HGSI CNJ.TO VXGN.PK Anthrax
U.S. to Buy Anthrax Treatment From HGS
Product Sale Is Rockville Biotech's First
By Michael S. Rosenwald
Washington Post Staff Writer
Tuesday, June 20, 2006; D01
Human Genome Sciences Inc. is scheduled to announce today that the federal government has agreed to buy $165 million worth of an experimental treatment for anthrax infection in what will become the 14-year-old Rockville firm's first product sale.
The purchase of 20,000 doses of Abthrax under the government's $5.6 billion Project BioShield program is intended to help the government stockpile a variety of anthrax therapies, including vaccines and drugs such as Abthrax, which would typically be given after exposure to the lethal substance.
The government, which could have purchased 100,000 doses under the BioShield contract, has also been considering another anthrax treatment from Cangene Corp., a Canadian biotech company. For now, federal health officials appear to have settled on Abthrax. Cangene is not expected to be awarded a contract today, according to people briefed on the deal.
HGS must still win approval from the Food and Drug Administration, but Abthrax could be used before that in case of an emergency. The drug was shown to be safe in testing of 105 people, but testing of several hundred more will be required. How much that testing will eat into revenue from the contract is unclear.
Biodefense is a tricky business strategy for biotech firms, particularly because there is no guarantee that such products will be used. While other smaller, early-stage companies are trying to build a business around biodefense, HGS is banking on a series of drugs for lupus, arthritis, hepatitis and cancer, with Abthrax as a bonus.
"The other drugs HGS has in development are more important to the company's story," than Abthrax, said Edward Tenthoff, an analyst with Piper Jaffray. He called the product a "wild card" in the company's pipeline and had not factored it in to his future revenue projections.
HGS executives say the Abthrax deal is important to the firm, as it attempts to transform itself from drug developer to drug seller. Toward that end, the additional revenue, to be paid after the product is delivered and approved in 2008, represents a source of cash to spend on the other products.
"This is another in a series of steps in moving HGS from primarily a discovery company into a commercial company," H. Thomas Watkins, the company's chief executive, said in an interview.
HGS recently signed a partnership deal with Swiss drug giant Novartis AG to finish developing and eventually co-market a new HGS treatment for hepatitis C. The deal could net HGS more than $500 million.
The company also recently completed spinning off its early-stage development operation to narrow its focus and spending on late-stage products. On Thursday, HGS plans to disclose data from key human tests on Lymphostat-B, its potential breakthrough treatment for lupus.
Though the government agreed to purchase 10 grams of Abthrax last year for testing, HGS had largely shelved development activity for the product as it awaited an answer from the government. Watkins said that because the company had no idea whether it would win the contract, HGS scientists worked on Abthrax -- testing it for safety in 105 people -- just enough to provide the government with preliminary data to make a decision.
Products such as Abthrax are part of a three-pronged defense against anthrax attacks. Vaccines can prevent infection, but they typically take several weeks and doses to build up immunity. Antibiotics can kill the anthrax bacteria but aren't effective against toxins released in the body by an anthrax infection. Abthrax prevents those toxins from entering and killing cells.
The government has said it has stockpiled enough antibiotics to treat 40 million people. It has awarded nearly $1 billion to VaxGen Inc., a California company, to deliver 75 million anthrax vaccine doses to protect 25 million people, but the company appears to be least two to three years behind schedule.
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