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Death by Bureaucracy? - The Circular Logic of Vaccine Funding

by: SusanC

Mon Dec 08, 2008 at 04:27:26 AM EST

We may be less than a month away from the demise of one of THE most promising pandemic vaccine candidates, for no better reason than bureaucracy gone mad...
SusanC :: Death by Bureaucracy? - The Circular Logic of Vaccine Funding
First of all, a caveat.  The following story is compiled mostly from information available in the public domain, and I have included links and quotes wherever they are available.  There are, however, a few remarks from sources that will only speak on condition of anonymity.  This kind of information is hard to verify.  I debated whether to write about this.  On balance, I believe the gist of the story is accurate, and that the issue IS of substantive public interest.  If anyone has any further information that can verify or discount any points I made, I'd be grateful to either have the information be confirmed, or stand corrected!  ;-)  Thank you!

Conflicts of interest: None.

The recombinant haemagglutinin or rHA vaccine FluBlok, developed by Protein Sciences (PSC), a CT-based small company, is probably one of the most promising pandemic vaccine candidates, for the many reasons that I wrote about more than a year ago here.  Before I get to the latest happenings, let me re-cap what has happened since that diary.  

In April 2007, the results of phase 3 clinical trials for seasonal flu were published in JAMA (free) Safety and immunogenicity of a baculovirus-expressed hemagglutinin influenza vaccine: a randomized controlled trial, giving even more reasons to feel encouraged about both the efficacy and safety of this vaccine, especially the fact that increasing the antigen dose increases efficacy without increasing adverse reactions apart from local pain.  Since the potential production capacity is enormous, this means that in a pandemic, we may be able to simply use higher antigen doses without necessarily having to depend on the use of adjuvants or other dose-sparing strategies.  And that is in addition to having the vaccine be available from 12 weeks into a pandemic instead of 6 months...

Apparently, BARDA/HHS holds similarly positive views about this recombinant vaccine, as shown by the prominent role it is supposed to play to mitigate a pandemic, in this slide used frequently by BARDA Director Robin Robinson since early 2008.

Interestingly, this rHA vaccine was actually the first H5N1 vaccine to be made for human use, in 1998, against the Hong Kong virus, at the request of NIH.  Note that the time from 'urgent call from NIH' to vaccine delivery was only 8 weeks!  However, since then, PSC has not received any government funding for further clinical trials.  More on that later.

Now, developing a vaccine is not for the faint-hearted, as you can see from this slide, presented by Bob Kadlec from the WH, a while back.  

A successful vaccine can only become available on the market if the company is able to find some means of tying over the 'valley of death', that long dry spell between early development and final licensure.  It is even more problematic for small companies that do not yet have a product on the market bringing in revenue, as is the case with PSC.  Bills have to be paid, labs have to be maintained, while the process goes through the labyrinth of government.  Quite frankly, the bottomline is, people can't live on thin air while government takes its time!

Various senior officials from BARDA, HHS, WH, etc have reiterated many times, how they are aware of the issue, and that "the federal government finally gets it", that they ain't gonna get any vaccine unless they can streamline their bureaucratic processes to help fund late-stage development for promising products, so that companies and products do not, literally, die a premature death.  

The question is, can they live up to their rhetoric?

As I said earlier, the seasonal flu version of FluBlok completed clinical trials last year, and a BLA or Biologics License Applications was filed with the FDA, I believe in April 2007 2008.  That is the final step towards licensure.  This is now December 2008, 20 8 months later.  The company is still waiting for final approval, despite this early report from Bloomberg in Aug 2007, that

The Food and Drug Administration has offered the company an expedited, six-month review of its application, a process that usually takes a year.

  I have no information as to the reason for the delay, but let's look at the even more important piece, getting federal grants to develop the pandemic vaccine.  In August of 07, BARDA/HHS put out a Request for Proposal (RFP):

The U. S. Department of Health and Human Services, through the Office of the Assistant Secretary for Preparedness and Response, contemplates single or multiple contract awards to develop recombinant influenza vaccines based on hemagglutinin genes or proteins (plasmid DNA, virus-vectors, peptides, subunit proteins and virus-like particles) and leading towards FDA-licensure and human usage. The scope of activities for which the Offeror may request funds include clinical investigation lot manufacturing, scale-up process development, clinical evaluation, validation of manufacturing process systems and manufacturing facility concept design but not facility construction.

