New Worries on BioShield Effort

By Marc Kaufman
Washington Post Staff Writer
Tuesday, October 4, 2005

For almost a year, the small California drug company Hollis-Eden Pharmaceuticals waited anxiously to see how much of its promising medicine against acute radiation sickness the government might want to purchase under the federal Project BioShield program. The legislation was passed last year to better protect Americans against threats from weapons of mass destruction, and radiation sickness treatments were high on the list.

On Friday, the company learned to its dismay that the government proposed to buy only 20,000 to 200,000 doses of its type of drug -- not nearly enough to make final development economically feasible.

The company's stock dropped sharply on the news, and some on Capitol Hill worried that the BioShield program -- which has been in trouble because large drug companies have generally declined to participate -- was headed for even rougher waters.

"For several years now, I would say we've been the poster child for BioShield -- the small company that had a product the government wanted and that was willing to develop it through the capital markets," said Richard Hollis, chief executive of Hollis-Eden.

"BioShield was supposed to make sure we had a market so we could continue to raise the money to do our work," he said. "Given what we saw on Friday, we feel very let down that BioShield is not being implemented like it was designed and passed."

In its request, the Department of Health and Human Services did not explain why it wanted only limited supplies of the radiation sickness medicine. The department has said it wants to buy at least 75 million doses of anthrax vaccine and 80 million doses for smallpox, and some observers expected a radiation sickness request of as many as 10 million courses of treatment.

HHS spokesman Marc Wolfson said yesterday that the radiation sickness request was an interim step and that "it may not be the amount we end up getting." He said companies have until Nov. 28 to comment on the request, and he expects it to be revised based on what they say.

Radiation sickness kills and injures by damaging bone marrow, which in turn leads to the destruction of infection-fighting cells and clotting factors that limit bleeding. In the event of acute radiation exposure, scientists say, most casualties would come from uncontrolled infections and bleeding.

The initial HHS notice a year ago seeking radiation sickness remedies called for a treatment against both effects, but last week's request called for a drug that would protect only against uncontrolled infection.

The HHS request was delayed once previously and has taken much longer to be published than expected. The delay, and the small size of the proposed contract, led some to worry that small companies will also shun BioShield projects.

"We want BioShield to work, and that means creating market incentives to produce new classes of drugs," said Robert White, spokesman for Rep. Thomas M. Davis III (R-Va.), who has voiced concern about the pace of procurement under the law. "I think there are legitimate reasons here to worry that this request is not enough to sustain new development and keep private industry interested."

Hollis-Eden's stock has dropped by almost 50 percent -- to $5.77 -- since the announcement Friday.

"Other companies looking at our experience can't be very encouraged," said Hollis, who said his company has spent more than $100 million to develop the drug because the Defense Department voiced strong interest in it and because the company thought it was the right thing to do.

"The game isn't over yet," he said, "but this certainly sends a very bad message."

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