Spore Wars
Forbes
Elizabeth MacDonald Robert Langreth
The anthrax attacks of 2001 were brutal and deadly. The next attack could be even worse. Are we prepared? The short-lived anthrax attacks that started a week after Sept. 11 are still shrouded in mystery. Innocuous white envelopes arrived by mail at big media companies and Capitol Hill. Twenty-two people were sickened and five died. "This is next," the letter-writer warned. To date no one has been charged.
The next attack could be far more horrific. Two hundred and twenty pounds of aerosolized anthrax spores sprayed from a nondescript truck in any U.S. city would wipe out anywhere from 130,000 to 3 million people, the equivalent of a hydrogen bomb. The scenario is considered one of the gravest bioterror threats to the U.S. Victims would be utterly clueless. Anthrax is odorless and tasteless and produces early symptoms that can dupe people into thinking they have the common flu. The inhaled version is usually fatal. But a vaccine, given postexposure in combination with antibiotics, could arrest it.
In 2004 the federal government allocated $5.6 billion to Project BioShield, an effort to boost the country's defenses against biological, chemical and nuclear threats. Nearly $1 billion was committed to stockpiling 75 million shots of anthrax vaccine, enough to inoculate 25 million and, hopefully, deter a terrorist biostrike.
Yet a year after BioShield and four years after the envelope attacks, the civilian stockpile is negligible. Instead we have a national security effort pinned mainly on a biotech firm with a checkered past pursuing an unproven vaccine technology on an extraordinarily tight deadline. Now that firm's rival, the sole current supplier of anthrax vaccine, a product that itself has been tarred as a serious health risk, has launched an intense lobbying effort to undermine its competitor's contract, accusing it of cozy ties with federal agencies.
Congress is threatening to hold hearings on the award. "It is unclear how quickly this new vaccine could be manufactured. I am especially concerned about potential delays," wrote Representative Bennie G. Thompson (D-Miss.) in a May letter to the Department of Homeland Security. Senate Finance Chairman Charles Grassley (R-Iowa) has fired off two letters to Health & Human Services demanding answers, noting he's "greatly concerned" that the government is "not prepared to protect the American people from an anthrax attack." Stewart Simonson, an assistant secretary at HHS, recently admitted to Congress that he remains unsure about the BioShield award process. "We're learning as we go," he said.
VaxGen, a little-known biotech firm in Brisbane, Calif., won the $878 million award, one of the largest government vaccine contracts ever, to make the 75 million anthrax vaccine doses. In October 2003 VaxGen was granted a license to use a bioengineered anthrax vaccine technology developed by the U.S. Army Medical Research Institute for Infectious Diseases at Fort Detrick, Md. The vaccine produced by this technology,
using genetically manipulated anthrax cells, is thought to be purer than traditional vaccines cultured in vats of souplike brews and laboriously filtered.
By the Numbers
Supplying the Stockpile
The U.S. is counting on two biotechs for a vaccine.
NAME
VaxGen, rpa102; Cost per dose: $11.70; Regimen: 3 doses; How it's made: Genetically; Doses Available: None yet.
BioPort, Biothrax, Cost per dose: $25.00 on average; Regimen: 6 doses over 18 months; How it's made: Cultured in Organic Soup; Doses Availabe: 5 Million.
BioPort is working to reduce that regimen. ²To be delivered to the government over the next 18 months. Source: Companies.
"BioShield was always designed to bring in new products," says Dr. Philip Russell, a former chief of U.S. Army medical research who advised HHS on its biodefense plans. "It was not a piggy bank to buy licensed products."
But VaxGen won't see a nickel of that money until it delivers a working vaccine. VaxGen has never made a licensed vaccine and is known mainly for a failed AIDS vaccine. Its accounting has been such a mess that Nasdaq delisted it in 2004 for not filing timely financial reports. VaxGen needs more cash to deliver its first batch of 25 million doses by 2006, as required by contract. "We're not going to let anyone down," says Lance Gordon, its chief executive.
