Mercury News
By Steve Johnson
The government has poured billions of dollars into programs to protect the nation from terrorists wielding biological weapons. That's been a bonanza for several Bay Area biotech companies.
One of them, Vaxgen, has won nearly $1 billion in contracts to make an anthrax vaccine. The tiny Brisbane company hopes to land a smallpox-vaccine deal worth even more.
But some people question whether the federal program will be able to defend the country from bioterrorist attacks that could take many forms. Despite claims by federal officials that they are making progress in countering bioterrorism, serious doubts remain.
Most major drug companies have declined to get involved. Some dislike dealing with the government because it's unpredictable or because there appears to be little commercial application for the products federal officials want developed.
Others complain that federal rules exclude firms mostly financed by venture capital, which includes many biotech start-ups. They also say any products developed under the program could leave the companies vulnerable to consumer lawsuits.
The dearth of business participation could slow development of countermeasures for the wide range of biological substances terrorists could use, some critics say. They liken the federal effort so far to trying to plug a leaky dike with too few fingers.
``Given a modest amount of time, the big holes will be, if not plugged, then at least partially plugged,'' said David Relman, a Stanford Medical School microbiologist and immunologist who's on the National Science Advisory Board for Biosecurity. ``But I'm not optimistic that we're going to take biological agents off the table as a threat.''
The danger can take many forms. Anthrax is considered one of the most likely substances to be used by terrorists. When somebody mailed it to federal offices and the media in 2001, five people died.
Anthrax can infect a person through a cut, contaminated food or the air. Once it enters the body, it releases two kinds of toxins that can kill infected cells and cause water to accumulate in the lungs.
Program flaws
VaxGen's vaccine uses a form of protective antigen that prompts the body's immune system to block the toxins from doing any damage. But 75 million doses will protect only 25 million people. It could take years to develop enough of the vaccine to shield most of the population.
Even if anthrax was eliminated as a serious threat, a number of other pathogens could cause widespread havoc. They include smallpox, botulism, plague, cholera, the Ebola virus, tularemia and shigella. Terrorists have plenty of options for using those substances on an unsuspecting populace.
In June, a study by two Stanford researchers concluded that contaminating a milk-processing facility with just one gram of botulism toxin could sicken 150,000 people and kill more than half of them.
During a tour last month at the Pleasanton offices of Applied Biosystems, which makes kits for government agencies to test for terrorist toxins, U.S. Rep. Richard Pombo, R-Stockton, said large animal feed lots also represent a tempting target. At many such lots, he said, ``there is no security.''
Federal officials have assured Congress recently that they are making progress in protecting the country. Since the Sept. 11, 2001, terrorist attacks, they have spent $21 billion to counter bioterror, according to the University of Pittsburgh's Center for Biosecurity. That's $5 billion a year, more than 10 times what was spent annually on biosecurity before the Sept. 11 attacks.
But critics contend the effort is flawed.
Among other things, some say the government seems so fixated on producing vaccines for existing pathogens, it hasn't adequately prepared for the possibility that terrorists or Mother Nature could create vaccine-resistant mutations of those toxins.
``I worry about the development of a vaccine to a virus that was well-known two years ago without knowing what its capacity for change is,'' said Marvalee Wake, a University of California-Berkeley professor who is president of the American Institute of Biological Sciences. ``It's so scary to be behind the curve rather than ahead of it.''
But the most common gripe is that the federal effort has alienated the businesses it needs most to be effective.
``It was ill-conceived,'' said Lynn Klotz, a biotech consultant and a senior science fellow with the Center for Arms Control and Non-Proliferation. ``It showed no understanding of how the pharmaceutical industry or even the biotechnology industry operates.''
Congress is considering legislative changes to entice more businesses to participate, including a provision that would ease the potential for consumer lawsuits against companies receiving government contracts to make biosecurity products.
Liability is a problem because of the way vaccines and other drugs for combating bioterrorism are approved. For obvious reasons, their effectiveness is tested only in non-human animals. So if the drugs wind up failing to protect humans, lawsuits could result.
