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Biotech firms eye flu shots

With a crisis sparked by the flu-shot shortage, federal health officials are eager for new, more flexible technologies that could produce vaccine faster and more cheaply, enticing companies to enter a market that others have largely abandoned because of poor profits.
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For five decades, billions of arms have been injected with flu shots containing clear liquid drawn from 11-day-old fertilized chicken eggs. Companies inject the eggs with flu strains. The eggs become tiny incubators, brewing viruses that are then killed and bottled in vials. The nation's entire flu vaccine supply is produced that way, including the 48 million shots that Chiron Corp. can't sell this season because of manufacturing problems in England.

With a crisis sparked by the flu-shot shortage, federal health officials are eager for new, more flexible technologies that could produce vaccine faster and more cheaply, enticing companies to enter a market that others have largely abandoned because of poor profits.

Cell-based vaccines
One idea is gaining traction: Instead of incubating the nation's entire vaccine supply in chicken eggs, regarded by many as an antiquated system too inflexible and time-consuming to respond to pandemics or vaccine shortages like this year's, federal health officials are encouraging several biotech companies to develop cell-based vaccines. Executives at Protein Sciences Corp. think they have just what experts are looking for: a process that grows vaccine in cells extracted from caterpillar ovaries. Before the flu crisis, the Meriden, Conn.-based company was ignored by investors. Not anymore.

"An investor called me and said, 'Hey, I know we haven't returned your calls like 20 times,' " said Daniel D. Adams, Protein Sciences' chief executive. "Is it too late to get in?"

Although health experts and industry leaders caution that research going on at Protein Sciences and other biotech companies may not cut the time and price to produce usable vaccine, they support such efforts as a possible solution to the nation's flu-fighting problem.

"You can't attract new companies to use a technology of the past," said Bill Pierce, spokesman for Health and Human Services Secretary Tommy G. Thompson. "There's a bit of a 'cool' factor at work here."

'Wave of the future'
Cell culture vaccines are a twist on the chicken egg method of vaccine production. Instead of injecting viruses in eggs, scientists infect cells -- drawn from insects, African green monkeys, dogs, or human fetal retinas -- with flu strains or their components. Then they grow the virus using large fermenting vats in manufacturing plants that look like breweries.

"This really is the wave of the future," said Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health and a vocal proponent of cell culture vaccines. He said he will soon ask Congress for $100 million to improve the nation's flu vaccine supply, including jump-starting more cell culture research.

"When you walk into a cell culture factory, you see gleaming stainless steel -- glass and steel and computers and very few people," said Noel Barrett, vice president of research and development at Baxter International Inc. of Deerfield, Ill., which has built a cell culture factory in the Czech Republic.

Walking into a chicken egg factory, by contrast, Barrett said, "You see lots of eggs, thousands and thousands of eggs, and lots of people, and you see that these factories are quite old."

Baxter hopes to sell its vaccine, PrefluCel, in Europe in 2006 and in the United States in 2008.

On track for approval
Protein Sciences, a privately held company with 39 employees, said its vaccine, FluBlok, is on track for approval by the Food and Drug Administration in 2007. The company recently began advanced human testing of FluBlok, which is produced from cloned flu strains that are grown in caterpillar cells.

The company says testing has shown that the vaccine is safe and that it may have fewer side effects than traditional flu shots and work better in the elderly. But the company acknowledged it has had trouble raising money, at least until the recent flurry of interest from investors.

Other companies experimenting with cell culture vaccines aren't nearly as far along. Vaxin Inc., a company with two dozen employees in Birmingham, Ala., is in preliminary human testing, as is ID Biomedical Corp. in Canada and the two major flu shot providers for the United States, Chiron Corp. and Aventis Pasteur.

Aventis and Vaxin are using cells developed by Crucell NV, a Dutch company. The cells derive from a single cell harvested from an 18-week-old fetus aborted in 1985, raising questions about how Americans would greet such a vaccine, given the debate over fetal stem cell research. Crucell chief executive Ronald Brus said the cell was harvested many years ago with permission from the woman who donated it. No more fetuses would be needed to sustain production, he said.