Watching anxiously from the sidelines is VaxGen's rival, BioPort, a Lansing, Mich. company that has up to now been the government's sole anthrax vaccine supplier. The company has run into serious criticism over the quality of its vaccine, BioThrax, made using a 40-year-old process. Some 450 military personnel have refused to take it, to the point of being court-martialed or jailed. Soldiers have sued BioPort and the government to stop a mandatory anthrax vaccination program for the military, alleging BioPort's vaccine made them sick, caused birth defects, even killed some of them. Nevertheless, in May the government ordered 5 million emergency doses of BioThrax for civilians. The company and the Pentagon insist it's safe.
BioPort was stunned that VaxGen won the big award. If VaxGen delivers, it could seriously threaten BioPort's rich defense contracts. Since 1998 BioPort has grossed $223 million on contracts worth $500 million. In an effort to derail VaxGen, BioPort is lobbying Congress with a PowerPoint presentation entitled "A Nation Unprotected," attacking VaxGen's science and credentials.
BioPort says that VaxGen could miss its 2006 deadline. That's plausible, given the government's urgent demands. Vaccine stalwart Sanofi-Aventis dropped out of the bidding for an earlier government anthrax contract. "The time frame outlined by the government for us was not feasible," a company spokesman says. One government report says Sanofi believed that earlier deadline could not be met by anyone.
The government, says BioPort, has "bet the health and protection of the American public on a company with a history of scientific failure and financial scandal."
All the squabbling on Capitol Hill is beginning to get in the way of VaxGen's efforts. Calling the congressional commotion "political theater," Lance Ignon, VaxGen's spokesman, says the Capitol Hill fights won't stop the company but that any hearing "certainly unnerves Wall Street, and it's Wall Street that's funding this work," adding that having to deal with Congress "does create a distraction."
The brouhaha underscores the glaring cracks in the U.S. biodefense. Most drug companies avoid the vaccine business like, well, the plague. The market is limited, and capital costs are high. Overdependence on a botched influenza vaccine from Chiron set off a panic last fall. The issue will only worsen as Congress gears up for BioShield II and a badly needed avian flu vaccine.
BioPort, which started out as a state-run vaccine lab in Lansing, Mich., began making an anthrax vaccine in the mid-1960s with a formulation tested in a late-1950s trial on 1,200 textile mill workers exposed to anthrax. Though that study was inconclusive about the vaccine's effectiveness against inhalation anthrax--only five people in the study got that disease--BioPort says that much research, including a report by the prestigious Institute of Medicine, has backed its safety and effectiveness against both inhalation and cutaneous, or skin, anthrax.
But the state lab ran a filthy operation. In the 1990s the Food & Drug Administration threatened to revoke its license, citing numerous "significant" violations, including rusting storage freezers, dirty equipment, dead insects littering the floor and a failure to keep work areas separate to prevent contamination from other vaccines. Though the lab continued distributing vaccine for the military, its operations were suspended by the FDA in 1998. It took four years of renovations and upgrades to get approval to resume licensed work.
While BioPort accuses VaxGen of getting lots of help from the government, it, too, has benefited from the kindness of bureaucrats. The state sold the lab for $25 million in September 1998 to a partnership led by Fuad El-Hibri, a former director of Porton Products, a British vaccinemaker. El-Hibri got family friend William Crowe, former chairman of the Joint Chiefs of Staff, to join the board. Crowe
got a 13% stake in the company. The buyers paid just $3.25 million in cash, borrowing the rest mostly with interest-free notes from the state of Michigan. When it got into fiscal trouble, BioPort got government bailouts, including multimillion-dollar contract increases, protection against product liability and the right to sell its vaccine on the private market. Since 1988 the government has spent $112 million on the lab.
The government has continued to buy BioThrax, even though in 2001 the FDA stuck a warning in the drug's packaging about potential side effects, including lymphoma, lupus, multiple sclerosis, seizures and even death. "Any other vaccine in the civilian market with such a comparably bad track record would have been yanked in minutes," says John Michels, Jr., a lead attorney for soldiers suing the military.
