Introduction

In Trump's 2019 State of the Union Address, the topic of eradicating HIV morphed into a campaign promise with HIV poster child Gilead (GILD) getting most of the accolades due to their advances in prevention drugs. Almost 9 months later (last month), the Trump administration reversed course and sued Gilead which means the position of "HIV poster child" is up for grabs again. Since Trump seems to have knocked the ball out of Gilead's hands, it's unclear if they will be able to repair the damage and reclaim their position or if a new company will rise to the occasion and become the newly anointed.

Trump's 2019 SOTU Address

During Trump's 2019 State of the Union Address, he has announced a strategy to stop the spread of HIV by 2030 by concentrating resources on hot spots where half the new infections occur. After the State of the Union details from the Secretary of Health and Human Services (HHS) Alexa M Azar II, who coordinated the plan, said that their goal was to focus on the 48 countries where half the infections occur and to reduce new infections by 75% along with ending the HIV epidemic in America. After the State of the Union, advocates like Dr. Anthony Facui, director of the National Institute of Allergy and Infectious Diseases, suggested an increase in antiretrovirals and prevention medicine at the Conference on Retroviruses and Opportunistic Infections (CROI). This increased emphasis on treatment was positive for HIV drugmakers like Johnson and Johnson (JNJ), Mylan (MYL), and Pfizer (PFE). Treatment and prevention stocks Gilead (GILD), GlaxoSmithKline (GSK), and Merck (MRK) received the biggest boost from the news, but this year, a new player with disruptive technology might be in the works. Which HIV company could be the biggest beneficiary from this Trump Administration and HHS initiative?

Trump's HIV Initiative

The architect of Trump's plan, Alex Azar, wrote an article after the State of the Union detailing how the Trump Administration and the Department of Health and Human Services are going to reach their goals using existing medicine in conjunction with pre-exposure prophylaxis (PrEP) medication. They are targeting resources to "geographic hotspots", which consists of 48 counties and some other areas and which constitute over 50% of new diagnoses in the United States. Their strategy can be summed up into "Diagnose, Treat, Protect, and Respond." Early detection is critical and getting people on the treatment regimen prevents transmission by keeping the viral loads in check. Additionally, people at risk of contracting HIV have new PrEP drugs like DESCOVY and TRUVADA made by GILD. Their response plan is to use CDC data to rapidly detect and treat growing HIV clusters to prevent new infections. If this model is successful they plan to roll it out on an international scale. The goal of the initiative is to "reduce new infections by 75 percent in the next five years and by 90 percent in the next ten years, averting more than 250,000 HIV infections in that span."

Trump's HIV Plan

The Past Year In Review

There have been many advancements in HIV treatment since this year's State of the Union address. A second patient, in addition to the famous decade-old case of Timothy Ray Brown, was cured of HIV. One drug manufacturer came out with a once a month injectable shot. CRISPR gene-editing technology was used to edit a stem cell implant aimed at curing HIV. Last but not least, a salvage therapy had over a 90% responder's rate with virtually no side effects. If history repeats itself, Trump will double down on his plan to defeat HIV, and unveil more details at the next State of the Union address in February 2020. The State of the Union address is well known for its impact on highlighting winners and losers among the presidential administration's initiatives. HIV is an anticipated winner again this year, but Gilead may not participate because tension has been on the rise between Gilead and the Trump administration. If HIV is mentioned at the State of the Union, it's expected the additional nuances of Trump's HIV plan will come to light the following month at the Conference on Retroviruses and Opportunistic Infections (CROI). This article speculates on some of the big HIV industry players.

The Trump administration, through the Department of Justice (DOJ), filed a patent infringement lawsuit on November 6, 2019 against Gilead seeking damages for patent protection. The Department of Health and Human Services had patents related to pre-exposure prophylaxis (PrEP) for HIV prevention. HHS asserted that GILD "willfully and deliberately induced infringement on the HHS patents." Due to the infringement, GILD allegedly profited from research funded by hundreds of millions of taxpayer dollars and reaped billions in revenues from PrEP through the sale of Truvada and Descovy.

