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Last Updated: Friday, 11 June, 2004, 07:01 GMT 08:01 UK
US military offers cash for bio defence
By Maggie Shiels
In San Francisco, California

BIO 2004
Government agencies were practically flashing cheque books at companies.

The American federal government has gone on the offensive in courting the biotech industry to develop products that will protect the nation and the modern soldier in the battlefield.

Overtures were made by a range of agencies at the BIO 2004 Annual International Convention being held in San Francisco - including the Department of Defence, the National Institute of Health, the Centres for Disease Control and Prevention and the Secretary of State for Health and Human Services.

The agencies were practically flashing cheque books under the noses of companies in an effort to entice them to come and do business with them. And at BIO 2004, they had a captive audience of 16,000 scientists, executives and government officials from 26 countries around the globe.

In the face of constant fears of bio terrorism attacks, there is no mistaking the plaintive appeal to the industry from Dr Chuck Galloway of the Defence Threat Reduction Agency.

"We are changing our business process so that we can more effectively reach out to industry, academia, national laboratories and the international community," he says.

"We need your help. This is a challenge to the country and we need everyone's good ideas."

Big spenders

The Defence Department says it wants to forge partnerships with biotech companies to speed up the launch of new products to detect and diagnose infections and decontaminate poisoned areas.

US Army Brigadier General Stephan  Reeves
Brigadier General Reeves is ready to spend.

US Army Brigadier General Stephan Reeves, who oversees the Joint Programme Office for Chemical-Biological Defence, says they have a budget of between $1.2bn and $1.4bn and they are ready to spend.

"Industry right now, because of the world wide terrorist threat, is given an incentive to get involved. We want to leverage that," he says.

The Department of Defence is not alone. Hot on its heels for ideas and products is the National Institutes of Health which says it will spend more than $1bn on research and development to similarly defend against agents that might be used in bio terrorism attacks.

Likewise, the Centres for Disease Control and Prevention expects to be able to spend about the same on bio defence related programmes.

These would include preparedness and response planning, building laboratory capacity, developing rapid diagnostic tests for threat agent detection, epidemiology projects and training.

Ready market

Also making a personal pitch to the industry was the Secretary of State for Health and Human Service Tommy Thomson who highlighted how companies can capitalise on Project Bioshield.

The programme, which has been approved by the US Senate, and is awaiting Congress approval and the President's signature, provides for $5.6bn of federal funds over 10 years.

The money is to be spent on drugs and vaccines to protect against attacks by biological and chemical weapons.

"We are using this Bioshield project as a way to get to these individuals who are great innovators and entrepreneurs, but who are maybe fearful of spending a lot of money in developing something, saying who's going to buy a vaccine or anti-viral or antibiotic for a 19th century disease like the plague or anthrax," says Mr Thomson.

"We are going to establish that market through the Department of Health and Human Services, and my encouragement to these individuals is to get into it and develop it and they will have a ready made market, namely the United States Government."

Not free market

For California based Vaxgen, the burgeoning bio defence sector has been a boon. The company has already received more than $100m to develop a new, recombinant anthrax vaccine and a promise to purchase three million doses.

Dr Chuck Galloway
Dr Galloway asks the industry to help.

It is also working on a small pox vaccine, both high priority projects for the government and ones that could be lucrative for Vaxgen says its chief executive, Lance Gordon.

"It is a good business and a good opportunity where we could meet a real need. We look forward to selling, according to government estimates, $700m worth of product to them."

Not everyone is quite so gung-ho about the government as a business partner.

"Government is not generally known for its largesse in awarding contracts," says Stephen Sammut who works for Burrill & Company, a life sciences merchant bank with more than $500m under management.

"It's not the same as a free market. There is the opportunity, at the very least, to make enough money to be able to cover costs.

"[But] whether or not a company can build a sustainable business solely on bio defence or bio security is still an open question. That's why so many of us in the venture community are looking for opportunities where there can be a transfer of that technology to other applications or civilian markets."


For Tim Mullane, president and chief executive of Biolog, being able to tap into the emerging bio defence market has been "a good upside opportunity".

Protective kit
The US government is keen to protect itself against bio attacks.

Last year the company landed a $2.28bn grant from the National Institute of Allergy and Infectious Diseases to fund the development of advanced detection and identification methods for bacteria, including those that could be used in acts of bio terrorism.

"Our core business is selling diagnostic products in the markets that are outside of the public health laboratory" Mr Mullane says.

"The uptick in the bio defence spending has really allowed us to expand our technology into a market we hadn't been into before, so it is a nice upside for us."

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