Herpes Vaccine Biotech Catches Flak Over Sketchy Offshore Trials

The saga of Rational Vaccines Inc. is proof that truth is stranger than fiction.

The Springfield, Ill.-based biotech company is focused on the development and commercialization of a vaccine for herpes.

It is led by CEO and co-founder Agustin Fernandez III, who is best known for winning an Oscar for a short film. The company's other founder and CSO, Dr. William Halford, died in June, succumbing to brain cancer.

Rational counts Silicon Valley investing giant Peter Thiel among its investors.

The company is being investigated by the St. Kitts and Nevis Ministry of Medicine for conducting a Phase 1 trial on the island without authorization.

The university that licensed a pair of patents in 2015 tied to Rational's vaccine, Southern Illinois University, has distanced itself from the company's offshore trials in the Caribbean.

"Rational Vaccines conducted its research and trials as an independent company, not as part of the University," the institution's medical school said in an Aug. 28 news statement.

"SIU is not responsible for trials and research conducted by independent companies."

Halford was a professor at SIU's school of medicine for a decade before his death.

And a former managing partner at Credit Suisse and current Rational Vaccine investor, Bartley Madden, says the company's offshore trial could push towards an alternate path to making drugs available faster and cheaper than Food and Drug Administration approvals, which he believes are too slow.

Genital herpes is a sexually transmitted disease caused by herpes simplex viruses 1 and 2 or HSV-1 and HSV-2. Worldwide, about four billion people are infected with herpes, and in the U.S. there are 150 million patients. Herpes can cause blindness, neonatal mortality and life-threatening encephalitis.

Moreover, herpes patients are three times more likely to contract HIV/AIDS.

Rational Vaccines was founded in 2015 by Halford and Fernandez III "for the purpose of offering better solutions to stop the spread of herpes and alleviate the problems faced by people suffering with unrelenting, chronic disease," according to the company website.

Halford studied herpes dating back to 1991 while Fernandez started looking for a better treatment after a friend talked to him about the hardships of having the disease.

Fernandez has no formal background in either medicine or biotech research. His entertainment background includes winning an Oscar in 2014 for his production of the short film "The Lady in Number 6: Music Saved my Life."

In November of last year, Rational Vaccines posted the results of a Phase 1 clinical trial where 17 patients from the U.S. were given a three-shot series of live Theravax vaccination in St. Kitts.

According to the company, all 17 participants reported the treatment was more effective than traditional antiviral drugs. Rational's Theravax is a live vaccine as opposed to antiviral therapies, the only FDA approved herpes treatment.

FDA approved medications include GlaxoSmithKline's Valtrex, Famvir from Novartis Pharmaceuticals Corp., and Acyclovir available in several generics.

According to Fernandez, Rational only went offshore because the company was unable to find funding for an FDA sanctioned trial as well as a safety panel known as an institutional review board (IRB), a two-part body designed to make sure a trial is safe for participants.

While the Rational trial lacked an IRB Fernandez said that participants in the testing were made aware that the trial was not sanctioned by the FDA.

The offshore testing has brought a loud chorus of critics accusing the company of not only being unethical but also trying to sidestep FDA regulations.

Among those protesting is the Ministry of Health and Human Services for St. Kitts and Nevis. Those officials claim that Rational did not advise any public agency regarding the trials operation, and the Ministry of National Security is currently conducting an investigation of the trials.

In March Fernandez told Biospace that the trial was conducted outside the U.S. because the FDA can take too long to approve drugs and that the regulator also didn't like live vaccines. He also said that another Phase 1 trial was being planned for Mexico as well as Phase 2 tests in Mexico and St. Kitts.

But in an interview earlier this month with MSNBC, Fernandez said that only the late Dr. Halford could say for sure why the trials were done offshore and without an FDA approval.

Fernandez said he feared the potential for his company's herpes treatment was being overshadowed by the criticism of Rational Vaccines's St. Kitts trial and its lack of ethics. "I didn't even know what an IRB was," he said.

Fernandez, whose background is in writing and producing movies, said that the debate over ethics is drowning out the real story, that Halford was a hero and that people are defaming a dead man over the ethical debate. "This guy is eradicating herpes; let's talk about that. Nobody is saying that we've lost one of the great scientific minds in America."

Halford argued in a research paper last year that his non-traditional approach to the offshore trial was not reckless, but rather served to make a potential treatment available to those who needed it faster. Fernandez has argued that his partner took the approach because he wanted to see positive treatment results before his death.

Both Halford and Fernandez took multiple injections of Rational's vaccine candidate with no adverse effects.

Fernandez did not respond to a request for an interview.

While Fernandez has said the FDA is too slow moving for his liking, it seems he has found religion about the regulator from an unlikely source.

It seems a representative of Thiel Capital set both Fernandez and Dr. Halford straight over the company's future use of offshore trials. While Halford made an argument that short circuiting the time-consuming regulations of FDA approved trials was good for some patients, Thiel's representative reasoned that in order to reach a billion patients, the trials had to flow through the FDA.

Thiel, the founder of PayPal and well-known venture capital investor, is not a fan of the FDA, having once said that the agency's regulations would prevent the approval of a polio vaccine in today's environment.

Thiel and others invested $7 million in Rational Vaccines earlier this year, but after the controversial St. Kitts trial. Thiel has taken plenty of heat for Rational's offshore regulatory shortcuts, but he and the others had nothing to do with where the Phase 1 trial took place.

Thiel Capital and Founders Fund did not respond to inquiries.

Fernandez says that Rational is now committed to submitting an Investigational New Drug Application with the FDA in the hopes of shepherding its herpes vaccine to an eventual approval.