Reaping the rewards
For now, the nation's biosecurity work is being done at a smattering of small biotech outfits in the Bay Area and elsewhere. Many are accustomed to skimpy revenue and rivers of red ink. But they are finding that the job of countering terrorists can be rewarding.
Take Dynavax Technologies of Berkeley, which makes treatments for allergies and infectious diseases. Between 2000 and 2003, its annual revenue averaged $1.7 million. Then, in 2003, it won $8.4 million in contracts to make vaccines for anthrax and other pathogens.
Xoma, another biotech company in Berkeley whose 2004 revenue was $3.7 million, was awarded $15 million in March to develop a treatment for people infected with botulism. The 18-month contract ``is a welcome shot in the arm,'' said the company's spokeswoman, Ellen Martin.
But few stand to see their revenue rise as much as VaxGen. The company was in trouble a few years ago. The AIDS vaccine it had been developing was going nowhere and it was losing money. Since the Sept. 11 terrorist attacks, however, federal money has been pouring in.
VaxGen, whose annual revenue barely topped $14 million in 2003, already has received $101 million to develop the anthrax vaccine and expects nearly $300 million more next year when it is due to deliver the first 25 doses.
As a result, the company is growing fast. It has 280 employees -- nearly triple what it had three years ago -- and expects to have 500 by late next year, he said. That could be just the beginning. Other countries also are expressing interest in buying the company's vaccine, Gordon said, and the federal contract for a smallpox vaccine VaxGen is seeking could be worth $2 billion.
Working for the government hasn't been easy. Initially, federal officials told VaxGen to produce the drug in vials. Then they changed their minds and wanted it in syringes.
``That did cause us a little heartburn,'' according to Gordon, who said the switch set the vaccine's production back at least six months.
The company also has had to change its accounting system to suit the government. And it must meet 14 times a month with federal officials to discuss matters related to the vaccine and produce monthly progress reports that run 700 pages or more, he said.
Nonetheless, Gordon figures it's worth it.
Despite those who criticize the national effort to counter terrorism and the many companies that have declined to get involved, VaxGen takes pride in helping protect the public from biological threats, Gordon said. Besides, he added, ``there's a lot of money in it.''
By Steve Johnson
The government has poured billions of dollars into programs to protect the nation from terrorists wielding biological weapons. That's been a bonanza for several Bay Area biotech companies.
One of them, Vaxgen, has won nearly $1 billion in contracts to make an anthrax vaccine. The tiny Brisbane company hopes to land a smallpox-vaccine deal worth even more.
But some people question whether the federal program will be able to defend the country from bioterrorist attacks that could take many forms. Despite claims by federal officials that they are making progress in countering bioterrorism, serious doubts remain.
Most major drug companies have declined to get involved. Some dislike dealing with the government because it's unpredictable or because there appears to be little commercial application for the products federal officials want developed.
Others complain that federal rules exclude firms mostly financed by venture capital, which includes many biotech start-ups. They also say any products developed under the program could leave the companies vulnerable to consumer lawsuits.
The dearth of business participation could slow development of countermeasures for the wide range of biological substances terrorists could use, some critics say. They liken the federal effort so far to trying to plug a leaky dike with too few fingers.
``Given a modest amount of time, the big holes will be, if not plugged, then at least partially plugged,'' said David Relman, a Stanford Medical School microbiologist and immunologist who's on the National Science Advisory Board for Biosecurity. ``But I'm not optimistic that we're going to take biological agents off the table as a threat.''
The danger can take many forms. Anthrax is considered one of the most likely substances to be used by terrorists. When somebody mailed it to federal offices and the media in 2001, five people died.
Anthrax can infect a person through a cut, contaminated food or the air. Once it enters the body, it releases two kinds of toxins that can kill infected cells and cause water to accumulate in the lungs.
Program flaws
VaxGen's vaccine uses a form of protective antigen that prompts the body's immune system to block the toxins from doing any damage. But 75 million doses will protect only 25 million people. It could take years to develop enough of the vaccine to shield most of the population.
Even if anthrax was eliminated as a serious threat, a number of other pathogens could cause widespread havoc. They include smallpox, botulism, plague, cholera, the Ebola virus, tularemia and shigella. Terrorists have plenty of options for using those substances on an unsuspecting populace.
