In the middle of the Ebola crisis two years ago, Durham biomedical startup Chimerix was on the fast track. It had received federal approval to test its experimental drug on Ebola-infected patients in Europe and the United States. Then last year, Chimerix was on the brink of getting that same antiviral drug, brincidofovir, accepted in the national stockpile to protect Americans against bioterror threats.
Today Chimerix is a Wall Street question mark with its drug still unproven and worries that it might never pan out – a victim of diarrhea and changing government priorities.
“From the perspective of Wall Street, everyone has basically written this drug off,” said Yigal Nochomovitz, a biotech equity analyst with Citigroup. “They’re in a tough spot. But they have a very good war chest, and they’ve taken steps to preserve it further by reducing their headcount.”
The company’s value has plummeted from $2.5 billion last summer to $184.4 million last week, forcing Chimerix to shed about a quarter of its workforce – more than 40 employees – in a bid to stretch its budget. Perhaps most telling about Chimerix’s descent is that the company’s value is less than the $300 million it has in the bank, cash that’s destined to evaporate month by month.
Chimerix stock slid from a high of $57.43 a share last August to $3.99 on Friday, a decline of 93 percent. Analysts characterize Chimerix’s financial collapse as an investment uncertainty. Chimerix CEO, M. Michelle Berrey, calls it “depressing.”
Success and setbacks
Founded in 2000, the company focused on developing a treatment for life-threatening viral infections in patients whose immune systems have been destroyed by cancer, transplants or by medications. It soon concentrated on brincidofovir, which was developed to wipe out viral infections without punishing the patient with potentially fatal side effects. The drug is a modification of cidofovir, a medication that is already approved and known to be effective, so the experts were confident that the safer Chimerix version was all but guaranteed to succeed.
Chimerix had cleared one milestone after another and ended its Ebola research in January 2015 only because the epidemic was waning and infected patients were becoming scarce. Then the company got the bad news in December that a major clinical trial, involving 452 stem cell transplant patients, had failed. Now, four clinical trials are shelved as inconclusive or unfinished, and Chimerix has no ongoing clinical trial for the first time in years.
In that failed trial, called Suppress, patients developed diarrhea. Doctors suspected graft versus host disease, an immune system malfunction in which the transplanted organ attacks the patient’s body. The doctors treated the patients with heavy doses of corticosteroids, which suppressed their immune systems and resulted in infections of cytomegalovirus, marring the results of the clinical trial.
Diarrhea is one of the symptoms of graft versus host disease. But it is also a major side effect of brincidofovir. In the Suppress trial, which took two years and cost about $45 million, doctors couldn’t be sure what caused the diarrhea – brincidofovir or the adverse reaction to the transplant – so the clinical trial was deemed invalid.
“That was a trial failure,” Berrey said last week at the company’s office. “That wasn’t a drug failure.”
The Suppress trial setback raised doubts about brincidofovir, forcing Chimerix to suspend two other ongoing clinical trials testing the drug in kidney transplant patients.
Chimerix plans to get around this setback by developing an intravenous version of brincidofovir that bypasses that gut and does not cause diarrhea. The clinical trial is expected to get underway later this year but it won’t be completed for at least three years – just as Chimerix’s cash reserves are running out sometime around 2019 or 2020 and the company is potentially sputtering on financial fumes.
Without any products on the market, the company has relied on periodic stock offerings and federal research grants for funding. Last year, Chimerix posted a net loss of $117.4 million on revenue of $10.8 million; in 2014 Chimerix lost $59.3 million on revenue of $4 million. The revenue came from the Biomedical Advanced Research and Development Authority, or BARDA, which has paid Chimerix $46.9 million so far on an $80 million contract to test brincidofovir on rabbits and mice as a smallpox antidote.
Chimerix’s short-term strategy for brincidofovir is to obtain a cash infusion from BARDA by getting the antiviral accepted into the Centers for Disease Control and Prevention’s Strategic National Stockpile for bioterror threats as an emergency treatment for smallpox. This would yield Chimerix an initial payment of $100 million over five years, and total potential payments up to $435 million, from the U.S. government’s Project BioShield.
The federal BioShield funding would help 90-employee Chimerix pay for continued testing of brincidofovir for eventual commercial approval by the Food and Drug Administration.