PSC, along with other companies, submitted their proposal in late 2007.  Early indications were optimistic, again from Bloomberg:

Now the U.S. is preparing another round of funding for companies including Protein Sciences and publicly traded Novavax Inc. to develop flu shots using recombinant DNA.

"We were told they could produce a vaccine in less than 12 weeks after the start of a pandemic," Robin Robinson, director of pandemic influenza countermeasures for the Health and Human Services Department, said in a telephone interview.

In the meantime, something else was also happening.  As I said, it's difficult for a small company to survive with no funds, so it's only natural that, pending government funds, they had to find the money from somewhere else.  An announcement for a potential merger with Emergent Biosolutions, a much bigger company that supplies the US government with the anthrax vaccine, came out in May 2008

Emergent BioSolutions to Acquire Protein Sciences' Phase III Recombinant Flu Vaccine

Tue May 27, 2008 12:01am EDT

ROCKVILLE, Md. & MERIDEN, Conn.--(Business Wire)--
Emergent BioSolutions Inc. (NYSE:EBS) and Protein Sciences Corporation (PSC), based in Meriden, Connecticut, announced today that the two companies have entered into an asset purchase agreement under which Emergent will acquire PSC's ongoing operations, including FluBlok, a Phase III recombinant influenza vaccine candidate, and certain other assets....

...Under the terms of the agreement, Emergent will acquire substantially all assets of PSC,...

...Emergent intends to retain all of the approximately 50 PSC employees and anticipates continuing production of FluBlok in the Meriden, Connecticut facility.Emergent expects to launch out of this location. In parallel, Emergent is evaluating plans for future large-scale manufacturing of FluBlok and is considering Meriden as a site for the facility...

...Terms of Acquisition

  Under the terms of the asset purchase agreement, the consideration paid by Emergent will include:

  --  Up to $28 million in cash and the assumption of PSC liabilities, including trade payables associated with the Phase III clinical trials of FluBlok;

  --  A $20 million, 4.75%, 5-year note, convertible into Emergent common stock at a conversion price of $12.50 per share;

  --  Up to $30 million in future payments based on the achievement of FluBlok commercialization milestones and net sales of FluBlok;

  --  A percentage of net sales of FluBlok.

  The closing of this transaction, anticipated by the end of the second quarter of this year, is subject to the approval of the stockholders of PSC, the receipt of regulatory approvals and the satisfaction of certain conditions of closing.

Unfortunately, the next thing we heard, the merger hit some buffers, and EBS has filed a lawsuit against PSC.  

Emergent BioSolutions sues Protein Sciences
July 10, 2008

Emergent BioSolutions Inc. has sued the company it planned to acquire in May, claiming that it was duped into giving a $10 million loan to the company through false claims that a sale would take place -- allegations that the other company calls ridiculous.

Rockville-based Emergent said executives from the other company, Protein Sciences Corp., based in Meriden, Conn., had given assurances that they push forward with board and shareholder approvals on a planned $78 million acquisition -- only to thwart those acquisition efforts after receiving a $10 million bridge loan from Emergent to pay overdue bills.

Claiming unfair business practices, deception and fraud, Emergent is suing Protein Sciences and two of its executives, CEO Daniel Adams and Chief Operating Officer Manon Cox, for $13 millions plus interest, punitive damages and assurances that Protein Sciences does not use the loan money for any other purposes than for which it was designed.

The local company said Adams and Cox, after signing the purchase agreement in late May, disparaged Emergent and the proposed deal to board members, employees, shareholders and members of the public at life sciences conferences; blocked Emergent's access to its internal documents and records and canceled the June 23 shareholder meeting on the very day that the final vote on the sale was to take place.

and PSC issued a press release to counter the claims:

Protein Sciences Responds to Emergent BioSolutions Lawsuit
July 10, 2008

... Those shareholders believed the transaction significantly undervalued PSC. EBS knew that PSC was short more than 10,000,000 votes necessary to approve the transaction and that more than 42% of PSC's shares were prepared to vote against the transaction and that less than 34% of PSC's shares had indicated a willingness to vote in favor of the transaction. Ultimately and after consultation with EBS and their acquiescence, PSC decided to delay the shareholder meeting instead of forcing a vote on the transaction.....

....Following the second proposal, EBS instead suggested that PSC circumvent its shareholders by filing for bankruptcy protection. As part of its bankruptcy strategy, EBS indicated that it was prepared to enter into a sweetened transaction with PSC but essentially at the same purchase price and on the other economic terms as the proposed transaction and have PSC present such sweetened transaction for bankruptcy court approval instead of seeking shareholder approval.

