Countering Bioterrorism

While the U.S. grapples with the 9/11 Commission report and considers how best to reshape its intelligence-gathering organization, Congress is opening up spending on technologies and biomedical solutions to deal with terrorist attacks. A number of life sciences firms, many of them small start-ups, are following the money and turning their attention to defenses against bioterrorism.

The biggest slug of money so far--$5.6 billion over the next 10 years--will come from the Project BioShield Act of 2004, which President George W. Bush signed into law at the end of July.

At the signing ceremony in the White House Rose Garden, Bush declared: "We refuse to remain idle while modern technology might be turned against us; we will rally the great promise of American science and innovation to confront the greatest danger of our time." The legislation authorizes the government to continue to build a stockpile of vaccines and drugs to fight anthrax, smallpox, chemical agents, and radiological weapons. Without the government, no mainstream market otherwise exists for such medical countermeasures, observers point out.

The legislative commitment improves on the $644 million that the government spent to stockpile vaccines and other supplies in 2003, according to consulting firm U.S. InterMed. And the 2003 spending levels themselves were a vast boost over the $50 million spent to establish stockpiles in 1999, before the Sept. 11, 2001, attacks on the Pentagon and the World Trade Center and the anthrax scares later that year.

Project BioShield is only a part of the response to bioterrorism by Congress and the Bush Administration. The Patriot Act of 2001 criminalized possession of biological agents for other than bona fide research and protective purposes. The Public Health Security & Bioterrorism Preparedness & Response Act of 2002 set aside R&D funds to develop diagnostic and therapeutic techniques to identify and counteract new weapons of mass destruction. It also provides commercial and financial benefits to firms that become involved in biodefense efforts.

Project BioShield and bills pending in Congress make it apparent that a new military-biodefense complex is being developed. The proposed Biological, Chemical & Radiological Weapons Countermeasures Research Act--some call it BioShield II--introduced into the U.S. Senate in March further encourages biodefense work by offering U.S. firms liability and intellectual property protections, as well as tax incentives.

In testimony supporting BioShield II before the U.S. House Subcommittee on Tactical Air & Land Forces in mid-July, Richard B. Hollis, chairman and chief executive officer of Hollis-Eden Pharmaceuticals, said Project BioShield is much like the Manhattan Project that brought together the brightest minds to develop a nuclear bomb to end World War II. However, he continued, "today's arms race pits the terrorists, who want to use weapons of mass destruction, against our ability to find medical countermeasures to render such arms much less destructive."

IN PARTNERSHIP with the Armed Forces Radiobiology Research Institute, Hollis-Eden is developing immune-regulating hormones intended to protect victims of a nuclear or dirty bomb attack. The firm's Neumune is an injectable steroidlike drug that stimulates bone marrow production, counteracts immune suppression, and reduces inflammation, explained Daniel D. Burgess, the firm's chief operating officer, at a Homeland Security investors' conference sponsored by the New York Society of Security Analysts (NYSSA) at the end of June.

Survivors of a nuclear or dirty bomb attack would suffer from acute radiation poisoning, Burgess said. Bone marrow suppression caused by radiation leads to the depletion of neutrophils--white blood cells key to the body's defenses against infections. Marrow suppression depletes blood platelets that must clot for the body to cope with flesh wounds.

Neumune is a dehydroepiandrosterone (DHEA) metabolite, Burgess said, that is not a corticosteroid and doesn't have androgenic effects. When Hollis-Eden got its start in 1994, Hollis, a former Genentech marketing executive, focused the firm on developing immune-regulating hormones to treat HIV. Some of the firm's drug candidates still target HIV and boost the immune systems of chemotherapy, malaria, and tuberculosis patients.

But since 9/11, the company has directed its efforts at ameliorating the effects of a radiological attack. Neumune would cost $50 to $100 per dose, a price at which "the government can afford to stockpile the drug, and we would still make good margins," Burgess said. By comparison, Amgen's recombinant biologic white-blood-cell booster Neupogen costs $2,500 per dose.

The potential market for Neumune is huge. The government would have to consider stockpiling treatments for 2 million military personnel and 8 million first responders such as firemen and paramedics, Burgess said. Protecting the civil population in major metropolitan areas would add millions more doses. And the government would have to consider treating populations near nuclear power plants in the event of terrorist attacks on such facilities.

Hollis-Eden is burning through $23 million to $27 million a year and has $79 million on hand, Burgess said, "enough to get us to profitability at this point." The firm is also working on an oral drug, Phosphonol, acquired earlier this year through the purchase of Congressional Pharmaceutical, which held rights to the University of Chicago-developed drug. Phosphonol may protect against DNA mutations that can occur from radiation or chemotherapy injury.

Other firms also have been actively soliciting help from Congress. Ken Ducey, president of Markland Technologies, testified on July 21 before the House Subcommittee on Rural Enterprises, Agriculture & Technology in support of tax incentives that promote private-sector homeland security initiatives. Ducey testified on behalf of the Homeland Security Industry Association, a group that is a little more than a year old and has members from 40 large and small businesses and academic groups.