Trump is very volatile, and compared to prior presidents, downright aggressive, so there is a chance that he goes on the attack during his State of the Union address against PrEP drug manufacturers that have taken advantage of the American people. Since PrEP was one of two pillars of Trump's plan, it's safe to say that his administration is now looking for another poster child. On the surface, Merck or GlaxoSmithKline would be the logical alternatives, but something possibly bigger is brewing in the HIV space, which is covered later in this article.

The amfAR Institute for HIV Cure Research is focused on a scientific basis for a cure by the end of 2020. They defined a functional cure as something that would end an individual's lifelong need for drug treatment to keep the virus in check. They identified four key challenges needed to develop a cure: pinpoint the precise locations of the latent reservoirs, determine how they are formed, persist and quantify the amount of virus in the reservoirs, and finally, eradicate them from the body. Gilead is a key partner in this collaboration.

There are many types of T-Cells, but only the CD4+ T-Cell can host the virus. The issue with the existing antiretroviral therapy (ART) is that they work in the blood to reduce the circulating virus, not the virus in the tissues. Only 3-5% of a person's CD4+ cells are circulating at any given time; the remainder are typically compartmentalized in a reservoir in organs such as the brain, lymph nodes, gut, and male/female reproductive tract. According to the MDPI Journal Gilead's planned mechanism of eradication is to use GS-9620, a TLR7 agonist, to force latent HIV from the virus's immune cell reservoir. Once released, broadly neutralizing antibody PGT121 would attach to it and clear it from the blood. This methodology is known as a shock and kill tactic and was presented at the 2018 CROI meeting. Tests in monkeys revealed that this approach delayed viral rebound following ART from 21 days in the control to a median rebound time of 112 days. In July, the company had a phase 1 readout that showed the drug was well tolerated with no Grade 3 or Grade 4 drug-related adverse events. Their finding was that "the results support studies in the potential role of Vesatolimod as part of combination regimens aimed at achieving ART-free control of HIV." The ART-free control verbiage, unfortunately, appears to be well short of a cure. This advance coupled with the patent infringement issue doesn't appear to have enough zest to make it on Trump's radar.

Merck (MRK) had a similar plan called "kick and kill" in which is used a cancer drug called Vorinostat as an activating agent to clear the body of its viral reservoir and get the immune system to respond using it innate immunity. In Merck's RIVER study, released in July 2018, 60 men who recently acquired HIV started ART and got their viral loads to undetectable levels and then received the "kick and kill." This consisted of Vorinostat and an anti-HIV vaccine. Results were very disappointing and showed that there was no impact on copies/mL compared to ART alone. It's important to note that the mice study was marginal in comparison to GILD's monkey study with GS-9620.

Merck is also developing a one-year subcutaneous implant. Anthony Fauci, the head of the National Institute of Allergy and Infection Diseases characterized "an implant for 1 year has enormous potential [...] that could be a game-changing advance." The drug is called MK-8591 or islatravir, and inhibits an enzyme that is needed for replication of HIV. Merck conducted a study in 12 uninfected people and measure the blood levels of islatravir 4 weeks after removal. In half of the cohort that received the higher dose, levels were so high that researchers were able to project that the release of the drug would be 12 - 16 months. No safety issues surfaced in the pilot study. The drug is entering phase 2 studies and has only dosed 12 people so the findings

Viiv Healthcare, the Pfizer and GSK owned HIV joint venture, also is testing cabotegravir in a phase 3 study as an intramuscular injection for the prevention of HIV infection. The phase 2 study results showed overall positive safety and tolerability data, where most patients favored the 12-week injection over pills over daily pills. Due to lower than expected exposure found in some patients in the phase 2 data, the phase 3 study will proceed with a lower dose and 6-week injections.

Almost two years ago, the Gilead PrEP news was extraordinary, but the news now pales in comparison to a group of 5 human patients that have not taken ART's for close to 5 years and have yet to experience a viral rebound that will be discussed later in the article.

