HHS ANTHRAX VACCINE DELAY THREATENS COMPANY, SAYS VAXGEN

Delivery to the federal government of the anthrax vaccine being developed by VaxGen, originally expected to occur by the end of the year, now will be pushed until at least late 2007, delivering a heavy fiscal blow to the financially struggling company, a VaxGen spokesman said.

HHS on May 10 confirmed its contract, first awarded in November 2004 under the BioShield program, to purchase 75 million doses of the vaccine for the Strategic National Stockpile at a price tag of $877.5 million (DID, Nov 8, 2004). However, VaxGen said, HHS at the same time modified its contract to require new clinical and nonclinical studies that will delay delivery of the vaccine until at least the end of 2007 or, more likely, early 2008. The company also noted that the changes were made without formal negotiation with HHS.

VaxGen said that since it will not be paid until the vaccine is delivered, these new requirements will increase its expenses, a factor not addressed by the contract modifications. Because of the new delay, "We do not have enough money to fund the company" through the anticipated delivery date of the vaccine, Lance Ignon, VaxGen's vice president for corporate affairs, said.

The company last reported it had $35 million in cash reserves on Feb. 10, directly following a nearly $27 million dollar sale of common stock.

"We will have to raise more money," Ignon said. "[The delay] makes that more difficult."

Company executives said they will meet with members of Congress and senior decisionmakers at HHS to try to get the contract modifications rescinded. If that is not successful, they said there is a legal team exploring possible ways to be compensated for the additional expenses under terms of the Federal Acquisition Regulation, the basic rulebook on government contracts. (http://www.fdanews.com/did/5_94/)