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Vir Biotechnology (NASDAQ:VIR) is a great speculative biotech play to look into. That’s because it has a huge focus on developing drugs for the treatment of patients with Hepatitis B Virus [HBV]. It has both VIR-2218 which is an RNA Interference (RNAi) drug and VIR-3434 which is a monoclonal antibody. VIR-2218 has been shown to be synergistic with both VIR-3434 and also with PEG-IFN-a as well. There is an ongoing phase 2 study known as MARCH, which is using VIR-2218 in combination with VIR-3434 for 24 and 48 weeks and in a triple combination with VIR-3434 and interferon. There were already positive results released from Part A of this MARCH study showing that both VIR-2218 and VIR-3434 were additive in reducing HBsAg for these patients.
Why I believe it offers investors a great opportunity now is because additional results from Part A are going to be released before the end of 2022, which will be a huge catalyst. In addition, there are going to be a few other data readouts from the Hepatitis B program released before the end of 2022. There will be additional data from a phase 2 study using VIR-2218 alone and in combination with PEG-IFN-a for Hepatitis B and then initial results from a phase 2 study using VIR-2218 in combination with BRII-179 for Hepatitis B Virus [HBV].
Not only that, but the company is flush with plenty of cash as well. It has more than $2.6 billion in cash, cash equivalents, investments and profit-share payments expected from GlaxoSmithKline (GSK), which will fund the company’s operations for at least the next 12 months. With data readouts expected for both VIR-2218 and VIR-3434 before the end of this year, this is why I believe Vir Biotechnology is a great speculative biotech to look into.
VIR-2218 And VIR-3434 Performing Well In A Few Combinations
I believe that VIR Biotechnology has a great future in that it has proven both VIR-2218 [RNAi drug] and VIR-3434 [monoclonal antibody] are good in helping patients with Hepatitis B either alone or in combination. However, both have done better when being combined with other drugs, especially with each other. Hepatitis B is a serious liver infection caused by the Hepatitis B virus that may possibly be prevented with a vaccine. The problem is that this disease is a chronic lifelong problem that doesn’t go away. Most people become infected with it because of spread through blood, semen or other body fluids. There are multiple symptoms that these patients may experience such as:
- Dark urine
- Severe abdominal pain
- Eye Yellowing
- Liver cancer
- Scarring of the liver
Like most viral infections sometimes the body can fight it off. However, in other cases the body can’t fight Hepatitis B, therefore patients have a chronic case. Chronic Hepatitis B patients need to take certain types of medications and may possibly even need a liver transplant as well. You can imagine why so many biotechs are attempting to develop a treatment for Hepatitis B. That’s because it is expected to be a very large market in the coming years. Consider that the global Hepatitis B Virus market is expected to reach $35.63 billion in 2030. There will be a lot of competition in this space, but I think that Vir Biotechnology has potential to be great, because of its extensive Hepatitis B program.
As noted above, there is one phase 2 study, which I believe can provide great insight into two key drugs being developed by the biotech to target patients with Hepatitis B. Again, these two drugs are VIR-2218 and VIR-3434. The phase 2 MARCH study is coming along well, because in June of 2022 the first patient was dosed in Part B. The trial is looking at using VIR-2218 and VIR-3434 in two specific combinations, they are as follows:
- VIR-2218 in combination with VIR-3434 for 24 and 48 weeks (double combination)
- VIR-2218 in combination with VIR-3434 plus interferon (triple combination) for 24 and 48 weeks
The reason why I think it is crucial to bring up this study is because of a catalyst opportunity, which is expected in the near-term. It is expected that Vir will be releasing updated results from Part A of this study before the end of 2022. Besides the near-term updated results from Part A of this phase 2 MARCH study before the end of 2022, there will be additional updated results using both combinations again in the 2nd half of 2023.