Bioethics Observatory Institute of Life Sciences

Timothy Ray Brown, known as the "Berlin patient," was the first person ever cured of HIV, which happened over a decade ago. The second patient cured of HIV is known as the "London patient." Both patients had myeloid leukemia and had total body irradiation to wipe out their T-cells before receiving their stem cell transplant. In both cases, the donor had a genetic mutation - which therefore is present in the donated stem cells - known as a CCR5 delta 32 mutation. People that have the CCR5 delta 32 allele do not have CCR5 receptors on their T-Cells and as a result are immune to HIV. The "Berlin patient" inspired Dr. Monique Nijhuis, from the University Medical Center of Utrecht in the Netherlands to develop a protocol to transplant HIV resistant genes with the intention of eradicating HIV from the patient. The European consortium is analyzing the results of 39 patients who have received transplants from CCR5 delta 32 donors. Dr. Carl Dieffenbach, the director of AIDS research for the National Institute of Health also endorsed this approach at this year's CROI conference and indicated that another was to genetically engineer a patient's immune cells through gene therapy to knock out the CCR5 receptor which is part of HIV's pathway into the T-Cell.

Timothy Ray Brown, right, and Dr. Gero Htter, the Berlin cancer doctor who gave Brown a lifesaving transplant that also cured him of HIV. Photo by Robert Hood / Fred Hutch News Service

There have been 3 HIV vaccine trials for efficacy worldwide. In 2004, the VaxGen candidates failed to offer any protection and halted its phase 3 trial in 2004. Later in 2007, the Phambili study was stopped for safety concerns. An ongoing trial of HVTN100 and HVTN702 is part of a consortium that includes the US Military, the Bill and Melinda Gates Foundation, NIAID, HVTN, GlaxoSmithKline (GSK), and Sanofi Aventis (SNY). Even though vaccines have had a bumpy road, Dieffenbach believes that we could give "remission in absence of eradication." This means that a patient's immune system would be trained to block HIV whenever sleeping HIV infected cells awake, which would be accomplished via injection of HIV blocking antibodies. On a different note, Janssen, a division of JNJ, is enrolling up to 3800 participants in eight countries who will get four vaccine injections over the course of a year. This study, termed the Mosaico study, will vaccinate patients with three different HIV strains, hoping to offer benefit in 65% of the study population. Prophylactic treatment is an ultimate goal in fighting HIV, but it has been elusive because the virus evolves so rapidly that it's difficult to target.

Path Toward a Functional HIV Cure

To understand what a "functional cure" means, it is helpful to recap what exactly HIV is and how existing drugs are currently treating the disease. HIV is a virus that selectively targets a patient's white blood cells known as T-Cells. These T-Cells help fight infections in our body and kill viruses, but the HIV virus exploits a weakness on the surface of the T-Cell. When an HIV virus comes in contact with the CD4 receptor and the CCR5 co-receptor, the virus gains entry into the T-Cell where it can replicate. The current standard of care is called Highly Active Antiretroviral Therapy (HAART) and what it does is target the virus's ability to replicate once already inside the cell, to keep the "viral load" down. It is well understood that keeping the viral load under 50 copies/mL both effectively prevents transmission of the disease and keeps the disease at bay for the existing infectee.

Frontiers in Immunology

Entry/Fusion Inhibitors - Superior Mechanism of Action, But Toxic

The approach to HIV treatment since the advent of HAART has been to mess up the virus' plan to replicate once inside the cell, but in theory, there is a better way. Instead of letting the virus inside the cell, fusion inhibitors block the CCR5 co-receptor and keep the virus outside the cell. With entry/fusion inhibitor treatment the virus can still bind to the CD4 receptor, but it is unable to get close enough to the cell membrane since the CCR5 co-receptor is blocked. Thus, it can't enter the cell and therefore it is unable to replicate. Even more importantly, replication of a virus is what allows for mutation, which ultimately leads to drug resistance as is common with HAART treatment regimens. Historically, fusion inhibitors like Pfizer's maraviroc and Merck's vicriviroc have shown efficacy in keeping viral loads down. However, side effects related to their method of CCR5 inhibition have limited their usage. The effects are apparent as Merck terminated the development of vicriviroc in 2010 and maraviroc has a black box warning for hepatotoxicity.