In June, a study by two Stanford researchers concluded that contaminating a milk-processing facility with just one gram of botulism toxin could sicken 150,000 people and kill more than half of them.
During a tour last month at the Pleasanton offices of Applied Biosystems, which makes kits for government agencies to test for terrorist toxins, U.S. Rep. Richard Pombo, R-Stockton, said large animal feed lots also represent a tempting target. At many such lots, he said, ``there is no security.''
Federal officials have assured Congress recently that they are making progress in protecting the country. Since the Sept. 11, 2001, terrorist attacks, they have spent $21 billion to counter bioterror, according to the University of Pittsburgh's Center for Biosecurity. That's $5 billion a year, more than 10 times what was spent annually on biosecurity before the Sept. 11 attacks.
But critics contend the effort is flawed.
Among other things, some say the government seems so fixated on producing vaccines for existing pathogens, it hasn't adequately prepared for the possibility that terrorists or Mother Nature could create vaccine-resistant mutations of those toxins.
``I worry about the development of a vaccine to a virus that was well-known two years ago without knowing what its capacity for change is,'' said Marvalee Wake, a University of California-Berkeley professor who is president of the American Institute of Biological Sciences. ``It's so scary to be behind the curve rather than ahead of it.''
But the most common gripe is that the federal effort has alienated the businesses it needs most to be effective.
``It was ill-conceived,'' said Lynn Klotz, a biotech consultant and a senior science fellow with the Center for Arms Control and Non-Proliferation. ``It showed no understanding of how the pharmaceutical industry or even the biotechnology industry operates.''
Congress is considering legislative changes to entice more businesses to participate, including a provision that would ease the potential for consumer lawsuits against companies receiving government contracts to make biosecurity products.
Liability is a problem because of the way vaccines and other drugs for combating bioterrorism are approved. For obvious reasons, their effectiveness is tested only in non-human animals. So if the drugs wind up failing to protect humans, lawsuits could result.
Reaping the rewards
For now, the nation's biosecurity work is being done at a smattering of small biotech outfits in the Bay Area and elsewhere. Many are accustomed to skimpy revenue and rivers of red ink. But they are finding that the job of countering terrorists can be rewarding.
Take Dynavax Technologies of Berkeley, which makes treatments for allergies and infectious diseases. Between 2000 and 2003, its annual revenue averaged $1.7 million. Then, in 2003, it won $8.4 million in contracts to make vaccines for anthrax and other pathogens.
Xoma, another biotech company in Berkeley whose 2004 revenue was $3.7 million, was awarded $15 million in March to develop a treatment for people infected with botulism. The 18-month contract ``is a welcome shot in the arm,'' said the company's spokeswoman, Ellen Martin.
But few stand to see their revenue rise as much as VaxGen. The company was in trouble a few years ago. The AIDS vaccine it had been developing was going nowhere and it was losing money. Since the Sept. 11 terrorist attacks, however, federal money has been pouring in.
VaxGen, whose annual revenue barely topped $14 million in 2003, already has received $101 million to develop the anthrax vaccine and expects nearly $300 million more next year when it is due to deliver the first 25 doses.
As a result, the company is growing fast. It has 280 employees -- nearly triple what it had three years ago -- and expects to have 500 by late next year, he said. That could be just the beginning. Other countries also are expressing interest in buying the company's vaccine, Gordon said, and the federal contract for a smallpox vaccine VaxGen is seeking could be worth $2 billion.
Working for the government hasn't been easy. Initially, federal officials told VaxGen to produce the drug in vials. Then they changed their minds and wanted it in syringes.
``That did cause us a little heartburn,'' according to Gordon, who said the switch set the vaccine's production back at least six months.
The company also has had to change its accounting system to suit the government. And it must meet 14 times a month with federal officials to discuss matters related to the vaccine and produce monthly progress reports that run 700 pages or more, he said.
Nonetheless, Gordon figures it's worth it.
Despite those who criticize the national effort to counter terrorism and the many companies that have declined to get involved, VaxGen takes pride in helping protect the public from biological threats, Gordon said. Besides, he added, ``there's a lot of money in it.''