Additional Hepatitis B Catalysts Expected In 2022 Could Boost Shareholder Value
Besides additional results from Part A of the phase 2 MARCH study noted directly above, there are two other data readouts with respect to the Hepatitis B program. The first of which involves a data readout from a study using VIR-2218 alone and in combination with PEG-IFN-a. Why I think this may provide a great opportunity is because just like the MARCH study, the combination of VIR-2218 in combination with PEG-IFN-a worked very well. The proof was with the release of data showing that VIR-2218 given together with PEG-IFN-a (cohort 3) results in a much more rapid and substantial HBsAg decline compared to just using only VIR-2218 alone by itself. The combination of VIR-2218 + PEG-IFN-a resulted in two key areas, which were:
- Average HBsAg decline from baseline was 2.0 log10 IU/mL at Week 12
- 0.6 log10 IU/mL greater than in the two cohorts evaluating VIR-2218 alone
This proves that putting PEG-IFN-a with VIR-2218 was a great benefit. PEG-IFN-a itself acts as an immune modulator. Treatment of Hepatitis B patients using just PEG-IFN-a alone typically results in a ≤ 0.25 log10 IU/mL HBsAg decline on average over a 12-week period. Another biotech which is also using an RNAi drug together with interferon would be Arbutus Biopharma (ABUS). Specifically, it is using its RNAi drug AB-729 together with PEG-IFN-2a [Peg-Interferon – 2 alpha] for the treatment of patients with Hepatitis B in an ongoing phase 2 open-label study. Results from this mid-stage study are expected in the 2nd half of 2022. These results will be important because it would not only allow Arbutus to advance this program forward for further evaluation, but it would also reinforce the notion that an RNAi drug being put together with Interferon has a profound effect on reducing HBsAg for these Hepatitis B patients.
A third opportunity for traders/investors is also possible. This would be because Vir Biotechnology has also chosen to advance RNAi drug VIR-2218 in combination with BRII-179 for these HBV patients. BRII-179 is an investigational T-cell vaccine being developed for Hepatitis B. The goal is to give these patients another immune boost using BRII-179. For instance, Interferon itself also is an immune modulator. The goal is to see if this combination also achieves similar or superior findings like the other VIR-2218 and PEG-IFN-a combination. Initial data using VIR-2218 plus BRII-179 is expected before the end of 2022. This provides another shot on goal for the Hepatitis B drug development program for Vir.
Financials
According to the 10-Q SEC Filing, Vir Biotechnology had $2.6 billion in cash, cash, cash equivalents, investments and profit-share payments to be received from GSK. It believes that it has enough cash to fund its operations for at least the next 12 months from the date of the 10-Q SEC Filing, which was filed on August 9, 2022. It has enough cash for now, but if it needs to raise cash it has the ability to do so with a sales agreement it made with Cowen in 2020. This Sales Agreement was made where Vir could offer from time to time to sell shares of its common stock with an aggregate pricing of up to $300 million. The good news is that so far it has not tapped into this financing yet, as of June 30, 2022 no shares have been issues under this Sales Agreement with Cowen. It could also use other options like debt securities or make another financial transaction to raise cash, either way it still has an option to use if it needs to raise cash immediately.
Risks To Business
There are several risks that investors should be aware of before investing in Vir Biotechnology. The first risk would be with respect to the Hepatitis B program pipeline. Even though it has achieved positive results in initial/interim updates using VIR-2218 and VIR-3434, there is no guarantee that results to be released before the end of 2022 will be positive. Another risk to consider would be sales of sotrovimab which may or may not do well in coming years. That’s because with the Emergency Use Authorization [EUA] of sotrovimab by the FDA, it is not authorized for use in any U.S. region. This may change if the FDA reauthorizes its use, but for the time being no revenue will be generated for this territory. Based on this, Vir and GSK have decided not to file a Biologics Licensing Application [BLA] to the FDA of sotrovimab for Covid-19. With an ever evolving Covid-19 landscape, plus a setback for this drug for Covid-19, sales may not go well.
Conclusion
The final conclusion is that Vir Biotechnology is a great speculative biotech play to look into. That’s because it has several data readouts expected to be released in the 2nd half of 2022. I already talked about additional data expected from Part A of the phase 2 study using VIR-2218 in combination with VIR-3434, which is expected before the end of this year. There are two other data readouts also expected during the same period dealing with the Hepatitis B program. These include the use of a study using VIR-2218 alone and in combination with PEG-IFN-a and from another study using VIR-2218 + VIR-3434 + PEG-IFN-a. While Vir and its partner GSK suffered a huge setback with the Covid-19 change for sotrovimab, revenue is still being generated. For instance, in the most recent quarter ending June 30, 2022, Vir generated $342.5 million as the profit-sharing amount for this collaboration.
As long as Vir does well with one of the ongoing combination regimens for Hepatitis B, then I believe it can do well in the long run. That’s not to mention that it does also have other drugs in the pipeline targeting different indications. Such other indications being targeted by the company are: Hepatitis Delta Virus [HDV], HIV and Influenza.
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