TPOXX works by inhibiting viral spread to uninfected cells by specifically inhibiting the protein VP37 (also known as F13 and p37), which is involved in producing extracellular enveloped virions. Extracellular enveloped virions are involved with spread of the virus between cells and systemic dissemination. Importantly, this protein is highly conserved in all orthopoxviruses, which not only provides TPOXX with an advantage of broad applicability but makes animal testing with smallpox analogs (the only ethical method to test a smallpox treatment) more straightforward and more likely to be indicative of efficacy in humans.
Exhibit 4: TPOXX mechanism of action
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Efficacy was determined in three pivotal studies in cynomolgus macaques infected with the monkeypox virus and an additional two pivotal studies in New Zealand white rabbits infected with rabbitpox. Mortality in these models is nearly universal, with a significantly shorter incubation period than that seen in humans. Human incubation periods can range from seven to 19 days (although are typically 12–14 days on average), while macaques develop skin lesions three to four days after infection, and the rabbits develop systemic viremia at around the same time (with fever consistently seen at day four). In animals treated with TPOXX at day four, when they became symptomatic, the survival rate was between 80% and 100%, with rates consistent between species (see Exhibit 5). As part of Study 3 in cynomolgus macaques, treatment at days five and six post-infection were also investigated, with survival rates for those treated five days after infection being 83% and survival for those treated six days after infection at 50%. This indicates that treatment once symptoms first start will be very important in helping people survive smallpox.
Exhibit 5: TPOXX animal study data – treatment at day four
Cynomolgus macaques |
Survival TPOXX |
Survival placebo |
P value |
Study 1 |
80% |
0% |
0.0038 |
Study 2 |
100% |
0% |
0.0002 |
Study 3 |
83% |
0% |
0.0151 |
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New Zealand white rabbits |
Study 4 |
90% |
0% |
<0.0001 |
Study 5 |
88% |
N/A |
N/A |
Additionally, besides the marked difference in survival, TPOXX also had dose-dependent effects on lesion counts and viral loads (see Exhibits 6 and 7).
Exhibit 6: Lesion counts in cynomolgus macaques
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Exhibit 7: Viral load in cynomolgus macaques
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Exhibit 6: Lesion counts in cynomolgus macaques
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Exhibit 7: Viral load in cynomolgus macaques
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The effective doses in the studies were determined to be 10mg/kg in macaques and 40mg/kg in rabbits (although due to species-specific issues, the exposure level was higher in macaques). A dose of 600mg twice daily for 14 days was selected for human testing, with plasma concentrations higher than that seen in both macaques and rabbits (see Exhibit 8).
Exhibit 8: Plasma exposure comparison for humans, macaques (non-human primates [NHP])
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Source: FDA presentation at FDA AMDAC meeting. Note: 10mg/kg is the dark blue line.
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For human safety, SIGA ran a Phase III, randomized, placebo-controlled trial with 359 subjects given 600mg of TPOXX twice a day for 14 days and an additional 91 receiving placebo. TPOXX was demonstrated to be safe with only 2% discontinuing treatment in both placebo and TPOXX arms due to adverse events. In total, 37% of patients in the TPOXX arm reported an adverse event compared to 33% in placebo. There was a single serious adverse event in the TPOXX arm (a pulmonary embolism that resulted in death), but that was deemed unrelated to treatment.
US BARDA contracts and the SNS
TPOXX has been the subject of two separate BARDA procurement contracts; the first was signed in 2011 and expires in December 2024. Per the contract, BARDA agreed to buy 1.7m courses of TPOXX with an additional 300,000 provided at no charge. The contract specified $508.4m in payments, of which $459.8m was received for the delivery of TPOXX and $45.5m was received as reimbursement for development and support activities ($3.1m remains eligible to be received in the future as reimbursement for these activities).
In September 2018, SIGA received a re-supply contract for TPOXX for up to $602m, including $461m for procurement of up to 1,488,000 courses of oral TPOXX (~$310 per course) and $85m for the procurement of up to 212,000 courses (~$401 per course) of IV TPOXX. An additional $56m is allocated for development and support and is essentially used to help fund the company’s R&D. Also, with a seven-year shelf life for oral TPOXX, we estimate that approximately one-seventh of the stockpile would need to be replaced on average every year (this varies depending on the timing of orders from BARDA). The base period for the contract is five years, with the potential to extend it to 10 years through the exercise of options (although this would not modify the contractual value or total dose quantities covered by the contract), which may mean this contract may be in effect until 2028. As of Q420, up to $424m of included potential payments from the 2018 BARDA contract are specified as unexercised options. Altogether, we assume there will be a continuing contractual relationship with the US government similar to its current form (with regards to pricing and volume) until 2034, when the final patents expire for TPOXX. However, we believe the contracts may extend beyond this as there are other barriers to entry for competitors beyond patents, such as the US government procurement system. Additionally, SIGA has a supply chain that is completely US-based, which we believe should be an advantage over the many generic companies that are reliant on international manufacturing.