At the end of July, PSC announced the termination of the merger negotiations.  Interestingly, their press release gives some indication of their expectations with regards to the HHS processes at the time:

"We remain on track for a decision on our BLA by mid-October, 2008 under the FDA's accelerated approval pathway."...

...PSC also announced that it submitted a proposal for federal funding for a contract to develop recombinant seasonal and pandemic influenza vaccines from the Department of Health and Human Services (BARDA).  Negotiations over the contract have been ongoing and a decision may be reached by BARDA within the next few weeks.

Now this could have been wishful thinking, or just spin.  OTOH, it would apper that the expectation of an award or awards was shared by many in the industry, including of course EBS.  From their original press release:

In addition, late last year, PSC applied for a research and development grant in response to a Biomedical Advanced Research and Development Authority (BARDA) RFP, "Advanced Development of Recombinant Influenza Virus Vaccines." BARDA has indicated its intention to issue one or more awards under this RFP in late 2008.

In any case, all that is moot, since the merger is now abandoned.  Whatever the rights and wrongs of this suit, the bottomline is, PSC now has until the end of December 2008, to repay the $10M that it had borrowed from EBS as part of the merger negotiations, or face bankruptcy.

In the meantime, apparently the HHS award process (and possibly the BLA) which was expected to complete in the past few months, has ground to a halt, on the grounds that an award would not be forthcoming until PSC can demonstrate that it is financially viable.  Or something to that effect.  It didn't matter that the threat of bankruptcy was a result of a lawsuit, or the action of one corporation against another.

OTOH, the last I heard, a federal government audit of PSC has concluded that the company is financially sound IF the RFP money was awarded.  If that is the case, it just seems to me this is mind-bogglingly circular logic, to require that a company is financially viable, before you give them the grant that is intended to MAKE them viable, so that they can develop the product to licensure.

Like, excuse me, did I miss something here?  

ps It's been TEN YEARS since the rHA H5N1 vaccine was first injected into human subjects as an investigational drug, with great success I might add.  If there are scientific reasons for the delay, like adverse reactions and such, well, I haven't seen them.  Believe me, I've looked.  I can only conclude that something is wrong with the process, of getting the vaccine through the development pipeline.  

Hello, is anyone home?  HHS?  BARDA?  


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btw as far as I understand
the RFP award is/was expected to be in the order of hundreds of millions.  Just to give an idea of order of magnitude.  

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

the core issues (IMHO):
The core issues are stated here: http://www.newfluwiki2.com/sho...


1. This vaccine had already been given to 200 healthcare workers in Hong Kong after their 1997 outbreak, with good antigenic titers

2. short production time - 6 weeks from gene to product

3. use pure protein instead of H5 virus, no biosecurity risk

4. cell-culture based, no need for eggs

5. company's own 10,000L bioreactor can make 1 million doses of 135ug rHA vaccine in 5 days.

6. global capacity is huge.  According to Fedson and Dunnill (unpublished observations) a conservative estimate using 25% of global bioreactor capacity can produce an adjuvanted 3.75ug rHA vaccine for 3.4 billion people in 3 months, greatly exceeding any capacity to vaccinate.

Is the above information still correct?  I'd guess so.  If it is, then my comments below apply:

1) We all pay much more for much less.

2) This can only be solved on US land, right?

3) We're waiting.

You arm yourself to the teeth just in case.  You don't leave the gun near the baby's hand.

I believe the point applies to all vaccines
and not just this one.  I just happen to become aware of this issue cos of interest in this vaccine.  But small vaccine companies have the same problems across the board.  They cannot get a vaccine to licensure without government funding, and they don't have the muscle to lobby in DC against the established giants, some of whom have lobbying budgets bigger than the whole net operating budget of the small companies.  They can become vulnerable to all sorts of factors that land them in such precarious situations.

BARDA was set up partly to address these issues, specifically.  It would be a great failure, IMO, if they let this ship go down simply because of bureaucratic stupidity.

At the end of the day, the product still has to prove its own merit.  But if the funding process becomes subject to the whims and actions of big corporates, then we are on a slippery slope indeed, IMHO.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

[ Parent ]
Would Emergent BioSolutions benefit if Protein Sciences goes down?
PS owes them $10 million, so EB might be their largest debt-holder.  Would they have legal ownership of PS's research?  

