The real plus, says Francis R. Cano, chairman and chief executive at Vaxin, is that his company, and the others, can start making additional vaccines to stem a pandemic or shortage without waiting for chickens to lay millions of eggs. Fauci agreed: "You can ramp up without waiting for all those eggs," he said.
But cell cultures won't change the fundamental reason so many companies say they have left the flu vaccine business: Profits are too slim. Pharmaceutical and biotech companies would rather make drugs people take every day, not just once a year. "Cell culture is not a salvation for the flu industry," said Scott Gottlieb, a physician and former senior policy adviser to the Food and Drug Administration.
Protein Sciences Corp. grows vaccine in cells extracted from caterpillar ovaries
(Courtesy Of Protein Sciences Corp.)
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Holler, the chief executive at ID Biomedical, said producing traditional flu shots generally costs about $2 per dose. He doesn't expect the cost to change much with cell cultures. The problem, said Holler and analysts, is that while prices have gone up some in recent years, the wholesale price for a flu shot is still $8 to $10. Consumers buy it for about $20.
Raising prices significantly is risky, too . Gottlieb said that was demonstrated last year by the dismal launch of FluMist, MedImmune Inc.'s nasal flu vaccine. With doses priced at about $46 wholesale, MedImmune sold just 450,000 and threw out millions of others. The Gaithersburg company slashed the price for FluMist in half this flu season while working to bring an improved version to market for 2007.
Fauci acknowledges the tricky economics of the flu business and says the government is working on "taking risk away for companies." The idea, he said, is to encourage wider vaccine use and eventually increase the number of people being immunized to 180 million from last year's 83 million. At the same time, the government is looking at a policy of annually buying unused doses or a flat amount upfront. But how large a quantity it would buy and for how much money are questions that have not been addressed.
Until there are solid incentives, Taunya Sell, an analyst for Ragen MacKenzie Group Inc. who covers ID Biomedical, said many companies will be skittish about jumping in. "If the profit margins are horrible, why would any company take that chance otherwise?" Sell said.
That's at least partly why flu vaccine companies have trouble raising money, Cano said. In six years, Vaxin has raised $14 million -- about $10 million in government grants and appropriations but only $4 million from investors, including two venture groups in Birmingham. Protein Sciences has spent about $10 million developing its vaccine but has raised little money from outside investors, Adams said. Instead, the company relies on upwards of $6 million a year in revenue from selling biological products to researchers.
Holler said ID Biomedical isn't banking on its the cell culture business. Instead, it's working on getting its flu shots into the U.S market and completing development of a nasal flu vaccine that, unlike FluMist, doesn't use a live virus.
Still, Cano of Vaxin and Adams at Protein Sciences like their companies' chances with cell culture vaccines now that attention is being paid. "Investors are more interested," Cano said. "The media are more interested." He has been contacted recently by local and national venture capital groups. Adams said he has had several investor meetings in recent weeks.
"It's just crazy here," he said. "I've been traveling more than George Bush."
Asked how much money the company has raised post-Chiron, though, Adams said: "We haven't raised any, but I think we're getting close."
Q. What is the flu? 
