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Acambis suffers vaccine letdown

By Rosie Murray-West

Acambis, the company behind the US stockpile of smallpox vaccines, stunned the City yesterday after the American government indicated it would not complete an order for the product.

The shares tumbled 28 to 296p, despite the company also saying that the "clinical hold" placed on trials of the vaccine by the US drug regulator have been removed after a safety review.

Gordon Cameron, Acambis chief executive, said: "I think the bottom line is that the government thinks that, with its old material, it has got enough. Politically they can say they have met their objective."

He said revenue for the year would be reduced from forecasts of £95m-£140m to £85m-£90m.

The Acambis vaccine, which is made in cell cultures, has been added to an old stockpile of smallpox vaccine, which was made by scarifying a calf's stomach. "This would never be allowed today," Mr Cameron said. The company has to prove that its vaccine is as safe and effective as the old one to get it approved by the US government.

The company brought forward its interim results after being told of the decision on the contract late last week. It said revenue had dropped from £82.3m to £51.3m compared with the same six months last year, while pre-tax profit had risen from £20.7m to £26.3m.

The company, which is developing other products but earns most of its profit from smallpox contracts, said revenue is expected to drop to between zero and $20m for 2005.

Mr Cameron said he didn't regret the company's decision to take on the smallpox business, even though revenues have been lumpy.

Acambis is still waiting for a decision on another US government order for 60m doses of a weaker vaccine suitable for vulnerable members of the population. Analysts say that this may be shared between Acambis and Bavarian Nordic, its main smallpox rival. Mr Cameron said that the decision on the earlier contract had no bearing on the weaker vaccine.

He added that other governments are looking at Acambis's vaccine because of fears of biological terrorism and some are waiting for the vaccine to be approved by regulators before they use it.

Now that the drug trials can proceed, he said the company could file for approval in 2005. Some analysts had feared the regulator would make Acambis repeat the trials. Acambis shares, which had dropped more than 10pc in early trading, recovered as analysts digested this news.