The doses of TPOXX contracted by BARDA are in the SNS. The SNS also stockpiles three vaccines for smallpox: ACAM2000, Jynneos and Aventis Pasteur (although the Aventis Pasteur vaccine is considered investigational and would only be used if the other vaccines were depleted or not readily available). ACAM2000 is a live, replicating vaccine that carries the risk of considerable side effects (black box warnings for myocarditis, pericarditis, encephalitis, encephalomyelitis, encephalopathy, vaccinia, and Stevens-Johnson syndrome, among others) and is also contraindicated in immune-compromised individuals. Based on clinical studies measuring cutaneous response as a proxy for vaccination success, the vaccine has 84–96% effectiveness according to the FDA label. Additionally, the mode of administration is 15 jabs of a bifurcated needle.
Jynneos is a highly attenuated vaccine that does not replicate in human cells (making it much safer than ACAM2000) and vaccine effectiveness could not be judged by a cutaneous response as there was not one due to the attenuation. In a comparison of the neutralizing antibody response to ACAM2000, Jynneos was judged to be non-inferior although numerically it provided a greater number of neutralizing antibodies. One issue with the dosing is that there are two doses, four weeks apart, which limits the potential usefulness of the vaccine in a true smallpox emergency. Besides preventing infection by vaccinating before exposure, vaccines are thought to have efficacy if provided within three days of exposure (well within the incubation period when people are asymptomatic). If given four to seven days post-exposure there may still be some protection and people exposed to the disease may not get as sick. In an emergency, while vaccines may help protect a certain percentage of the population, as we have seen from COVID-19, timely distribution of vaccines in the US is not without challenges. Once there is an event, therapeutics such as TPOXX will be a very necessary component of the response to the crisis as they can be given at a later time post-exposure and appear to have far fewer side effects than vaccines.
There is also an additional therapeutic in the US stockpile, cidofovir, which is investigational and it is not known if a person with smallpox would benefit from it, according to the FDA. Chimerix is developing brincidofovir for the treatment of smallpox and has tested the therapy in New Zealand white rabbits, who were infected with rabbitpox, and BALB/C mice, who were infected with ectromelia virus. For the rabbits provided therapy three days post exposure, 100% survived, with 90% surviving if provided therapy four days post exposure (as in the TPOXX trials). In untreated rabbits, survival was 29% (compared to 0% in the TPOXX trials). Within the mice treated four days post-exposure, survival was 78% while those untreated had a survival rate of 13%. An NDA has been submitted for the product with a PDUFA date of 7 April 2021. If approved, we would expect a BARDA contract for brincidofovir, although we believe this would be in addition to TPOXX not as a replacement of it. As a reminder, the current TPOXX stockpile only covers approximately 0.5% of the US population and the number at risk is much higher (as mentioned, some CDC forecasts estimate that up to 54.5 million people could be infected with smallpox if it were used as a bioterrorist weapon). Additionally, as brincidofovir had a higher survival rate within the placebo animals, the placebo-adjusted survival rate in the TPOXX trials appears to be higher, potentially indicating it may have superior data. We do not believe there are any other near-term potential competitors to TPOXX based on our research.
SIGA has a number of initiatives to expand on TPOXX in the US. The company is currently looking to expand its franchise with an IV version (NDA expected to be submitted in Q221) to treat those who are either too sick or unable to swallow oral TPOXX capsules. A total of $85m of the 2018 BARDA contract is allocated for the procurement of 212,000 doses of an IV version of TPOXX. Additionally, SIGA is working on a pediatric liquid formulation (technically a powder for reconstitution) for people weighing under 13kg. The reason for this is that TPOXX is given as three 200mg capsules twice daily for 14 days to those who weigh 40kg or more, two 200mg capsules for those who weigh between 25kg and 50kg and one 200mg capsule for those between 13kg and 25kg in weight. As there is no way to split a capsule in half, the mg/kg dosage would be too high for small children (and they would find it difficult to swallow a capsule). Timing is unclear for the liquid formulation, but development is underway.
The largest potential expansion of TPOXX would be in PEP. There is a one- to two-week gap in potential treatment of smallpox infection. Vaccines can protect against infection from before exposure to at most three to seven days after exposure. The current label for TPOXX assumes its use once symptoms have started after the incubation period (approximately 12–14 days after exposure on average). So there is a period of time when an exposed person would be unprotected by a vaccine and not likely to get TPOXX under the current labelling. The PEP program is looking to bridge that gap. Under PEP, TPOXX would be given to anyone who has been exposed to someone with smallpox given the high chance that person would become infected (as a reminder, someone exposed to an infected person has a 90% chance of contracting the disease themselves). Colonel Peter Weina, chief of research at Walter Reed Military Medical Center, stated at the 1 May 2018 FDA advisory committee meeting that: ‘The reality is that this [smallpox] is so highly infectious, post-exposure prophylaxis is going to be a knee-jerk reaction to anybody at any time if you've got anybody who's been diagnosed. So anybody who's within eyeball shot of somebody who's got a diagnosed case of smallpox is going to be getting this drug [TPOXX].’