This promising vaccine's lack of progress looks absolutely stupid, but is it also dirty?  "Follow the money" works in films; what about in real life?  

I'm wondering if there's another company besides EB that doesn't want PS to succeed.  I don't like pursuing that thought, but it's mind-boggling that a quick-to-produce and not-harmful vaccine would be stuck when all forces should be pushing for progress.  I have to wonder if somebody is pushing back.  Wouldn't there be many staff members in government who want to see this work and want to help it along?  They have families, too; it isn't as if they can stay safe in a bubble.  


"The truth does not change according to our ability to stomach it."  Flannery O'Connor

good questions, Jane
Frankly, I don't know what the behind-the-scenes stuff is all about.  All I can say is, I suspect the $10M is small change to big companies, but enough to drive a small one to bankruptcy.  If that is the case, there is some imbalance there that is very disturbing.

But as I said, this is speculative.  I don't have solid information beyond what I've written.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

[ Parent ]
Lots to digest here, and I'm skimming at breakneck speed because I have just a few minutes while students are reading in which to complete a recommendation for one of them.  Please forgive if I should know this already:  Does Emergent Biosolutions have a prepandemic vaccine already in development? Does anybody know?  

I don't think so
Does Emergent Biosolutions have a prepandemic vaccine already in development? Does anybody know?  

Not that I'm aware of.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

[ Parent ]
it has been pointed out to me that the BLA was filed in April 2008, not April 2007.  I've corrected the top diary accordingly.  In which case the delay in the BLA approval is not as onerous as I at first thought, but the main concern, with the RFP, still remains.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

I think the point for me is
the 'Valley of Death' issue is a real and acknowledged one, that BARDA/HHS has repeatedly said they will do their utmost to address.  Here's a slide from the recent PHEMCE meeting, from Robinson again:

There may be other reasons for the delay, but IF the ONLY reason is because of PSC's inability to repay the $10M loan, which it incurred while waiting for the much more substantial government grants to arrive, and IF BARDA's unwillingness to award the funds means PSC goes into bankruptcy, then there is something seriously wrong here.  If the issues as I understand them are correct, then IMO BARDA is not fulfilling its mission, of helping to bridge the Valley of Death and bring promising technologies to market.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

again I suspect this applies across the board
to smaller companies, that the longer the delay with funding, the more likely they will go bust.  It's a real hazard for the development of new pandemic vaccines.

Sure, government has to be careful with taxpayers' money, and not fund projects that are likely to be non-viable, but if there is information suggesting that the project is otherwise sound once the grants are in place, then I don't see the logic for the current stalemate.

You know what it reminds me of?  The medieval practice of trial by drowning  

Trial by drowning is a medieval ordeal allegedly used on women suspected of witchcraft. The idea was that witches would float. As part of the trial the accused was thrown into a lake or river. If the accused sank, she was innocent and presumed not to be a witch. If the accused floated, she was presumed to be a witch and could be hanged or executed by burning. Either way, the accused faced death, and a no-win situation.

According to Frederick G. Kempin's Historical Introduction to Anglo-American Law in a Nutshell, a West legal text, the actual practice was to hurl the tied-up accused into a body of water. If the water received the accused, she was innocent and hopefully pulled out of the water and freed.

Translate - if PSC can survive by finding the money to pay off its creditor, then the government will help fund the development of the rHA vaccine.  But PSC has to survive the drowning first...

Umm.. I thought we live in the 21st century??

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

[ Parent ]
This is truly a consequential issue.  

[ Parent ]
sorry, slide is here

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

[ Parent ]
I sent a question to HHS
kudos to them for a prompt reply ;-)

The information surrounding this procurement is sensitive and prohibited from disclosure by the Federal Acquisition Regulations:

(FAR)  3.104-4 (a) & (b)  Disclosure, protection, and marking of contractor bid or proposal information and source selection information.

(a) Except as specifically provided for in this subsection, no person or other entity may disclose contractor bid or proposal information or source selection information to any person other than a person authorized, in accordance with applicable agency regulations or procedures, by the agency head or the contracting officer to receive such information.

(b) Contractor bid or proposal information and source selection information must be protected from unauthorized disclosure in accordance with 14.401, 15.207, applicable law, and agency regulations.

There's further information about who to contact which I've omitted here.

