Coronavirus Vaccine JV Gives Refana Option For Panacea Stake
Executive Summary
Private US firm Refana, which expects its first commercial foray through a COVID-19 vaccine it will develop with Panacea Biotec, has obtained an option to acquire a stake in the Indian firm, with marketing rights to be split with the partners' 50:50 joint venture.
India's Panacea Biotec Ltd. has set up a 50:50 joint venture with US-based privately-owned Refana Inc. to develop a COVID-19 vaccine. As part of the deal, Refana has an option to invest up to $10m in Panacea's shares or convertible securities.
The venture is expected to mark a commercial debut for Delaware firm Refana, which has so far focused on research partnerships in artificial intelligence and cancer-related projects. For some time now, speculation has been building about Panacea’s plans for a vaccine against SARS-CoV-2, the virus which has caused the ongoing pandemic.
However, a lack of funds might have prevented the loss-making company from dipping its feet in the COVID-19 prophylactic/therapy pool. For the quarter ended December 2019, Panacea posted a net loss of INR213m ($2.8m) on consolidated sales of INR1.67bn.
Managing director Rajesh Jain told Scrip that Panacea plans to invest “a few thousand dollars” in seed money while the joint venture will initially raise funds from agencies like the Coalition for Epidemic Preparedness Innovations and later from various governments when they place orders.
Panacea will be responsible for product development and commercial manufacturing, while the joint venture, based in Ireland, will handle clinical development and regulatory submissions across the world. Marketing rights will be split between the three parties.
“We will market the vaccine in India and several developing countries while Refana will market it in regions like the US and Europe. The joint venture also has a set of countries that it wants to commercialize the vaccine in,” Jain told Scrip.
Refana’s Investment A Game Changer?
While the joint venture is good news, it’s interesting to note that if Refana opts to invest in Panacea, it could change the balance of power within the company.
Panacea has a paid-up equity of INR61m, which translates to $800,000, an amount much lower than the $10m that Refana has the option to invest within three years from now. The founder and founder group hold a 73.59% stake while 26.41% is with the public. Serum Institute of India Ltd. and its promoters reportedly hold around 14.5% equity in Panacea Biotec.
A regulatory filing shows that 69.36% shares are pledged or otherwise encumbered as of 31 March 2020.
Panacea’s investments in several unrelated ventures ranging from real estate, infrastructure, securities trading, insurance, agricultural farming, tourist resorts and power plants to a hospital have gone south, and the resultant debt burden left the company’s finances bleeding from fiscal 2012. (Also see "Two Cheers For Panacea, Will It Get Three?" - Scrip, 30 Dec, 2019.)
The company was referred to the erstwhile Board for Industrial and Financial Reconstruction (BIFR), an Indian government agency which deals with financial sickness and revival, and proceedings have been under the National Company Law Tribunal from 2016. While acquisition of a company under BIFR is permitted and could result in taxation benefits for the acquirer, it would nevertheless be a legally involved and complicated process.
40 Million Doses By December
The joint venture has developed a vaccine using inactivated whole virus with a proprietary adjuvant, proof of concept has been established in animal studies and the technology has been transferred to Panacea.
“In the next four weeks, we will create preclinical supplies to generate regulatory data and submit that by August or September so that we can get permission to start Phase I clinical trials in early October, which we should complete by January. In 12-18 months, we should end Phase III trials and we will continue to manufacture the drug substance so we can make 40 million doses by December and scale it up to 500 million doses on an annual basis,” said Jain.
If the data from Phase I trials are positive and establish efficacy, by next January Panacea could begin supplying the vaccine to countries which grant emergency use authorization.
“The first to start may not be the first to launch. Right from efficacy to scale-up to last mile there are challenges that we foresee. We are working with the whole virus, while others are working with parts of the virus so the entire immunological response is directed towards this particular part. We are sure of efficacy and we have eliminated side effects as seen in animal studies,” Jain said, responding to a question on what gives Panacea the confidence to get into COVID-19 vaccine development at a relatively late stage.
The world requires an estimated seven to 14 billion doses of any effective vaccine and all announcements so far amount to 2.5 billion doses, including those using higher risk technologies, so a shortage of vaccines is expected even if all the current players succeed, he added.
No Repurposed Drugs
Meanwhile, Panacea doesn’t plan to repurpose any of the drugs in its existing portfolio to develop a COVID-19 therapy, Jain told Scrip. The company has immunosuppressants, oncology and cardiovascular products and other pharma companies have been taking a new look at some of their existing molecules to develop therapies.
Among the Indian companies doing so are Dr. Reddy's Laboratories Ltd., Cipla Ltd., Zydus group’s Cadila Healthcare Ltd., Glenmark Pharmaceuticals Ltd. and Bharat Serums and Vaccines Ltd. (Also see "With Interferon, Zydus Cadila Launches Third Salvo Against COVID-19" - Scrip, 21 Apr, 2020.).
In May, Gilead Sciences Inc. entered into royalty-free co-licensing arrangements with Mylan NV, Jubilant Life Sciences Ltd., Hetero Drugs Ltd., Cipla Ltd and Ferozsons Laboratories Ltd. for the US firm's investigational drug remdesivir. (Also see "Gilead Licensing Deal Expands Remdesivir Access, Capacity" - Scrip, 13 May, 2020.)
In the race to develop a prophylactic vaccine are Cadila Healthcare, Serum Institute of India Ltd., Bharat Biotech International Ltd. and Indian Immunologicals Ltd. A short video on their vaccine development efforts is here. (Also see "Coronavirus TV: Vaccine Expertise And R&D In India" - Scrip, 21 Apr, 2020.)