Nice article today in Boston Globe.
boston.com
A shot in the arm for biotech
Amid funding crisis, federal antiterror dollars are welcome
By Naomi Aoki, Globe Staff, 2/5/2003
President Bush's proposal to earmark $6 billion over 10 years to expand the nation's medical arsenal against bioterrorism could prove a small but vital shot in the arm for the biotechnology industry, which is facing one of the worst funding crises in its 25-year history. For a select few firms involved in vaccine, antibiotic, and infectious-disease research, federal dollars are already emerging as a way to bring cash in to advance programs and protect jobs that might otherwise have been slashed.
The most notable example is Acambis, a British firm with US headquarters in Cambridge. It won a $428 million contract in the months after Sept. 11, 2001, to provide 209 million doses of smallpox vaccine for a national stockpile.
But as many biotech companies run dangerously low on cash, a growing contingent seeks to capitalize on the national investment in homeland security. In the past two months, three Boston-area firms, Avant Immunotherapeutics, Coley Pharmaceutical Group, and Therion Biologics, have won contracts or entered into collaborations to make safer and more potent vaccines for biological threats such as anthrax, smallpox, and plague.
''It's been a tough year,'' said Una Ryan, chief executive of Avant, which won $8 million in federal funding to create a single vaccine to protect against anthrax and plague.
''Avant has suffered a hit to its stock price. We don't want to go to the capital markets to raise money under these circumstances. The only alternative is to cut staff, and delay trials.
''This money from the government allows us to underwrite a lot of research, advance our underlying technologies, and actually accelerate them into a new area of biodefense.''
But given the cost and time of developing a drug (an average of $800 million and more than a decade, according to the Tufts Center for the Study of Drug Development), Ryan and other biotech executives say, $6 billion is hardly a fix for the industry's financial woes -- and only a first step in reaching the goals Bush outlined in his State of the Union address.
For companies in a position to leverage their expertise to develop vaccines or treatments for the weapons of biological warfare, industry insiders say, the growing pool of federal dollars represents a substantial opportunity. But few expect to see companies embark on biodefense research that diverges from their area of expertise or diverts them from their commercial focus.
''Unless a technology is also a good business investment, it won't have legs to deliver on its promise for homeland security,'' said Alf Andreassen, a principal with Paladin Capital Group's Homeland Security Fund. ''The two have to go together to toughen us up as a nation.''
The Washington-based investment group aims to fund technologies that can be used to defend against bioterrorist attacks and other national security threats. Choosing technologies with applications that go beyond defense is a critical component of their investment decisions, Andreassen said, because it allows them to mitigate the financial risk while ensuring the nation -- and not just the military -- is secure.
''There's always an opportunity for the biotech industry to access federal dollars,'' said Dennis Panicali, Therion's chief scientific officer. ''But this is probably one of the greatest opportunities I've ever seen.''
For years, scientists have experimented with creative ways to combat biological and chemical warfare. But the private sector, fearful there was little market for such seemingly esoteric products, has been reluctant to develop them. Without a guaranteed buyer for a product such as an anthrax vaccine, industry lobbyists have argued, it made better financial sense to devote time and money to products in steady demand, such as cancer and diabetes therapies.
Under Project BioShield, government officials could tap into a separate pot of money to help spur research and fund the stockpiling of a promising drug or vaccine, without the standard annual budget appropriations.
The proposal, still in skeletal form, would give federal health agencies wide latitude to expedite antiterrorism projects through the development and regulatory process. The National Institutes of Health would be able to lift salary caps to hire scientists with expertise in bioterrorism, streamline contracts, and build specialized laboratories.
''We must rebuild America's capacity to produce vaccines by committing the federal government to the purchase of medicines that combat bioterror,'' Bush said this week in a speech to NIH scientists.
Coley won $6 million in federal funds to use its immune-boosting compounds to make a more potent version of the anthrax vaccine, which requires six doses and 18 months to create immunity. The anthrax vaccine isn't likely to be a big seller for the company, and the funds represent a small fraction of the company's overall operating costs, said Dr. Arthur Krieg, Coley's chief scientific officer. But the defense project has allowed them to hire additional employees -- people whose expertise will translate into other research programs -- and to speed work on related vaccine projects by a year or more.
For large companies, the profit margins offered by the government are too small to merit the time and money it costs for them to produce a vaccine, said Avant's Ryan. But for smaller firms like Avant and Coley, she said, the relatively small margins are worthwhile if they allow the companies to leverage their expertise, enabling them to expand their businesses, advance their understanding of the underlying technology, and defray overhead costs.
Project BioShield will only be a success, however, if it also manages to address the legal and regulatory hurdles that stand in the way of vaccine development. The time and cost of clinical trials have soared to enormous proportions, in many cases requiring tens of thousands of volunteers to satisfy regulators that the vaccines are safe and effective. Avant decided not to pursue the US market for its cholera vaccine because the cost of meeting such regulatory demands didn't justify its development. Companies also face the legal liability that comes with exposing healthy people to the risks that even the safest vaccines carry.
Avant was awarded its contract by DynPort Vaccine Co., a Maryland firm that is the prime contractor for the Defense Department's Joint Vaccine Acquisition Program, which allowed Ryan to circumvent the liability concerns, since DynPort has a congressional mandate. Even so, she said, Avant's funding covers only the development of the vaccine through preclinical research, and if at the end of two years the Needham company is not given more funding, its efforts could come to naught.
''Without the guaranteed promise of a buyer for these vaccines, the public could lose out, and we could lose out because we will have done research that doesn't lead to revenues,'' Ryan said. ''And without a more realistic vaccine development program, there will be no vaccines for poor people and people attacked by bioterrorism.''
Naomi Aoki can be reached at naoki@globe.com.
This story ran on page C5 of the Boston Globe on 2/5/2003.
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