Biotechs Race for New Vaccine
Government Bid Calls for Improved Anthrax Shot

By Kendra Marr
Washington Post Staff Writer
Monday, October 6, 2008

Developing a next-generation anthrax vaccine is not for the weak of heart -- or wallet. Just two years ago, a revoked federal contract for a purportedly new and improved vaccine left a California biotech in ruins.

But that hasn't stopped two local companies from entering a high-stakes competition to succeed the unsuccessful contractor. PharmAthene of Annapolis and Emergent BioSolutions of Rockville have each spent millions of dollars to answer the government's latest call to develop and supply a better anthrax vaccine, a genetically modified version that produces robust immunity in fewer shots with lessened side effects. By employing newer vaccine technology, the government aims to eventually replace BioThrax, the first and only anthrax vaccine, licensed in 1970 and now owned by Emergent.

Millions of dollars are at stake under the Bush administration's $5.6 billion Project BioShield, a program established in 2004 to stockpile an emergency reserve of critical drugs to protect Americans from bioterrorism. While this next-generation vaccine contract is subject to available BioShield funds, PharmAthene estimates the new contract could be valued at $350 million to $600 million. Both Emergent and PharmAthene have made substantial investments in developing a new anthrax vaccine, part of their arsenals of biodefense products vying for government money.

Last month, after the Department of Health and Human Services pared down its applicant pool for the new anthrax vaccine, Emergent and PharmAthene were still in the running. The award, or awards split between multiple firms, to supply the Strategic National Stockpile with at least 25 million doses could come in the next few months. In the event of an attack, the winner could be called on to provide millions more doses, said Robin Robinson, director of the HHS Biomedical Advanced Research and Development Agency, which manages Project BioShield.

Creating a new vaccine is costly work. PharmAthene paid $20 million in March for the biodefense unit of British firm Avecia, acquiring its next-generation vaccine SparVax. In addition, it spent $7.1 million on anthrax vaccine research and development in the six months ended June 30.

In May, Emergent purchased rPA 102 from its rival VaxGen for $2 million. The South San Francisco, Calif., biotech had already spent more than $175 million on the vaccine in 2006 when the government canceled its $877.5 million contract for 75 million doses, citing stability problems with the vaccine and missed deadlines. VaxGen began to crumble, and Emergent swooped in to pick up the pieces. In past two quarters, Emergent spent about $13 million on biodefense research and development, with a substantial focus on improving rPA 102's stability.

The government needs a strong vaccine with at least a two-year shelf life to quickly inoculate the entire nation against anthrax in case of a terrorist attack. To build a better vaccine, scientists have reinvented how it's made.

When anthrax spores enter the blood stream, they release three substances: protective antigen, lethal factor and edema factor. Protective antigen binds with the two factors to release two fatal toxins.

BioThrax mainly contains protective antigen, which induces antibodies to combat anthrax toxins, but there are also small traces of other proteins. Side effects associated with BioThrax -- swollen arms, muscle pain, flu-like symptoms, nausea -- are thought to be caused by these extra proteins.

A recombinant, or genetically modified, version such as rPA 102 or SparVax would strip away proteins that don't help produce immunity, scientists say. Engineered cells would produce only the protective antigen, resulting in a purer and likely stronger vaccine, leading to shortened dosage. Scientists say recombinant manufacturing would quickly produce high volumes of consistent vaccine.

But this is a theory that has yet to be tested.

Emergent executives point to studies they say show that BioThrax has no more side effects than other vaccines. Last week HHS extended BioThrax's current $448 million contract to stockpile 18.75 million doses, asking for an additional 14.5 million doses for at least $364 million.

Meanwhile, Emergent has been working with the Centers for Disease Control and Prevention to reduce BioThrax's prolonged dosage of six injections over 18 months, and it has submitted an application to the Food and Drug Administration showcasing BioThrax's stability in hopes of lengthening the vaccine's three-year shelf life to four years. In addition, Emergent recently received a federal award for up to $29.7 million to create an enhanced form of BioThrax, which has a shortened dosage.

But PharmAthene also received a development contract for up to $83.9 million to make a recombinant anthrax vaccine that can be stored at room temperature. Last week a $13.1 million investment from Panacea Biotec of India, which purchased PharmAthene shares at a 90 percent premium the day after the Dow Jones industrial average fell more than 700 points, reaffirmed the Annapolis start-up's threat to the more-established Emergent, said Stephen G. Brozak, president of WBB Securities, a San Diego investment and research firm.

A new anthrax vaccine has been a long time coming. In 2001, shortly after the post-Sept. 11 anthrax attacks that killed five and sickened 17, a committee of scientists declared that the public "urgently needed" a better anthrax vaccine. Seven years later, BioThrax is still the only one available.

Emergent has already shown a willingness to put up an aggressive fight for the new contract. When VaxGen won its $877.5 million contract for 75 million doses of rPA 102, Emergent, then known as BioPort, spent millions of dollars lobbying for BioThrax. In an op-ed, one key Emergent lobbyist alluded to VaxGen as an "unproven supplier" of an "experimental anthrax vaccine" -- the very vaccine Emergent now champions.

In its pitch for rPA 102, Emergent has emphasized that it would be offering the U.S. stockpile "a domestic source" -- as it's made in Michigan. PharmAthene would still rely on Britain's Avecia to make part of the vaccine.

PharmAthene responded, saying its manufacturing process, which manipulates E. coli to construct protective antigens, would be able to make a vaccine faster than Emergent's, which uses bacillus.

"When VaxGen failed and their product was available for purchase, we looked to it very carefully," said David P. Wright, PharmAthene's chief executive. "But we found the Avecia product to be further along."

But Emergent and PharmAthene still have to successfully roll out their vaccines on a commercial level to keep a contract -- the stage VaxGen ran into trouble. VaxGen's vaccine was effective in the laboratory, but its stability stumbled as production ramped up.

To make a commercial batch of chemical drugs, companies just multiply the ingredients, much like a recipe, said Michael Kurilla, director of the Office of Biodefense Research Affairs at the National Institute of Allergy and Infectious Diseases. But biologic drugs are made in living cells that are used as mini-factories.

"The manufacturing of recombinants is still more of an art than a science," Kurilla said. "People are still learning the nuances."