The government awarded its first contract under the Project Bioshield program yesterday -- an $877 million deal with a small California company to make 75 million doses of a newly developed anthrax vaccine.

Under the contract, VaxGen Inc. will begin delivering the vaccine to the strategic national stockpile within two years at a fixed price negotiated with the Department of Health and Human Services.

The Food and Drug Administration has not reviewed the vaccine for safety or effectiveness, and yesterday officials said that will not happen until 2007. But under the Bioshield legislation, the vaccine can be distributed and used before official approval if the Centers for Disease Control and Prevention declares a health emergency.

The new vaccine will be made using purified proteins created by cloning. The proteins stimulate the immune system to produce antibodies that can neutralize anthrax toxins.

HHS Secretary Tommy G. Thompson said no company would produce the anthrax vaccine if the government did not agree to buy a specified amount in advance. "Acquiring a stockpile of this new anthrax vaccine is a key step toward protecting the American public against another anthrax attack," he said. In October 2001, five people died and six were hospitalized after inhaling anthrax spores released from mailed envelopes; no one has been charged.

The first 75 million doses will be stored in the national stockpile for use in an emergency, but the vaccine could be available to the general public and the military after FDA review and approval. As currently formulated, the anthrax immunization requires three separate injections and, according to VaxGen officials, is effective both before and after exposure to the deadly bacteria.

Initial work on the vaccine was done by the U.S. Army Medical Research Institute of Infectious Diseases at Fort Detrick, Md. In 2002, VaxGen licensed the product and, working largely with public money from the National Institute of Allergy and Infectious Diseases, developed a manufacturing process.

VaxGen, founded in 1995 as a spinoff from biotech giant Genentech Inc., was involved in the development of a much-anticipated, but ultimately unsuccessful, AIDS vaccine in the late 1990s. In August, the company stumbled again, announcing that the Nasdaq exchange was delisting its stock because the company had not filed two quarterly reports with the Securities and Exchange Commission. VaxGen said the reports were delayed because it was implementing new accounting policies and would need to restate earnings reports dating to 2002.

Nasdaq informed VaxGen that the issues did not appear to result from impropriety, the company said. VaxGen said it would file the reports in October, but they have yet to be filed.

The company has also faced several class-action lawsuits by shareholders who allege the company "misled investors about the progress of certain clinical trials and our future manufacturing and marketing plans," according to VaxGen filings with the SEC.

The $5.6 billion Bioshield program was signed into law by President Bush on July 21 in an effort to develop defenses against possible biological weapons.

The new anthrax vaccine is a centerpiece of Bioshield, but many questions remain about its effectiveness and how long it can be stored. In a conference call, VaxGen CEO and President Lance K. Gordon said its shelf life is expected to be two or three years.

Another anthrax vaccine that is already available was, until last week, a required immunization for many active-duty military personnel. That vaccine, an older type that is cultured in a growth medium, was approved by the FDA in late 2003, but a federal judge ruled last week that the agency did not follow proper procedures and the Defense Department has stopped its inoculations. The vaccine is manufactured by BioPort Corp. of Lansing, Mich., under a $245 million Pentagon contract.

BioPort spokeswoman Kim Brennen Root said HHS also announced yesterday its intention to purchase at least 5 million doses of its product, BioThrax, for the strategic stockpile. "This is an important first step in the overall preparedness of the nation, and especially for potential first responders," she said.

Staff writer Michael Rosenwald contributed to this report.

Health and Human Services Secretary Tommy G. Thompson says a vaccine stockpile will help protect Americans.