The Singapore government, which last year was among Asia’s leaders in its efforts to combat the Covid-19 coronavirus, appears to have stumbled, after the Economic Development Board agreed to pay a San Diego-based biopharma company, Arcturus Therapeutics Holdings, Inc. US$220 million to develop a vaccine in conjunction with the Duke University-National University of Singapore Medical School. Financial analysts in the US have downgraded the Arcturus stock after some of its clinical studies were less than promising and the vaccine looks likely to be delayed.

Singapore earlier had ambitions to vaccinate all of its citizens at the same pace as Israel and the United Arab Emirates have done. It has been buying vaccines from other sources and delayed the start of a program to inoculate its 5.7 million residents. As of February 20, according to the Our World in Data website, it had only vaccinated 1.6 percent of residents, behind 17 other nations including Morocco, Bahrain, and Poland.

“Of 31 Covid-19 vaccine trials (by Arcturus), currently some at are Phase 2 and others are at Phase 3 out of 221 at the start,” said an infectious disease specialist who asked not to be named. “Many are not going to achieve the grade, so I am not surprised.”

So far, the Singapore media appears to have been silent on the Arcturus troubles. According to US media, neutralizing antibodies in the tests for Arcturus were at lower levels than for rival vaccine candidates. Arcturus is hoping its vaccine will not require a booster shot, making it easier to administer than vaccines that require two doses.

Said a Singaporean epidemiological expert who also declined to be named, Phase 2 trials of the Arcturus vaccine are still ongoing and if successful, phase 3 trials may take place late this year. He added, “Since the world won’t have complete vaccination, being ready in 2022 is still okay, but doing phase 3 trials have just become more challenging. The Arcturus vaccine is late, but there is no basis to label it a failure.”

Ho Ching, the 67-year-old chief executive officer of Temasek Holdings, Ltd., the city-state’s biggest sovereign investment fund, was one of several people who played a central role in picking Arcturus to develop its ARCT-021 vaccine for use against the scourge. She said in a Facebook post on Feb. 22 that 40 vaccination centers are to be established by the end of April, each able to administer 2,000 shots a day. Fourteen centers are now up and running. So far, the disease has sickened almost 60,000 victims, the majority of them migrant workers, although it has taken the lives of only 29, testimony to the island’s health system.

Singapore has budgeted the equivalent of US$750 million for vaccines, with Arcturus Therapeutics tapped to lead the country’s effort to control the coronavirus. Health care workers, the elderly, and front-liners were to be first in a bid to vaccinate the entire population by the third quarter of the year, which, if successful, would still put Singapore ahead of other Southeast Asian countries.

According to the Ministry of Health on its website, “As vaccine supply will arrive in Singapore in batches over several months as manufacturers increase their production of vaccines, vaccination should start with groups who are at greater risk and hence most in need of Covid-19 vaccination, including healthcare workers and Covid-19 frontline workers, as well as vulnerable groups at greater risk of severe disease from COVID-19 infection, such as the elderly.

How much the Arcturus effort will be a part of that is unknown, since its Phase 3 trials appear likely to run into the third quarter of the year. On December 28, 2020, Arcturus’s shares fell sharply on the announcement that while it did receive approval from the Singapore Health Science Authority to proceed with a phase-2 clinical study of its vaccine candidate, “the data seemed to be underwhelming,” according to the CNBC business news channel. Analyst Edward Arce at the Wall Street firm HC Wainright downgraded the stock on concerns his firm had “lost confidence in the potential of ARCT-021 to provide meaningful protection from SARS-CoV-2 infection and Covid-19.”

While the latest dataset “does not completely impair single-shot ARCT-021,” Arce wrote, “which may provide protection against Covid-19 infection in Phase 3, the lack of SARS-CoV-2 neutralizing antibody (NAb) titers at or above levels seen in convalescent sera reduces our confidence that ARCT-021 will be able to achieve competitive levels of vaccine efficacy with single-shot dosing. … At a minimum, the question will be asked by the market and unanswered until Phase 3, thereby limiting near-term upside and justifying a Market Perform rating.”

Raymond James Financial, Inc. also downgraded the stock, which fell sharply by 52 percent to US$43.96 on news of the downgrades before recovering on February 22 to US$59.59, well below the consensus target at US$106.15.

Arcturus announced its agreement with Singapore’s EDB to begin the development process in November, noting the provision of an upfront limited-recourse loan of US$45 million and terms for up to US$175 million to be used for the purchase of equipment, materials, and services related to the manufacture of the vaccine. Under the terms of the agreement, the loan is to be repaid through royalties on future ARCT-021 commercial sales.

However, if ARCT-021 doesn’t obtain regulatory approval, the pact contains a provision that the loan will be forgiven and Arcturus gets to keep the money. Additionally, Arcturus and the EDB have agreed to terms providing the EDB with the right to purchase up to US$175 million of ARCT-021 vaccine at pre-negotiated prices, with shipments expected to begin in the first quarter of 2021.

Arcturus has had a somewhat checkered corporate history. In March 2018, the company sued the chief executive officer, Joseph E. Payne, after pushing him out of his job a month earlier, citing “misconduct, poor judgment and bad decisions” during his tenure, accusing him in the lawsuit of self-dealing and conflicts of interest, and seeking damages. Among other charges, according to the suit, Payne attempted to transfer substantial amounts of Arcturus’s intellectual property to another firm, Providence Therapeutics, controlled by Payne’s personal friend and occasional business partner.

Payne, the company’s largest shareholder with 13.7 percent of the stock, fought back with the help of a group of allied shareholders, pushing out the board of directors and replacing the board with four directors he had recruited. According to a March 2018 statement from the company, an agreement was reached settling litigation between the two sides. Payne was quoted saying he was “extremely pleased” to be reinstated, bringing back his co-founder, Padmanabh Chivukula as chief scientific and chief operating officer, who had resigned after Payne was fired.

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