According to the company, PEP treatment would be for a 28-day course of therapy (versus 14 days for the approved indication). If BARDA were to purchase an equivalent number of PEP courses compared to the current (post-infection treatment) contract, this opportunity could be double the size (due to double the treatment length and therefore double the number of capsules required). With regards to the development plan, the company has stated that two human studies are planned, one to evaluate if there is interference with the Jynneos smallpox vaccine and an expanded safety study. The studies may begin as early as Q321 (with timing somewhat dependent on the COVID-19 pandemic) with completion expected in 2022. Additionally, based on communications with the FDA, no additional animal studies will likely be needed for approval for the PEP indication. That said, it is uncertain exactly when TPOXX for PEP would be stockpiled (if at all) and it could occur before or after FDA approval. However, for the sake of conservatism and due to the lack of visibility, we currently forecast inclusion in the SNS in 2025. Note that SIGA has been awarded a research contract in 2019 (and expanded in 2020) for up to $26m with the US Department of Defense to support work on the PEP label expansion.
SIGA is partnered with Meridian Medical Technologies, a Pfizer subsidiary focused on health security with a 50-year history of selling medical countermeasures globally, for the marketing of TPOXX outside the US. Other products marketed by Meridian include an antidote treatment for organophosphorus nerve agents such as Sarin and VX and a treatment for cyanide poisoning, among others. Exact terms of the Meridian agreement are undisclosed beyond that it will be a percentage of sales of oral TPOXX net of certain expenses, with the percentage increasing when exceeding a certain threshold.
In April 2020, the first contract outside of the US was signed with the Canadian Department of National Defence (CDND) for up to 15,325 courses of oral TPOXX over four years for a total of $14.3m. Note the per-course amount is $933, approximately triple what has been obtained from the US government. The reason for the lower price for the US government is that it helped fund the development of TPOXX and the large quantity of doses in the stockpile. The CDND made an initial purchase of 2,500 courses for $2.3m in Q220, with up to (subject to option exercise over the course of the contract) 12,825 courses to be ordered following Canadian regulatory approval (expected late 2021/early 2022). With regards to the Canadian approval, the proposed indication would cover all human pathogenic orthopoxviruses such as smallpox, monkeypox (milder than smallpox but still deadly to around 10% of those who catch it, with a 2019 outbreak in Nigeria), cowpox and vaccinia.
In January 2021, SIGA received a second contract from a separate Canadian government agency. The Public Health Agency of Canada (PHAC) awarded a contract for up to $33m of oral TPOXX within five years (though total doses were unspecified). The contract specifies commitments for the purchase of $3.4m by 31 March 2021 and a cumulative purchase of $17.2m by 31 March 2023. The remainder will be purchased after that date with these purchases subject to option exercise by the PHAC.
We believe SIGA and Meridian will focus on key US allies, such as Europe, Australia, Japan and South Korea, and that SIGA will seek partnerships for other territories. The two companies may also be able to find additional clients in South America, Asia and Africa. The sales cycle for these international agreements will likely be long and it is unclear how many courses the different governments may purchase, but the COVID-19 pandemic will certainly have provided a concrete example of how disastrous a pandemic can be. We would expect additional contracts to be signed internationally in the coming years and we believe those contracts could be substantial in size (see Exhibit 9). It is important to note there is an undisclosed payment to Meridian for its international business development services, which will vary based on whether amounts exceed certain thresholds. We currently model this fee to be 20% of sales on average (the company has stated that it expects the margin on international agreements after manufacturing and Meridian fees to be between 65% and 80%). The company submitted an application with the EMA in July 2020 with a proposed indication similar to Canada’s, covering all human pathogenic orthopoxviruses.
Exhibit 9: International market potential in select countries/regions
Country |
Population (m) |
Courses at midpoint of US and Canadian coverage levels |
Potential contract size at midpoint of US and Canadian prices per dose ($m) |
EU27 |
445.8 |
1,469,728 |
915 |
Germany |
84.1 |
277,264 |
173 |
France |
65.4 |
215,613 |
134 |
Italy |
60.4 |
199,129 |
124 |
Spain |
46.8 |
154,292 |
96 |
Ukraine |
43.6 |
143,742 |
89 |
Poland |
37.8 |
124,620 |
78 |
Romania |
17.1 |
56,376 |
35 |
UK |
68.2 |
224,844 |
140 |
Japan |
125.6 |
414,082 |
258 |
South Korea |
51.7 |
170,446 |
106 |
Australia |
25.7 |
84,729 |
53 |
Source: Edison Investment Research