Shares in VaxGen Inc. rose Wednesday on news that the Brisbane firm
was awarded an $80.3 million government contract to continue development of an
anthrax vaccine and scale up manufacturing to 3 million doses.
The three-year contract keeps VaxGen in the running for additional awards
totaling $1.4 billion to make and maintain a stockpile of 60 million doses of
anthrax vaccine to protect the U.S. population in case of bioterrorism.
VaxGen's competitor, Avecia Group PLC of Manchester, England, which has
been developing a similar vaccine based on a protein fragment that stimulates
the immune system, was awarded a $71.3 million contract.
Funding for the $1.4 billion anthrax vaccine stockpile depends on
congressional passage of Project Bioshield, which would provide nearly $6
billion to prepare an arsenal of medicines against anthrax, smallpox and other
potential terrorist weapons. The bill was approved by the House, but is
pending in the Senate.
It would allow the government to choose a contractor or contractors by
early 2004 to make an initial 25 million to 30 million doses, the first phase
of an effort to build up a full stockpile by 2013.
VaxGen stock had been rising like stair steps through September as the
date approached for a decision on the anthrax contract by the National
Institute of Allergy and Infectious Diseases. After the agency's announcement
Wednesday, company shares gained 58 cents, or 4.81 percent, to close at $12.65.
Share value has nearly tripled since Sept. 2.
"We are pleased to have been awarded a contract that plays such an
important role in our nation's defense,'' said Lance Gordon, VaxGen's chief
executive officer.
Government vaccine work has helped to sustain VaxGen this year after
clinical trials on its AIDS vaccine yielded little or no benefit. The company,
which was founded to develop the AIDS vaccine it acquired from Genentech Inc.,
saw its shares lose half their value when the disappointing data were revealed
in February.
Then VaxGen snared a $16 million contract to develop and test an anthrax
vaccine created by Army researchers.
Now the company not only has a shot at the $1.4 billion in potential
anthrax vaccine contracts, but is also vying for a share of another $1.4
billion that Project Bioshield would spend on a stockpile of smallpox vaccine.
In a research note, Punk Ziegel & Co. analyst Sharon Seiler said VaxGen
is well positioned to win the anthrax stockpile contract. Its South San
Francisco manufacturing plant is equipped to produce 100 million doses a year.
Furthermore, the company just lined up back-up manufacturing capacity in the
United Kingdom through an agreement with that country's Health Protection
Agency.
Seiler owns VaxGen shares, and her firm does investment banking business
with the company.
VaxGen is conducting human trials to make sure the anthrax vaccine dose
has no harmful side effects, but people are not exposed to anthrax germs to
test its effectiveness. Under Food and Drug Administration rules, the
effectiveness is being tested in animals.
Dow Jones News contributed to this report.
E-mail Bernadette Tansey at btansey@sfchronicle.com
