VaxGen to Supply Anthrax Vaccine

Bay Area biotech firm VaxGen Corp. has won an $887.5-million contract to supply the federal government with a new anthrax vaccine that will be stockpiled for use in a national emergency, the Health and Human Services Department said Thursday.

The contract is the first to be awarded under Project Bioshield, a program designed to increase the availability of vaccines and drugs to prevent and treat infectious diseases that might be part of terrorist attacks. The news drove up shares of Brisbane-based VaxGen as much as 16% in after-hours trading. In regular over-the-counter trading Thursday, the stock closed at $14.35, up $1.90.

The anthrax vaccine stockpile would be enough to protect about 25 million people if terrorists launched a broad assault with the bacterium.

VaxGen expects to deliver the first vaccine doses in early 2006, company President Lance Gordon said. But VaxGen and government officials cautioned that the vaccine needed to undergo testing in both animals and humans to prove its effectiveness before that delivery could occur.

The company will not receive any money until doses of the vaccine are actually placed in the national stockpile, so VaxGen is making a rather substantial bet that it can bring the trials to a successful conclusion.

“The company is taking a lot of risk to be involved in this,” said Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases. But the company would probably not have pursued the vaccine at all if the government hadn’t committed to its purchase, he added.

The vaccine may be stockpiled, and could be used by the government in an emergency, without being approved by the Food and Drug Administration, VaxGen said.

Officials stressed that the vaccine was not being purchased for use on U.S. soldiers.

“The military will have to make their own decision,” said Dr. Philip Russell, medical advisor to the Health and Human Services Department.

A federal judge last month barred the military from forcing soldiers to be injected with the current anthrax vaccine, manufactured by BioPore Laboratories in Lansing, Mich. Hundreds of soldiers have been punished or discharged from the military for refusing to undergo vaccination because of the fear of side effects.

Health officials hope that the new vaccine, developed over the last 10 years by scientists at the U.S. Army Military Research Institute of Infectious Diseases, won’t have side effects because it is a purer product.

The existing vaccine is produced by growing the anthrax bacterium in culture and isolating so-called antigenic proteins from the bacterial surface. The vaccine is not highly purified, however, and contains a variety of other biological materials from the cell culture.

In contrast, the VaxGen vaccine is a recombinant DNA product in which the antigenic protein is grown in other organisms. Its greater purity makes it less likely to produce adverse side effects.

“We’ll know exactly what is in the product,” Gordon said.

If all goes well, VaxGen will deliver all 75 million doses of the vaccine within three years. Gordon said the company planned to submit an application to the FDA in 2006 to license the vaccine for general use.