More Drug Makers Are Losing Patience Over Bioshield Funds
BY PETER BENESH
INVESTOR'S BUSINESS DAILY
Richard Hollis is prepared to bite the hand he hopes will feed his company, Hollis-Eden Pharmaceuticals. (HEPH)
The hand belongs to Project Bioshield, a program designed to stockpile drugs and vaccines in the event of a large-scale terrorist attack.
President Bush announced Bioshield in January 2003 and signed it into law in July 2004.
The program is run by the Health and Human Services Department. It allocates $5.6 billion over 10 years to create a market for products to counter the effects of chemical, biological and nuclear terrorism.
But Hollis says Bioshield hasn't kept its promise. He's written, cajoled and lobbied lawmakers in an effort to find out why the money being allocated isn't being spent.
In late January, Hollis put his beefs about the program before millions of viewers on CBS' "60 Minutes."
The "60 Minutes" segment examined U.S. preparedness for nuclear terrorism. It also looked at Hollis-Eden's anti-radiation drug, Neumune. Hollis-Eden has spent $100 million to develop it.
Neumune rebuilds white blood cells and platelets after radiation exposure, which helps victims recover and avoid potentially life-threatening diseases.
The drug has had Pentagon backing for years. Tests at the Armed Forces Radiobiology Research Institute showed 100% of primates given Neumune survived radiation, while 100% of test animals without Neumune died.
Human clinical trials to test radiation or biochemical treatments are impossible. So the Food and Drug Administration can approve countermeasure drugs such as Neumune on the strength of primate tests.
Neumune is even easy to administer. People can inject themselves with a one-time-use syringe.
With all these advantages, Neumune seemed to be Bioshield's best anti-radiation prospect. Investors took notice, pushing Hollis-Eden's shares to an all-time high of 36.25 in September 2003.
But as doubts grew in the biotech community about Project Bioshield's management, Hollis-Eden's stock went into free fall. It bottomed out at 4.44 last month.
Insufficient Funds?
Some biotechs have even walked away from developing products for Project Bioshield, figuring there's no point in making products if the government is not going to buy and stockpile them.
One of the dropouts is Vical, (VICL) which claims to have an advanced anthrax vaccine.
Human Genome Sciences (HGSI) Chief Executive James Davis told Congress in June that his firm's anthrax countermeasure could have been in the national stockpile months earlier "if the full authority of Project Bioshield (had) been used as intended."
In October, Davis' firm got a contract to supply 10 grams of its drug, ABthrax, for testing. Bioshield took a one-year option for 100,000 doses.
So how do government officials respond to suggestions that Project Bioshield is falling short of its intent?
Monique Mansoura, the HHS' senior planning officer for public health emergency preparedness, says Bioshield is strapped by limited funds.
The program is doing the best it can with the money it has available, she says. But it also must spend carefully on what it considers the top priorities.
"With $5.6 billion, we can't address all threats for 300 million citizens," Mansoura said.
The program has spent only around $1 billion so far.
Others say the problem isn't so much money as it is stewardship.
"There's a real gap between the intention to create a new industry for biodefense countermeasures and the outcome. The central point of leadership has to come from the president," said Brad Smith, head of the University of Pittsburgh's Center for Biosecurity, which advises the government.
Project Bioshield has purchased four products so far. It has paid VaxGen $900 million for 75 million doses of anthrax vaccine for the national stockpile. BioPort gets $122.7 millon for 5 million doses of its anthrax vaccine.
Fleming & Co. gets $5.7 million for 1.7 million children's doses of potassium iodide, the standard treatment to prevent thyroid cancer after radiation exposure.
Akorn (AKN) gets $22 million for products to treat internal contamination by radioactive substances.
Some experts question these decisions. Brian Jenkins, terrorism analyst at RAND, a nonprofit research organization, says Bioshield's decision makers are missing the mark by focusing on radiation and anthrax.
Nor would Jenkins have stockpiled 300 million doses of smallpox vaccine, which the U.S. government did before Bioshield.
"It's hard to turn anthrax and smallpox into weapons of mass destruction," Jenkins said.
Hollis says he wants the government to focus on the threat of nuclear terror rather than anthrax. Ideally, he says, Bioshield officials would commit to 10 million doses of Neumune, which Hollis-Eden could supply at $50 to $100 per treatment.
While it didn't endorse any specific drug, the 9-11 commission recommended a stockpile of 10 million doses of a radiation countermeasure.
Bioshield plans to buy only 100,000 doses of whichever drug it thinks will best do the job. The deadline for proposals is Feb. 23. Hollis says his firm is working round the clock to win the business.
