AVANIR PHARMACEUTICALS (AVNR)

[Gd2Aussie3]

"CEO Of Biotech Takes Feds To Task Over Bioterrorism Policy "
Author: PETER BENESH
Section: Health & Medicine Date: 4/11/2005

The U.S. government says it wants to protect the nation from bioterrorism, but you couldn't tell that by its policies, says Gerald Yakatan, chief executive of Avanir Pharmaceuticals in San Diego.

At a recent biotech conference in San Diego, Yakatan lambasted the way national leadership has handled funding to fight bioterrorism.

After 9-11 and the subsequent and still unsolved anthrax attacks, Avanir tried to interest federal officials in its own anti-anthrax product. Yakatan found he couldn't get funding for research and development under Project Bioshield, the government's 10-year, $5.6 billion program.

He spoke with IBD.

IBD: What's the problem with Project Bioshield for companies trying to make anti-bioterrorism products?

Yakatan: When the government talked about Project Bioshield and $5.6 billion over 10 years, our industry thought this would be a lot of money for research. I had to go to Capitol Hill myself to find out that it's only for procurement.

Theoretically under Project Bioshield, you have a guaranteed procurement expenditure. A firm in the manufacturing business would like that.

But before you can procure, you have to have a product. You have to have funding to get from discovery of a potential therapeutic agent to development.

If you're in the business of discovering new drugs, the return on your investment would be too small if you finance it yourself.

IBD: What kind of return can prospective makers of anti-bioterrorism products expect?

Yakatan: For most of those products that I can see, the government will be the primary purchaser. So if that's going to be the deal, that means payment will be cost plus 5% or so. That's less than market prices would be for a new chemical entity for treatment of another condition.

IBD: Who's in charge of approving funding for discovery and development of anti-bioterrorism products?

Yakatan: In our area, which is anthrax antibodies, the National Institutes of Health was first. Then the Centers for Disease Control got involved. Then the Department of Defense got involved. There are many different agencies.

My biggest gripe has been that, in a situation where national interest should be primary, we shouldn't have to figure out who to go to in government. It seems to depend on who you know and who purchases this stuff. This is a science and a business in itself.

There should have been clearly laid out guidelines for what the government is seeking and how the government would evaluate that, so a company would know how to try to get into the anti-bioterrorism business and try to help out.

IBD: What exactly do you need?

Yakatan: I need to know what steps to go through, who to apply to and - after I've got my product ready to go forward - I need to know who I go to find out if my products is as good as another company's. Then I'll know if I should spend any more time or money. That's never been clear to me personally.

For example, in 2004, the CDC requested our antibodies for anthrax testing in their own labs along with the antibodies from other companies. They eventually gave us back the results of testing on our compound. But they didn't tell us anything.

I was looking for them to say, "You have a good product and should continue and here's how you should go forward."

Or they could have told me, "There are other products that are better than yours and we don't have any further interest."

IBD: You were left in limbo?

Yakatan: Exactly. The government can't figure out national intelligence, so I'm not surprised.

We're going ahead trying various sources of government support we know about.

But in a national emergency, if that's what we face, there should have been guidelines about who has money, how much, how the decision is made, and what the process is for competing.

That's still up in the air, as far as I know. We have several proposals we're preparing but we're going ahead in the dark.

IBD: Let's say a company has a product that can help against bioterrorism. How can it know how much to make?

Yakatan: If the government's going to buy this stuff, the main issues are: how much will it buy, where will it store it, and how in an emergency will it distribute it?

There's not enough thinking about the back end. It's one thing to come up with a drug that will help treat something. It's another to stockpile it and have a system for delivering it in a crisis.

The chances of a bioterrorism attack being nationwide are unlikely. So you must have in place local systems for distribution and taking care of people.

IBD: What will the government's strategy to fight bioterrorism mean for Avanir and other drug discovery firms?

Yakatan: I don't see bioterrorism work as a business model for a biotechnology company.

G'day, Mates.

Aussie