VaxGen to pursue legal action after government orders new testing of anthrax vaccine

By Elaine Rigoli

Tampa, Fla., May 10 - VaxGen, Inc. said that because the Department of Health and Human Services (HHS) has modified its November 2004 contract to purchase 75 million doses of the company's recombinant anthrax vaccine candidate for $877.5 million, the company will seek financial compensation - and is taking legal action in case its request for changes or compensation is not accepted.

Prior to delivering the vaccine, VaxGen will now be required to conduct an additional phase 2 trial using validated final drug product and demonstrate efficacy in non-clinical models after exposure to inhalational anthrax, also using vaccine that meets the standard of a Food and Drug Administration-approved product.

However, the company will not be paid for the product until it is delivered, the company said in a news release.

The company said it estimates that meeting the new requirements will delay the initiation of deliveries to the stockpile to the end of 2007 at best and more likely into 2008. The company has an obligation under the modified contract to initiate deliveries no later than November 2008.

"We have therefore urged HHS to reconsider its decision and either accept deliveries of our recombinant anthrax vaccine candidate according to the terms of our original contract or provide appropriate financial compensation for the new requirements. In parallel, we are pursuing legal remedies that we are confident will result in a more equitable price for our vaccine candidate upon its delivery and acceptance to the stockpile," president and chief executive officer Lance K. Gordon said in the release.

VaxGen will be expected to fund these additional activities without government funding support. Prior to the modification, VaxGen said it had intended to initiate deliveries by the end of this year or early 2007.

Based in Brisbane, Calif., VaxGen is a biopharmaceutical company engaged in the development, manufacture and commercialization of biologic products for the prevention and treatment of human infectious diseases, including anthrax and smallpox.

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