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Bavarian Nordic secures $1.6 billion deal with US government

Published on 06/06/07 at 01:39pm

Danish company Bavarian Nordic has secured a massive new contract to provide the US with millions of doses of smallpox vaccine.

Ever since the September 11 2001 attacks and the subsequent anthrax scare, the US government has been preparing itself for a potential biological attack with a project known as BioShield, but progress has been slow.

The US government has now confirmed an order of 20 million doses of Bavarian Nordic's vaccine Imvamune, which could earn the company up to $1.6 billion in the long term. But it will have to prove the product can be demonstrated to be effective and without severe side-effects in patients, if it is to avoid the pitfalls in the risky process which have caught out other companies.

The scale of the BioShield contracts have proved to be highly attractive to vaccine companies, but have also proved to be high-risk; two companies have been left in the cold in recent months after the US government broke off the agreement without compensation.

In February, the US health department informed San Diego-based biotech company Hollis-Eden that it was backing out of a deal to stockpile its radiation sickness drugs, which the company had spent many years and nearly $90 million developing. The news wiped nearly a third off the company's share price  a blow surpassed by the one which Acambis similarly suffered in November 2006.

The UK biotech company lost 40% of its market capitalisation after the US government declared that its vaccine ACAM2000 was no longer "highly rated" on technical grounds.

Officials feared that the Acambis product shared serious side-effects with older smallpox vaccines, including rare cases of severe skin infections and myopericarditis, an inflammation of the heart-wall muscle and surrounding area, which can be fatal.

But, in the event, trials of the Acambis vaccine produced no fatalities, and in May, an FDA committee gave its backing to the product. The FDA's all-clear has come too late for the company, however, and Bavarian Nordic has now secured the contract in its place.

Peter Wulff, chief executive of Bavarian Nordic said: "We are proud and delighted that we now can deliver the world's first safe and effective smallpox vaccine for the protection of US citizens against bioterrorism using smallpox virus."

Wulff added: "From the very first presentation of Imvamune for the US government in 2001, we have had a constructive and trusting collaboration with the US authorities. Therefore, we do not consider this contract to be a single transaction, but rather the beginning of a long-term partnership with the US government."

A vital component of the deal is that Bavarian Nordic has negotiated an upfront payment for its work from the US government   a sum of $150 million, helping to underline the government's long-term commitment.

Unlike other smallpox vaccines, Imvamune is based on the modified vaccinia virus Ankara (MVA), a poxvirus strain that is not able to proliferate in humans as a result  of six major deletions in its genome compared to those of pathogenic strains. This means Imvamune doesn't produce the complications associated with traditional smallpox vaccines.

The vaccine has been shown to be safe in animal models and more than 1,500 human trial participants. Imvamune has demonstrated a high protection rate and a faster onset of the immune response than traditional vaccines in animal models.

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