VaxGen has a rocky track record, too. It began in 1995 as a spinoff from Genentech. In 1999 it won an $8 million government contract to test its AIDS vaccine, but the official negotiating that contract for the Centers for Disease Control got in trouble for simultaneously talking to VaxGen about a job. VaxGen soon got in its own trouble for hyping its AIDS vaccine in press releases. It boasted that trial data
showed its AIDS vaccine "is safe and raises a powerful immune response against HIV."VaxGen also corrected a disappointing sales estimate that ran in Investor's Business Daily, instead noting that "sales for the first year alone could total between $500 million and $650 million." As its stock rose, insiders started selling.
But in February 2003 VaxGen announced that its AIDS vaccine failed its first big trial. A later trial confirmed it was a flop. Investors sued, alleging executives knew things were going badly and had tried to inflate VaxGen's stock price. One suit has been dismissed, and VaxGen has agreed to settle a derivative action for $500,000 to cover attorneys' fees.
As its AIDS work was blowing up, VaxGen was working to get access to Fort Detrick's anthrax vaccine technology. It had friends. VaxGen Chief Gordon is a long-time acquaintance of Philip Russell, the former chief of Army medical research. Both sit on the board of the Albert B. Sabin Vaccine Institute in New Canaan, Conn. Fort Detrick gave VaxGen the license to its anthrax technology in October 2003. Russell, then an adviser to HHS, stepped in to settle a fight between government bureaucrats over whether VaxGen would pay royalties to the government. "He said, 'Dammit, I don't care what you do, but settle it--don't leave this company in the lurch,'" recalls Gordon.
A year later HHS awarded VaxGen the BioShield award. Gordon and Russell adamantly deny their relationship had any influence on VaxGen's selection. "I scrupulously stayed away from talking to him, to the point where I felt terrible about it," says Gordon. The company now quotes Russell in its media kit: "We have a lot of faith in this vaccine, and we believe it's the right way to move forward to protect the country against anthrax."
VaxGen is now restating its financials for 2001 through 2003 but appears to have lost a cumulative $173 million from the end of 1997 through 2003. Because of the restatement, VaxGen hasn't filed 2004 reports. Since December 2003 it has raised $100 million in equity and convertible debt financing and brought in $101 million in earlier federal contracts to develop its anthrax vaccine. It says it has $55 million in cash.
Both BioPort's and VaxGen's vaccines aim to spur the body to generate antibodies against the lethal bacterium. Bacillus anthracis (anthrax comes from the Greek word for coal, an allusion to the black skin lesions of the cutaneous disease) is a naturally occurring, spore-forming bacterium that is at least 11,000 years old. On a
microscopic level, anthrax is elegant in its simplicity and terrifying in its power.
After spores enter the body, they germinate into spaghetti-like strings
of bacteria cells, which then multiply and secrete three proteins: protective antigen, lethal factor and edema factor. Rings of protective antigen latch on to the surface of human cells and bind to the other two proteins to form toxins that then bore inside the cell, causing hemorrhaging, necrosis (blackened flesh) and death.
BioPort's vaccine uses filtered elements of dead anthrax bacteria grown in a soup of sugars, salts, amino acids and vitamins. The company says the vaccine consists primarily of protective antigen, but that it also contains small amounts of edema factor and other proteins.
In contrast, VaxGen uses genetically engineered anthrax cells to create a vaccine containing only the protective antigen. The company believes that antibodies to this protein are all that's needed for immunity. The recombinant manufacturing process allows for high volumes of consistent medicine.
VaxGen is scrambling to complete its clinical trials by the end of 2006, but Gordon says that by the end of this year it will start pumping out doses that are 95% pure, as required by its contract. Though the FDA won't review for licensing the safety and effectiveness of VaxGen's vaccine until 2007, the government is scrutinizing it,
conferencing with executives every two weeks.
After all this, a preliminary trial of VaxGen's vaccine involving 100 human volunteers found that high doses had an immune response comparable to BioPort's vaccine, says a trial investigator, Dr. Harry L. Keyserling, professor of pediatrics at Emory University. (BioPort, of course, disputes this analysis.)
The sad truth is that we'll never know if these anthrax vaccines can defend us from a large-scale attack--until one occurs. Drugmakers are prohibited from infecting people with the deadly disease just to test a vaccine. If an attack ever comes, we could have big problems on our hands.