“If we don’t get a stockpiling agreement that gets us some earnings, it’s going to be tough to get through the last months of the FDA when we get that thumbs up or thumbs down,” Berrey said. “If the company goes under because we don’t get this procurement contract in time, then that’s it, the drug is gone.”
Maybe. Analysts say another pharmaceutical company could potentially buy brincidofovir and BARDA could have the drug manufactured for the stockpile without requiring FDA approval. The drug’s success rate on smallpox is impressive: When administered to infected rabbits at the first sign of illness, brincidofovir resulted in a 100 percent survival rate; tests on infected mice are scheduled later this year.
Chimerix became on overnight social media sensation in 2014 when a Virginia family petitioned the company to donate brincidofovir to treat their son, a 7-year-old cancer survivor dying from viral infections after a bone marrow transplant. Four months after taking brincidofovir, the boy, Josh Hardy, was sent home from the hospital.
“Our security depends on companies like Chimerix that are willing to invest in biodefense technologies, even facing the vagaries of government funding,” said Jeff Runge, director of the National Collaborative for Bio-Preparedness, a consortium of the Department of Homeland Security, based at UNC-Chapel Hill. “They’re a very important part of the nation’s biosupply. We need them to be successful.”
The Strategic National Stockpile already contains vaccines against smallpox, which are the first line of defense, as well as one antiviral remedy developed by Siga Therapeutics. A second antiviral is deemed necessary to complete the nation’s readiness in the event of a smallpox attack. The vaccines would be taken in the first two weeks after a smallpox attack, and public health authorities would then switch to the antivirals to treat anyone who develops symptoms.
Brincidofovir was expected to be the second smallpox antiviral stockpiled. Chimerix officials were in talks with federal authorities in 2015 and finalizing contract details that would have brought the company its first payment this year. Then federal officials unexpectedly diverted funding from this year’s $646 million stockpiling budget to refocus on a national response to the raging Ebola pandemic.
By now, Chimerix had hoped to resume its negotiations with BARDA for a stockpiling contract in the 2017 fiscal year, which begins Oct. 1. But a new global health threat has emerged: the Zika virus, which causes a birth defect called microcephaly. In February, the World Health Organization declared Zika a public health emergency of international concern as the virus has spread through the tropics.
The Obama administration has requested that Congress expand Project BioShield funding to pay for public health concerns, such as Zika, that are not classified as material health threats. U.S. Sen. Richard Burr, a Republican from North Carolina, and three other U.S. Senators in April persuaded Health and Human Services Secretary Sylvia Burwell to withdraw that request. They argued the funding shift would blur the distinction between a public health concern and a national security threat.
But Runge, who was the Department of Homeland Security’s first chief medical officer, noted that the threat of a smallpox virus outbreak is low, while political pressure to address emerging health emergencies, such as Ebola and Zika, is high.
“It is politically insoluble for government officials not to have a plan and not to find resources to fight this thing,” Runge said.
So far Zika has not taken precedence over smallpox, anthrax, botulism, nerve agents, cyanide and other potential bioterror threats, and a BARDA spokeswoman said the agency is in contact with Chimerix with regard to a potential contract. The final decision is contingent on whether funding will be available in the coming year.
Smallpox was declared eradicated by the World Health Organization in 1980, but it is widely suspected that the virus may be in circulation on the international black market. Inoculations from the 1960s and 1970s have likely waned in effectiveness, Berrey said, so that those infected could still become seriously ill even if they did not die. Death rates from naturally occurring smallpox – a highly infectious disease that covers the skin with pustules and leaves permanent scarring – could be as high as 30 percent, but weaponized strains of the virus could be more potent.
Chimerix doesn’t plan to apply for commercial approval of its smallpox antidote until the fourth quarter of 2017. Berrey said Chimerix will seek FDA approval to enhance potential sales of brincidofovir for international antiviral stockpiles, as the drug is intended only for national defense.
However, commercial sales are essential to use brincidofovir for other types of viral infections. Meanwhile, each year of delay chips away at Chimerix’s revenue potential from the antiviral, commonly called “brinci” by Chimerix executives and analysts. With the drug’s patent exclusivity set to expire in 2034, Chimerix trudges on.
“We’re determined to get brinci across the finish line,” Berrey said. “The ultimate goal is for sales – to make the drug commercially available.”