Well, I guess that's it, then.  We're not going to find out more about it, until such time as tptb can disclose the outcomes.  Not quite what I expected, but then, what do I know?

Oh, well...

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

I suppose that's fair emough
There has to be a certain amount of confidentiality in such processes.  OTOH, ASPR/BARDA/HHS has prided themselves on public engagement and transparency, and I give them great credit for that.  It would be interesting to note whether in future transparency can extend a little further into some of these areas that may involve issues of public interest.  I don't know, hard to strike a balance.

I guess we'll just have to wait and see.  

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

[ Parent ]
Recognizing what's at stake
Hopefully the right thing will get done because the right people recognize what is at stake.  As you say, we'll see what happens.

Thanks for writing this.

[ Parent ]
Conn Company Goes Into Production on Swine Flu Vaccine
on NPR


But Protein Sciences still awaits government OK on manufacturing facility

A Connecticut bioscience company has decided to go ahead with production of a swine flu vaccine.

But Protein Sciences in Meriden says its still waiting for a decision on a government contract that would help it expand its manufacturing capacity.

One of the buildings at Protein Sciences' headquarters is nearly half filled - with a big empty space....

"So this is going to be where we intend to put a very large scale manufacturing facility... "

CEO Dan Adams has had plans for this area for a long time - a facility that could turn out 100 million doses of vaccine each year, key infrastructure in fighting a pandemic.  But Adams says, such a venture needs government backing.


The company is just months away from FDA approval on its groundbreaking vaccine production method.  Most vaccine production uses chicken eggs infected with the live virus as incubators, but Protein Sciences instead uses insect cells, in a cleaner and quicker method.  The cells are infected with a harmless baculo virus, that acts as a kind of template - scientists can splice on the genetic code for any disease that they want to make a vaccine against.  This is called recombinant DNA technology.  Other com panies are working on similar techniques, but none are as close to approval for a commercial product as Protein Sciences.

"Insect cells will make anything....all we have to do is change the virus, so we can change from making a flu vaccine to a diabetes vaccine, to a hepatitis B vaccine - we can just change by just changing the code on the baculolovirus.....if we want to change to making an H1N1 vaccine, it's a Friday to Monday thing.  We clean the bioreactor, and we start infecting it with the code for H1N1."

Protein Sciences has decided to take a chance and go ahead with production of an H1N1 vaccine, encouraged by positive signs from the US government, and an invitation to apply for fast track approval in Europe.  Having done a lot of the preliminary work already, the company now says it can turn out 100 thousand doses of swine flu vaccine by the week of June 8th.  Companies using egg based technology are still months away from an H1N1 product.  But says Adams, up until very recently, government dollars have been focused on those older methods.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...

We have 300 million people to vaccinate,
and egg-based vaccine production takes a long time for even the first batch to be ready.  It would be wonderful to have this cell-based production working soon, and in the US, too!  They can make vaccine quickly enough to cover the top tier of Americans needing it, and have some to share with other countries, then make some more for the rest of us.  

There may not be much time before a worse strain of influenza comes around, so I hope the FDA is being diligent in its research.  I hope to hear some positive news soon.  

"The truth does not change according to our ability to stomach it."  Flannery O'Connor

[ Parent ]
cross-posted from the news

HHS Announces Advanced Development Contract for New Way to Make Flu Vaccine


Tuesday, June 23, 2009

HHS Secretary Kathleen Sebelius announced today that the department will pursue advanced development of new way to make influenza vaccine. The work will be done by Protein Sciences Corporation, Inc., of Meriden, Conn., under a new $35 million contract. The contract could be extended up to five years at a total cost of approximately $147 million.

"The technology has advanced in recent years to a point that we believe it could help meet a surge in demand for U.S.-based vaccine for seasonal and pandemic flu," Secretary Sebelius said. "We want to use the technology to help our nation respond to emerging infectious diseases."

With this new technology, known as recombinant influenza vaccine, a gene would be extracted from a flu virus and placed into an insect virus called baculovirus, which does not affect people and can multiply quickly to high levels in insect cells. The cells are purified to become a basic part of a human vaccine.

Using this method, vaccine candidates, clinical investigational lots, and commercial-scale vaccine production may be available faster than by using traditional vaccine production methods. Because the basic cells can be frozen and stored indefinitely, manufacturing large quantities of a vaccine is also faster using this recombinant technology.

All 'safety concerns' are hypothetical.  If not, they'd be called side effects...


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