Corporate Presentation

Next Generation Entry/Fusion Inhibitor - Non Toxic

CytoDyn Inc. (OTCQB:CYDY) has developed a monoclonal antibody CCR5 antagonist called leronlimab to treat HIV with virtually no side effects compared to the nausea, fatigue, and trouble sleeping that come with the HAART regimen. The drug has an impressive safety and efficacy profile. After 24 weeks of leronlimab therapy, 81% of patients had suppressed viral load compared to 43% from the last drug approved in the study's patient population. There were no drug-related Serious Adverse Events (SAEs), giving it one of the best safety profiles in the HIV landscape. Leronlimab also addresses patient compliance as a once-a-week injectable with a 72 hour grace period. The drug also has a fast-track designation and a rolling BLA and is in a position to ask for accelerated approval. It hit its primary endpoint in a pivotal phase 3 trial. They have a very favorable label request with one drug resistance in 3 classes or one drug resistance in 2 classes with limited treatment options. Approval could represent a$1.7 to $3.4 billion market within the first year of approval based on Biovid's Market Research. After expected approval, they plan to do a label expansion to switch to monotherapy maintenance.

Corporate Presentation

It's important to note that 565 leronlimab monotherapy patients have literally thrown away HAART, the standard of care, for close to a year. Five special patients have even been off the side effect heavy HAART 5 years, demonstrating leronlimab's considerable resilience to patients' developing drug resistance, attributable to the fact that leronlimab mostly prevents the virus from ever replicating. Leronlimab may prove to be a superior option over HAART for many patients.

The HAART standard of care, which leronlimab theoretically has the potential to disrupt, represents a >$15 billion franchise for GILD, but the leronlimab monotherapy patients are living ART-free and have complete control of their HIV. Contrast leronlimab's viral rebound data to GILD's GS-9620 animal study, which saw viral loads rebound in 112 days (less than 4 months). Patients in CytoDyn's monotherapy trial are essentially represented by the orange line in the Functional Cure graphic (a few graphics) above, and many patients could remain functionally cured without side effects for years to come, since CytoDyn doesn't have any strong evidence of viral rebounds yet.

Prevention in HIV is all about keeping the viral load under 50 copies/mL, which the FDA considers an undetectable level and incapable of spreading the disease. As a once a week injectable, PRO 140 (leronlimab) offers convenience to the patient, virtually no side effects, and essentially keeps the virus away from the T-Cells and unable to replicate. Here's a nice analogy: HIV is like having little piranha in your blood that only eats T-Cells. The HAART treatment lets the piranha eat the T-Cell but slaughters most but not all of its offspring. Leronlimab, on the other hand, puts a Teflon coating around the T-Cells so the piranha have nothing to eat, so they die from malnutrition.

In a prevention setting, if a person at risk is given leronlimab and exposed to the virus the theory is that the virus will be blocked from replicating and eventually defenses in the body will break it down. This theory might even be applied to patients diagnosed with HIV. If this is done long enough perhaps the virus will eventually break down. Esteban Hernandez-Vargas said that " latently infected resting memory CD4+ T cells are the only cell type in which it has been clearly demonstrated that replication-competent virus can persist for several years in patients." Some patients have been on leronlimab for close to 5 years and at some point, this group of patients would be ideal for that sort analysis to see if they have in fact been cured.

