As the World Health Organization initiates a new agreement for coordinating global responses to future pandemics, the future of vaccine development in the U.S. faces growing challenges, including waning funding and regulatory changes, that threaten next-gen COVID-19 vaccine candidates and pandemic preparedness more broadly.
Taking lessons from COVID-19, members of the World Health Organization last week adopted an agreement aimed at improving the world’s response to future pandemics. But with the U.S. currently withdrawing from the WHO, not to mention cutting funding and revamping regulatory requirements, the outlook for the development of vaccines, including those that could help fight the next pandemic, is increasingly uncertain.
For the pharma industry, investment in vaccines has long taken a backseat to other, more profitable research areas. This has meant that much of the innovation in early-stage vaccine research—including that which led to the COVID-19 vaccines—has emerged through public funding of universities and smaller-scale biotechs.
Recent HHS funding cuts have targeted COVID-19 research. In March, the agency terminated $11.4 billion in COVID-19 funding at the Centers for Disease Control and Prevention (CDC). “The COVID-19 pandemic is over, and HHS will no longer waste billions of taxpayer dollars responding to a non-existent pandemic that Americans moved on from years ago,” the agency said in a statement at the time explaining the decision.
With major job losses at the FDA and deep cuts to National Institutes of Health research supporting early-stage innovation, the broader pharma and biotech industries are facing potential severe disruption, according to Cheng Li, director of Biotech Equity Research at Oppenheimer. “If you have fewer dollars going to basic research, you’re going to have fewer breakthrough therapies in the next 10 years, and you will save fewer lives in the next 20 years,” he told BioSpace. “For vaccines, the cutting of funding or shifting the investment to more profitable areas maybe won’t have an immediate impact, but, over the long term, I think it will have serious consequences.”
Li said the funding cuts by the HHS are significant not only due to the impacted companies working on alternative COVID-19 vaccines, but also because their platforms were seen as holding potential to combat future pandemics.
It’s becoming a negative feedback loop—when you have fewer investments in early research or platform innovations, you are less likely to have really novel and groundbreaking technology or candidates.
Meanwhile, the FDA last week unveiled a new approval framework for future COVID-19 vaccines, prioritizing seniors 65 and older and high-risk individuals 6 months to 64 years of age.
Already, new requirements mandating placebo-controlled trials for vaccines have been met with confusion over the narrow definition of what constitutes a placebo. In an interview with BioSpace, Paul Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia, called the move “anti-vaccine activism come to the policy side.”
In this article, BioSpace looks at four companies and vaccines that have been impacted by shifting U.S. government decision-making.
Vaxart’s VXA-CoV2-3.3
In February, HHS suspended its potential $453 million government contract with Vaxart, placing a stop order on the California-based biotech’s COVID-19 vaccine trial. The Phase IIb trial is evaluating VXA-CoV2-3.3, an oral candidate, for efficacy, safety and immunogenicity against an approved mRNA vaccine. According to Li, the government funding is crucial to advance this COVID-19 program, and the potential oral vaccine is important because of its ability to encourage wider vaccination coverage due to the simpler logistics involved—particularly useful in the event of a future pandemic where the cold chain requirements of certain types of vaccines can limit access.
The stop-work order led to a company restructuring plan that resulted in approximately 10% of Vaxart’s workforce being laid off, according to the biotech’s 2024 financial report. Then, in April, two months after the stop work order was issued, HHS lifted the order, allowing the biotech to continue screening patients for enrollment into the study.
Li said the pause to clinical trials poses a risk to companies not just on the financial side but also because of the overall disruption to operations, evidenced by Vaxart’s headcount reduction. For the trials themselves, “there are major consequences because you need to get everything back on track—that means manufacturing the required doses, trial logistics and recruitment,” Li said.
Novavax’s Nuvaxovid
Unlike Vaxart, Novavax was not the recipient of a stop-work order. Instead, the Maryland-based company was waiting on an FDA decision regarding full FDA approval of its updated COVID-19 vaccine, Nuvaxovid, which finally came on May 16—about six weeks after the original PDUFA date of April 1.