In any case, some experts and industry leaders caution that new technologies won't change the flu vaccine marketplace anytime soon, and perhaps not ever. Perfecting the technology is at least several years away. It won't make vaccine production cheaper. And it likely won't make production significantly faster. "It's more hype than reality," said Anthony F. Holler, chief executive of ID Biomedical, which sells millions of flu shots in Canada but also is dabbling in development of cell culture vaccines.

Faster production
Producing the flu vaccine the way it's done now is very much a matter of time and patience. After acquiring millions of specially purified chicken eggs, companies need about six months to create and distribute the vaccines. The process takes too long to be of much help if an unexpected strain erupts or if, as happened this year, something goes awry with the current season's batch.

While Adams of Protein Sciences said his company's technology might allow it to manufacture several million doses in eight to 10 weeks, officials at the other companies developing cell culture vaccines said their production process, including checks for quality control, would take about five months, shaving perhaps a month off the traditional method.

"Cell culture has the potential to save a few weeks," said Michel De Wilde, executive vice president for research and development at Aventis. "You have to start up your fermenters. It still takes a lot of time, but maybe a little less time."

Cell culture vaccines may hold safety advantages. Unlike those produced in chicken eggs, some cell culture vaccines are not processed with chemicals that can cause rare side effects, and people with egg allergies won't have dangerous reactions to them. Also, cell cultures could produce vaccines for the deadly avian flu, which might kill the chicken embryo needed to develop vaccine in an egg.

The real plus, says Francis R. Cano, chairman and chief executive at Vaxin, is that his company, and the others, can start making additional vaccines to stem a pandemic or shortage without waiting for chickens to lay millions of eggs. Fauci agreed: "You can ramp up without waiting for all those eggs," he said.

Slim profits
But cell cultures won't change the fundamental reason so many companies say they have left the flu vaccine business: Profits are too slim. Pharmaceutical and biotech companies would rather make drugs people take every day, not just once a year. "Cell culture is not a salvation for the flu industry," said Scott Gottlieb, a physician and former senior policy adviser to the Food and Drug Administration.

Holler, the chief executive at ID Biomedical, said producing traditional flu shots generally costs about $2 per dose. He doesn't expect the cost to change much with cell cultures. The problem, said Holler and analysts, is that while prices have gone up some in recent years, the wholesale price for a flu shot is still $8 to $10. Consumers buy it for about $20.

Raising prices significantly is risky, too . Gottlieb said that was demonstrated last year by the dismal launch of FluMist, MedImmune Inc.'s nasal flu vaccine. With doses priced at about $46 wholesale, MedImmune sold just 450,000 and threw out millions of others. The Gaithersburg company slashed the price for FluMist in half this flu season while working to bring an improved version to market for 2007.

Fauci acknowledges the tricky economics of the flu business and says the government is working on "taking risk away for companies." The idea, he said, is to encourage wider vaccine use and eventually increase the number of people being immunized to 180 million from last year's 83 million. At the same time, the government is looking at a policy of annually buying unused doses or a flat amount upfront. But how large a quantity it would buy and for how much money are questions that have not been addressed.

Until there are solid incentives, Taunya Sell, an analyst for Ragen MacKenzie Group Inc. who covers ID Biomedical, said many companies will be skittish about jumping in. "If the profit margins are horrible, why would any company take that chance otherwise?" Sell said.

Improved chances
That's at least partly why flu vaccine companies have trouble raising money, Cano said. In six years, Vaxin has raised $14 million -- about $10 million in government grants and appropriations but only $4 million from investors, including two venture groups in Birmingham. Protein Sciences has spent about $10 million developing its vaccine but has raised little money from outside investors, Adams said. Instead, the company relies on upwards of $6 million a year in revenue from selling biological products to researchers.

Holler said ID Biomedical isn't banking on its the cell culture business. Instead, it's working on getting its flu shots into the U.S market and completing development of a nasal flu vaccine that, unlike FluMist, doesn't use a live virus.

Still, Cano of Vaxin and Adams at Protein Sciences like their companies' chances with cell culture vaccines now that attention is being paid. "Investors are more interested," Cano said. "The media are more interested." He has been contacted recently by local and national venture capital groups. Adams said he has had several investor meetings in recent weeks.

"It's just crazy here," he said. "I've been traveling more than George Bush."

Asked how much money the company has raised post-Chiron, though, Adams said: "We haven't raised any, but I think we're getting close."