But, Mr. Edelman said, "It could be a substantial company," adding that in five or 10 years, the company's stock could be worth 10 times what it is today.

The stock, which sold for $12 in the initial public offering, has been as low as $5.75 and as high as $10.25 in the past two months. It closed yesterday at $10.25 a share, up 25 cents.

But Mr. Edelman cautioned that although Univax is making great strides, it faces a long haul. The danger, he said, is that its technology may become antiquated in 10 years.

Univax is still one or two years from marketing its first product, WinRho SD, a therapy for an autoimmune disease that sharply reduces blood clotting and affects about 100,000 people a year, including those infected with HIV. At the earliest, Mr. Stagnaro says, the company hopes to get FDA approval to begin selling a product in early 1994, and analysts predict that the company will not break even until 1995 or 1996.

Meanwhile, the 4-year-old company has been burning up its capital at a rate of $1 million a month and will continue to do so.

The company will have to raise more money in the next few years to build a 40,000-square-foot manufacturing facility, which would in Frederick County and employ between 25 and 40 people.

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