The overall approval progress was shrouded in uncertainty, with reports circulating that Novavax may be required to run a new clinical trial prior to approval. Makary added to this suspicion in an X post last month, writing that “new products require new clinical studies.”
Novavax maintained that the requirement would be a postmarketing trial, and that expectation was realized in the approval notice, which noted four such studies. The approval was also somewhat limited in scope, indicated for all seniors aged 65 years and older, and in adults 12 through 64 years with one or more conditions that put them at high risk for severe COVID-19 outcomes. This is in contrast to Unlike Moderna’s Spikevax and Pfizer/BioNTech’s Comirnaty, which each have full approvals for patients 12 and up.
The uncertainty leading up to the approval proved harmful to Novavax; its share price dropped nearly 20% after Kennedy in April raised questions over Nuvaxovid’s efficacy. The vaccine’s BLA dominated the Q&A period of the company’s Q1 call, indicating peak investor interest. Despite this, Novavax posted a 610% increase in year-on-year sales, driven primarily by Nuvaxovid.
“I think Novavax is in a different situation because it has a billion-dollar market cap, and they have a partnership with Sanofi to market the vaccine,” Li said, adding that Novavax is in a better position compared to smaller vaccine makers that rely more heavily on government funding.
GeoVax’s GEO-CM04S1
One such smaller company is GeoVax, which, like Vaxart, fell victim last month to a stop-work order for its investigational COVID-19 vaccine, GEO-CM04S1, and a termination of its funding agreement. The biotech had been using the finances provided by the Biomedical Advanced Research and Development Authority (BARDA) to support a Phase IIb trial.
“The Notice invoked the ‘termination for the convenience of the government’ provision of the Project Agreement,” David Dodd, the company’s CEO, told BioSpace in an emailed statement. “Although not referenced in the Notice, nor in any separate communications with the government parties, GeoVax assumes that the contract termination is resulting from the ongoing government efficiency efforts under the new administration.”
Despite the loss of financial support, estimated to be less than $750,000 annually, Dodd said the company’s ongoing Phase II trial programs will continue, and he does not anticipate any significant changes to GeoVax’s operations.
As with Vaxart, GeoVax initially received funding because of its differentiated strategy to vaccine development, with the biotech pursuing a multi-antigen approach. According to Dodd, a multi-antigen approach was selected due to the potential for a more robust immune response in addressing emerging variants and to potentially increase durability of the protective immune response.
CastleVax’s NDV-HXP-S
CastleVax, a spin-out from Mount Sinai, experienced a similar outcome to GeoVax, after also receiving funds from BARDA. CastleVax is developing NDV-HXP-S, an intranasal vaccine for use against COVID-19, and could have received up to $338 million from BARDA to advance the candidate through clinical trials. The biotech had been scheduled to begin a Phase IIb efficacy study using the funds, but CastleVax CEO Michael Egan told Endpoints News in April that the trial had not yet begun.
A stop-work order received by the company looked like it would result in the termination of its funding agreement with BARDA, Egan told the publication. He added that CastleVax will continue to run a smaller study through internal financing or from capital raised from external, non-governmental partners.
The promise of an intranasal vaccine rests on its ability to induce an immune response in the respiratory tract, which could increase protection against COVID-19 infection, as SARS-CoV-2 is spread through the air.
For Li, the cancellation of such funding agreements—even in Vaxart’s case, where funding has been restored—is perceived negatively by any potential biotech investor. With the industry considered too risky by many investors, the early-stage vaccine space becomes an even more difficult financing environment if government support cannot be trusted to hold, Li said.
“It’s becoming a negative feedback loop—when you have fewer investments in early research or platform innovations, you are less likely to have really novel and groundbreaking technology or candidates,” Li concluded. “Likewise, if you can’t raise money, you can’t run a global trial. And I think that’s where you start to see how market conditions and political decisions filter down to the scientific and operational levels. You might have a great candidate, but not if you can’t afford to take it forward.”