Although businesses need to secure their facilities, homeland security spending in the private sector has increased only about 4% since 2001, Ducey told subcommittee members. On the other hand, bioterror defense is clearly a government concern. Speaking at the NYSSA conference, Ducey said the Department of Homeland Security would spend $803 million in 2004 on detection devices, while the Customs & Border Protection Bureau would spend $9 billion on border protection.

Markland supplies border, cargo, and port security systems to both government and industry. The firm's interest in private antiterror spending is understandable since it recently licensed the right to sell a version of the Navy's shipboard chemical agent detector and alarm system to shopping malls, factories, cruise lines, and office buildings. The firm is also the sole producer of the portable device for the Navy. According to company documents, the chemical agent detector uses two ion-mobility spectroscopy cells to detect nerve agents and other lethal gases.

Markland bought defense-systems maker Science & Technology Research for $6.5 million in October 2003. STR is the original maker and licensee of the Navy's chemical agent detector. Then in June Markland acquired EOIR Technologies for $19 million. With this acquisition, it gained a second technology developed with the Army to identify chemicals and gases in the field using a portable Fourier transform infrared spectrometer. Markland had $43 million in sales in 2003 and, with the acquisition of EOIR, it is projecting sales of $62 million for this year.

EOIR's vice president of sensor science, Greg Williams, told conference attendees that the device was designed as a passive long-range chemical detection agent for use on overseas battlefields. Software in the device compares any gases identified with a library of potential toxic agents. In fact, the device was used at the World Trade Center site in 2001 to identify thermal hot spots and possible gas leaks.

In addition to discussions of radiologic and chemical threats, Aethlon Medical Chairman James Joyce also spoke at the New York conference about defenses against biological threats. The firm, which currently has no revenues and lost about $1.5 million in fiscal 2004, has developed blood filtration devices. Using hemodialysis to augment the body's immune response, Aethlon's technology helps clear the blood of viruses and toxins before cell and organ infection can occur. The firm has a Cooperative Research & Development Agreement with the National Center for Biodefense at George Mason University, Fairfax, Va., to further its technology.

"We target pathogens that are small enough to bind to hollow fibers" used in hemodialysis cartridges, Joyce says. Key to clearing the blood of biowarfare agents are special binding antibodies that the firm would supply. Like Hollis-Eden, the firm had originally intended to develop treatments against HIV infection.

And like Hollis-Eden, which still faces years of testing before it can commercialize its HIV treatment, Aethlon turned to biodefense as a way to speed research and more quickly bring products to market. Both firms will be helped by new Food & Drug Administration regulations that allow rapid approval of antiterror drugs and devices based on animal studies that show efficacy and human studies that need only prove safety.

Aethlon's "hemopurifiers" are designed for rapid deployment to soldiers as battlefield-wearable postexposure treatments, Joyce points out. The blood purifiers are targeted at what are now considered the worst bioterror threats: smallpox, hemorrhagic fevers such as Ebola and Marburg, anthrax bacteria, and botulinum toxin.

ANOTHER PARTICIPANT at the New York conference showed attendees that it has technology to contain a bomb explosion and limit dispersion of chemical, biologic, and radiologic agents should an explosion occur. Vanguard Response Systems, like Markland, has acquired and assembled technologies and equipment focused on biodefense. The Canadian firm, which had sales of nearly $8 million in its 2003 fiscal year, counts the Royal Canadian Police, the U.S. Army and Marine Corps, and the Israeli Police among its customers.

Vanguard's Universal Containment System "is essentially a tent placed over an explosive device," President David Luxton said. The tent can be filled in 30 seconds with a special foam that absorbs a blast, contains bomb fragments, and "neutralizes every known biotech hazard including anthrax and ricin." The foam can also contain the spread of nuclear material.

Vanguard produces the containment system under license from the Canadian government. Contacted after the conference, the firm's chief technology officer, Chris Corbin, explains that the fabric is a proprietary ballistic felt that stretches up to 900% "to help catch and contain fast-moving and jagged metal." The foam, he says, is "water-based and has the consistency of shaving cream with a uniform bubble structure." The strong surface tension and uniform bubble size together soaks up the energy of a bomb blast and slows shrapnel.

A decontaminating ingredient in the foam effectively kills biohazards and soaks up radioactivity. In case of an uncontained dirty bomb blast, Corbin says the foam is an effective cleanup agent.

Luxton said he realizes that Project Bioshield doesn't specifically apply to his firm's Universal Containment System, but he added that anything that advances the procurement of technology to limit harm from weapons of mass destruction is a benefit. Others in the nascent homeland security industry agree. And while like Markland's Ducey they hope the private sector will step up to the challenge and better protect factories, office buildings, and shopping malls from terror attacks, they all realize that government spending is driving the industry today.