Disease busters: Boca Raton-based Nabi Biopharmaceuticals specializes in creating vaccines for a variety of diseases. Now they want to do the same for nicotine - Biotech

South Florida CEO, Sept, 2002 by Rochelle Broder-Singer

Imagine taking a drag on a cigarette, but never getting that smoking "high." How easy would it be to quit? Pretty easy, hopes Nabi Biopharmaceuticals. The Boca Raton-based biopharmaceutical developer and manufacturer has just started human trials of its new NicVAX vaccine, which prevents nicotine from reaching a smoker's brain and making him or her feel good.

Making vaccines that train the body to attack incoming molecules is Nabi's specialty. In the past, the company has focused on preventing such infections as staph and hepatitis B. CEO David J. Gury says NicVAX is not so different. "Nicotine is a non-naturally occurring infectious disease," he says.

While Nic VAX garners major press attention, Nabi's core product remains Nabi-HB, an "antibody in a bottle" for hepatitis B infections -- a market Nabi has 80 percent of in the US. Nabi collects plasma from people who already have hepatitis B antibodies in their blood, using it to create a product that provides immediate protection from the virus. Nabi-HB is mainly used in liver-transplant patients to prevent infection of the new liver.

Nabi-HB, along with three other drugs already on the market, helped the company achieve $235 million in sales in 2001. The company's operating income for the year was about $117 million, but most of that came from a one-time gain, the $104 million sale of Nabi's plasma-collection business.

What's important about last year's financial results, says Gury, is that Nabi was able to spend $15.3 million on research and development using on-market product sales to fund the work. This is a major part of Gury's strategy. "Historically, biotech companies have used equity monies ... for development, and then sold the rights once they were developed, for cash to develop more," he says. "It probably means that it's taking us longer in some aspects to develop our products, but it means that we maintain more of the ownership of the products, and we think that brings more value to our shareholders."

Nabi is also committed to producing its own products, rather than contracting outside drug makers. To that end it has built a $90 million manufacturing facility in Boca Raton, an investment that should pay off this year, following its approval in October 2001 by the Food and Drug Administration. While the FDA certification process took four years, that is not unusual -- the FDA holds biopharmaceutical manufacturing plants to strict standards, and had not approved a facility like Nabi's, built from scratch, in 25 years. "It's sort of like baking bread -- every loaf comes out different because of the process," says Gury. "Getting the plant licensed and having the complete integration of our processes, from the collection of the raw [plasma] material through to the end product, all within the house, that's particularly [important] when you deal with the FDA."

The 31,000-square-foot plant is currently operating at two-thirds capacity, producing Nabi-HB and two other products still being tested. Gury says he'd like to acquire additional on-market products and produce them there.

In the meantime, Nabi has its own pipeline. Four new compounds are currently in human trials, with StaphVax the closest to market. StaphVax, like NicVAX, helps the body recognize as foreign an invader it normally ignores -- in this case, staph bacteria (formally S. Aureus). Staph infections have become a major issue in hospitals, with antibiotic-resistant versions flourishing (death rates run as high as 25 percent of those infected). StaphVax is set for a second set of Phase III trials (the last set before final approval) in 2003, and Nabi expects to see it on the market in 2005. While StaphVax "is a vaccine that could become a blockbuster product," says Roth Capital Partners healthcare research director Fariba Ghodsian, she cautions that the approval path is more than one year behind Nabi's expectations.

New products are critical to Nabi's future. Even though net income for the second quarter of 2002 dipped to $800,000, from $1.5 million in 2001, Nabi increased its research and development spending by $1 million. Gury says the company wants to be profitable, but not at the expense of revenues further down the line. "It's difficult to be profitable and to have R&D," he says. "But if you don't commit to the R&D, eventually, you're not going to be around for the future."