Elizabeth MacDonald Robert Langreth
The anthrax attacks of 2001 were brutal and deadly. The next attack could be even worse. Are we prepared? The short-lived anthrax attacks that started a week after Sept. 11 are still shrouded in mystery. Innocuous white envelopes arrived by mail at big media companies and Capitol Hill. Twenty-two people were sickened and five died. "This is next," the letter-writer warned. To date no one has been charged.
The next attack could be far more horrific. Two hundred and twenty pounds of aerosolized anthrax spores sprayed from a nondescript truck in any U.S. city would wipe out anywhere from 130,000 to 3 million people, the equivalent of a hydrogen bomb. The scenario is considered one of the gravest bioterror threats to the U.S. Victims would be utterly clueless. Anthrax is odorless and tasteless and produces early symptoms that can dupe people into thinking they have the common flu. The inhaled version is usually fatal. But a vaccine, given postexposure in combination with antibiotics, could arrest it.
In 2004 the federal government allocated $5.6 billion to Project BioShield, an effort to boost the country's defenses against biological, chemical and nuclear threats. Nearly $1 billion was committed to stockpiling 75 million shots of anthrax vaccine, enough to inoculate 25 million and, hopefully, deter a terrorist biostrike.
Yet a year after BioShield and four years after the envelope attacks, the civilian stockpile is negligible. Instead we have a national security effort pinned mainly on a biotech firm with a checkered past pursuing an unproven vaccine technology on an extraordinarily tight deadline. Now that firm's rival, the sole current supplier of anthrax vaccine, a product that itself has been tarred as a serious health risk, has launched an intense lobbying effort to undermine its competitor's contract, accusing it of cozy ties with federal agencies.
Congress is threatening to hold hearings on the award. "It is unclear how quickly this new vaccine could be manufactured. I am especially concerned about potential delays," wrote Representative Bennie G. Thompson (D-Miss.) in a May letter to the Department of Homeland Security. Senate Finance Chairman Charles Grassley (R-Iowa) has fired off two letters to Health & Human Services demanding answers, noting he's "greatly concerned" that the government is "not prepared to protect the American people from an anthrax attack." Stewart Simonson, an assistant secretary at HHS, recently admitted to Congress that he remains unsure about the BioShield award process. "We're learning as we go," he said.
VaxGen, a little-known biotech firm in Brisbane, Calif., won the $878 million award, one of the largest government vaccine contracts ever, to make the 75 million anthrax vaccine doses. In October 2003 VaxGen was granted a license to use a bioengineered anthrax vaccine technology developed by the U.S. Army Medical Research Institute for Infectious Diseases at Fort Detrick, Md. The vaccine produced by this technology,
using genetically manipulated anthrax cells, is thought to be purer than traditional vaccines cultured in vats of souplike brews and laboriously filtered.
By the Numbers
Supplying the Stockpile
The U.S. is counting on two biotechs for a vaccine.
NAME
VaxGen, rpa102; Cost per dose: $11.70; Regimen: 3 doses; How it's made: Genetically; Doses Available: None yet.
BioPort, Biothrax, Cost per dose: $25.00 on average; Regimen: 6 doses over 18 months; How it's made: Cultured in Organic Soup; Doses Availabe: 5 Million.
BioPort is working to reduce that regimen. ²To be delivered to the government over the next 18 months. Source: Companies.
"BioShield was always designed to bring in new products," says Dr. Philip Russell, a former chief of U.S. Army medical research who advised HHS on its biodefense plans. "It was not a piggy bank to buy licensed products."
But VaxGen won't see a nickel of that money until it delivers a working vaccine. VaxGen has never made a licensed vaccine and is known mainly for a failed AIDS vaccine. Its accounting has been such a mess that Nasdaq delisted it in 2004 for not filing timely financial reports. VaxGen needs more cash to deliver its first batch of 25 million doses by 2006, as required by contract. "We're not going to let anyone down," says Lance Gordon, its chief executive.
