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VaxGen to Sell Anthrax Vaccine

California biotechnology firm VaxGen Inc. has agreed to sell its anthrax vaccine for $2 million after losing a major federal contract for the treatment, the Washington Post reported today (see GSN, Dec. 4, 2007).

The U.S. Health and Human Services Department in late 2006 canceled the $877.5 million deal for production of 75 million doses of the next-generation vaccine.  VaxGen at the time was two years behind schedule on delivery of the drug and has since laid off nearly all employees in a near-total collapse.

Emergent BioSolutions of Maryland, maker of the existing U.S. anthrax vaccine, lobbied against the VaxGen contract.  It is expected to announce today a deal to buy the vaccine from its one-time rival company for $2 million up front and up to another $8 million over time.  VaxGen would also receive some money from sales of the vaccine.

Emergent's present vaccine requires six shots and up to 18 months to provide immunity.  It has also been linked to side effects among military personnel.  The company hopes to win a contract this month for 25 million doses of an anthrax vaccine that would require fewer shots and provide immunity in less time.

Its in-house research has not progressed as far as VaxGen's had.  While Emergent could face the same troubles that plagued its competitor, it believes those problems have been or can be addressed.

"The government has gone on the record looking for new technology, but there's a big leap of faith here," said Steve Brozak, president of WBB Securities.  "Many companies have been felled by new technology.  VaxGen is a perfect example of a company turning into vaporware.  It was death by slow cuts."

The leading contender for the U.S. contract appears to be Maryland-based PharmAthene, which in March obtained the rights to a British-made vaccine (see GSN, March 24).  An Indian firm and others could also apply (Michael Rosenwald, Washington Post, May 5).