The Thai Red Cross AIDS research center is initiating a PrEP clinical trial in subjects at high risk of HIV infection. Leading scientific advisor Dr. Jonah Sacha is conducting the research and CytoDyn has a Memorandum of Understanding with the Tai Red Cross to develop the HIV PrEP clinical trials. Sacha will also oversee the PrEP cure developments. Supporting PrEP and cure initiatives is the independent leronlimab data from the PRESTIGO Registry Study Group, which is to be presented at CROI. The people in this study are heavily treatment-experienced (HTE) patients that averaged at least 4-classes of drug resistance. The group of patients in this PrEP study are actually less sick than in the leronlimab phase 3 groups, where leronlimab managed to yield a whopping 90% responders rate. The PrEP responders rate to be announced at CROI might be very high. If the majority of HIV positive patients have no side effects, cannot transmit the disease, and has a fully functional immune system, this could be considered a functional cure, allowing Trump to claim a big win.

Throughout the article, little seeds have been planted to accentuate the case for a new player in HIV, who has a disruptive technology, backed by data on long term patients, who possibly could be cured with a drug that has little to no side effects. The CytoDyn story, once again, could be "too good to be true." However, the company is weeks away from a planned BLA submission that will result in a planned drug approval by June 2020, based on its rolling BLA and fast track status. In September, CytoDyn signed a non-binding licensing deal for $90 million from a major distributor. Once the drug is approved, the company has Samsung Biologics ready to provide them with up to $1.0 billion of inventory, based on anticipated drug prices, to meet the expected demand. CytoDyn also signed with distribution partners ready to market the drug. The pieces are in place for CytoDyn to start bringing in billions in revenue next year, except for one key thing. The company needs about $20 to $25 million to fund its operating costs while they are waiting for BLA approval over the next 6 months. This need for either a licensing deal or some type of financing seems to be dampening the enthusiasm for the technology as market participants await closure on financing terms or a licensing deal. It's been eerily quiet in the past two months because no big pharma company has made an even an overture toward what could be the most disruptive technology in the HIV space.

A Gilead investor might consider hedging his bets with the biggest threat in the HIV space. In a worst-case scenario for this investor, nothing happens and CytoDyn doesn't become a political football, then the investor can unwind the hedge after the CROI meeting. If something does happen then the hedge could be wildly profitable and even cover multiple situations included the licensing of the technology by a competitor. In all likelihood, the Trump lawsuit against Gilead could be much ado about nothing, as are most political events. However, can investors ignore 565 patients that were able to throw away their daily HAART regimen and defy big pharma? A 95% responder rate with prolonged remission and favorable safety is good enough to ignite a patient advocacy revolution, and as an investor, you don't want to be caught on the wrong side of the trade.

There are a lot of theories floating out there about how to cure HIV and how to deal with the HIV epidemic. The big picture is that Trump seems stalwart in his approach about eradicating HIV, but therein lies the opportunity. The challenge to investors in the coming months leading up to the State of the Union is figuring out which horse is he going to back. Gilead is the largest HIV drug maker in the world and was the golden child in HIV until the Trump lawsuit hit. This lawsuit should serve notice to GILD investors that they have been targeted by Trump. There is a body of evidence to suggest that CytoDyn has the goods to be crowned the new innovator in HIV. It's definitely a long shot that Trump would elevate a $120 million market cap company as the frontrunner, but it is possible.

The most likely scenario would be Merck and ViiV jockeying for position in their efforts to get top billing and dethrone Gilead. Both of them could potentially negotiate with the administration, but its not clear which company might have the best strategy for PrEP. Whoever is perceived to have the inferior PrEP solution may be forced to seek a license from another PrEP drug maker; however, they would need a drug asset close to approval. Fortunately for CytoDyn, leronlimab approval is only about 6 months away, and if the technology is as robust as presented in this article, a licensee (Merck or ViiV) and CytoDyn could cobble together a viable PrEP program in months and then file for a label expansion.

If Gilead gets wind of this strategy, they might try to play "spoiler", which would be a great outcome for CytoDyn. Regardless, the bottom line is that Trump hit Gilead hard, and they could be on the ropes in the PrEP race. The question for investors is: does Gilead wake up in time to fight back, or does Merck, ViiV, or possibly a CytoDyn collaboration with one of them knock Gilead out?

Disclosure: I am/we are long CYDY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

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The Politics Of HIV - The Political Football Has Been Fumbled - Seeking Alpha

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