Watching anxiously from the sidelines is VaxGen's rival, BioPort, a Lansing, Mich. company that has up to now been the government's sole anthrax vaccine supplier. The company has run into serious criticism over the quality of its vaccine, BioThrax, made using a 40-year-old process. Some 450 military personnel have refused to take it, to the point of being court-martialed or jailed. Soldiers have sued BioPort and the government to stop a mandatory anthrax vaccination program for the military, alleging BioPort's vaccine made them sick, caused birth defects, even killed some of them. Nevertheless, in May the government ordered 5 million emergency doses of BioThrax for civilians. The company and the Pentagon insist it's safe.
BioPort was stunned that VaxGen won the big award. If VaxGen delivers, it could seriously threaten BioPort's rich defense contracts. Since 1998 BioPort has grossed $223 million on contracts worth $500 million. In an effort to derail VaxGen, BioPort is lobbying Congress with a PowerPoint presentation entitled "A Nation Unprotected," attacking VaxGen's science and credentials.
BioPort says that VaxGen could miss its 2006 deadline. That's plausible, given the government's urgent demands. Vaccine stalwart Sanofi-Aventis dropped out of the bidding for an earlier government anthrax contract. "The time frame outlined by the government for us was not feasible," a company spokesman says. One government report says Sanofi believed that earlier deadline could not be met by anyone.
The government, says BioPort, has "bet the health and protection of the American public on a company with a history of scientific failure and financial scandal."
All the squabbling on Capitol Hill is beginning to get in the way of VaxGen's efforts. Calling the congressional commotion "political theater," Lance Ignon, VaxGen's spokesman, says the Capitol Hill fights won't stop the company but that any hearing "certainly unnerves Wall Street, and it's Wall Street that's funding this work," adding that having to deal with Congress "does create a distraction."
The brouhaha underscores the glaring cracks in the U.S. biodefense. Most drug companies avoid the vaccine business like, well, the plague. The market is limited, and capital costs are high. Overdependence on a botched influenza vaccine from Chiron set off a panic last fall. The issue will only worsen as Congress gears up for BioShield II and a badly needed avian flu vaccine.
BioPort, which started out as a state-run vaccine lab in Lansing, Mich., began making an anthrax vaccine in the mid-1960s with a formulation tested in a late-1950s trial on 1,200 textile mill workers exposed to anthrax. Though that study was inconclusive about the vaccine's effectiveness against inhalation anthrax--only five people in the study got that disease--BioPort says that much research, including a report by the prestigious Institute of Medicine, has backed its safety and effectiveness against both inhalation and cutaneous, or skin, anthrax.
But the state lab ran a filthy operation. In the 1990s the Food & Drug Administration threatened to revoke its license, citing numerous "significant" violations, including rusting storage freezers, dirty equipment, dead insects littering the floor and a failure to keep work areas separate to prevent contamination from other vaccines. Though the lab continued distributing vaccine for the military, its operations were suspended by the FDA in 1998. It took four years of renovations and upgrades to get approval to resume licensed work.
While BioPort accuses VaxGen of getting lots of help from the government, it, too, has benefited from the kindness of bureaucrats. The state sold the lab for $25 million in September 1998 to a partnership led by Fuad El-Hibri, a former director of Porton Products, a British vaccinemaker. El-Hibri got family friend William Crowe, former chairman of the Joint Chiefs of Staff, to join the board. Crowe
got a 13% stake in the company. The buyers paid just $3.25 million in cash, borrowing the rest mostly with interest-free notes from the state of Michigan. When it got into fiscal trouble, BioPort got government bailouts, including multimillion-dollar contract increases, protection against product liability and the right to sell its vaccine on the private market. Since 1988 the government has spent $112 million on the lab.
The government has continued to buy BioThrax, even though in 2001 the FDA stuck a warning in the drug's packaging about potential side effects, including lymphoma, lupus, multiple sclerosis, seizures and even death. "Any other vaccine in the civilian market with such a comparably bad track record would have been yanked in minutes," says John Michels, Jr., a lead attorney for soldiers suing the military.
VaxGen has a rocky track record, too. It began in 1995 as a spinoff from Genentech. In 1999 it won an $8 million government contract to test its AIDS vaccine, but the official negotiating that contract for the Centers for Disease Control got in trouble for simultaneously talking to VaxGen about a job. VaxGen soon got in its own trouble for hyping its AIDS vaccine in press releases. It boasted that trial data
showed its AIDS vaccine "is safe and raises a powerful immune response against HIV."VaxGen also corrected a disappointing sales estimate that ran in Investor's Business Daily, instead noting that "sales for the first year alone could total between $500 million and $650 million." As its stock rose, insiders started selling.
But in February 2003 VaxGen announced that its AIDS vaccine failed its first big trial. A later trial confirmed it was a flop. Investors sued, alleging executives knew things were going badly and had tried to inflate VaxGen's stock price. One suit has been dismissed, and VaxGen has agreed to settle a derivative action for $500,000 to cover attorneys' fees.
As its AIDS work was blowing up, VaxGen was working to get access to Fort Detrick's anthrax vaccine technology. It had friends. VaxGen Chief Gordon is a long-time acquaintance of Philip Russell, the former chief of Army medical research. Both sit on the board of the Albert B. Sabin Vaccine Institute in New Canaan, Conn. Fort Detrick gave VaxGen the license to its anthrax technology in October 2003. Russell, then an adviser to HHS, stepped in to settle a fight between government bureaucrats over whether VaxGen would pay royalties to the government. "He said, 'Dammit, I don't care what you do, but settle it--don't leave this company in the lurch,'" recalls Gordon.
A year later HHS awarded VaxGen the BioShield award. Gordon and Russell adamantly deny their relationship had any influence on VaxGen's selection. "I scrupulously stayed away from talking to him, to the point where I felt terrible about it," says Gordon. The company now quotes Russell in its media kit: "We have a lot of faith in this vaccine, and we believe it's the right way to move forward to protect the country against anthrax."
VaxGen is now restating its financials for 2001 through 2003 but appears to have lost a cumulative $173 million from the end of 1997 through 2003. Because of the restatement, VaxGen hasn't filed 2004 reports. Since December 2003 it has raised $100 million in equity and convertible debt financing and brought in $101 million in earlier federal contracts to develop its anthrax vaccine. It says it has $55 million in cash.
Both BioPort's and VaxGen's vaccines aim to spur the body to generate antibodies against the lethal bacterium. Bacillus anthracis (anthrax comes from the Greek word for coal, an allusion to the black skin lesions of the cutaneous disease) is a naturally occurring, spore-forming bacterium that is at least 11,000 years old. On a
microscopic level, anthrax is elegant in its simplicity and terrifying in its power.
After spores enter the body, they germinate into spaghetti-like strings
of bacteria cells, which then multiply and secrete three proteins: protective antigen, lethal factor and edema factor. Rings of protective antigen latch on to the surface of human cells and bind to the other two proteins to form toxins that then bore inside the cell, causing hemorrhaging, necrosis (blackened flesh) and death.
BioPort's vaccine uses filtered elements of dead anthrax bacteria grown in a soup of sugars, salts, amino acids and vitamins. The company says the vaccine consists primarily of protective antigen, but that it also contains small amounts of edema factor and other proteins.
In contrast, VaxGen uses genetically engineered anthrax cells to create a vaccine containing only the protective antigen. The company believes that antibodies to this protein are all that's needed for immunity. The recombinant manufacturing process allows for high volumes of consistent medicine.
VaxGen is scrambling to complete its clinical trials by the end of 2006, but Gordon says that by the end of this year it will start pumping out doses that are 95% pure, as required by its contract. Though the FDA won't review for licensing the safety and effectiveness of VaxGen's vaccine until 2007, the government is scrutinizing it,
conferencing with executives every two weeks.
After all this, a preliminary trial of VaxGen's vaccine involving 100 human volunteers found that high doses had an immune response comparable to BioPort's vaccine, says a trial investigator, Dr. Harry L. Keyserling, professor of pediatrics at Emory University. (BioPort, of course, disputes this analysis.)
The sad truth is that we'll never know if these anthrax vaccines can defend us from a large-scale attack--until one occurs. Drugmakers are prohibited from infecting people with the deadly disease just to test a vaccine. If an attack ever comes, we could have big problems on our hands.
