U.S. cancels VaxGen's $877M vaccine contract

The other shoe has dropped on VaxGen's troubled effort to develop a new anthrax vaccine for the U.S. government. Shortly after the company failed to meet a federal deadline to restart human trials, which had been stopped by the FDA, the government canceled its $877 million contract. The soured deal has become emblematic of everything that was wrong with the government's $5.6 billion Project BioShield, which had hoped that the prospect of major contracts would drive the development of innovative new therapies to counter a bioterror attack. Instead of gaining the involvement of big pharma, little companies like VaxGen jumped in.

The government recently shifted its strategy, providing new funds to back research rather than expecting companies to develop therapies on their own in the hope of signing contracts. But analysts say that the future of VaxGen--which has never produced an approved therapy and had already experienced a major setback in an earlier attempt to deliver a new AIDS vaccine--has become uncertain. VaxGen officials say they're still confident in their vaccine approach, which they spent $175 million developing. VaxGen has a smallpox vaccine in development and enough funds to make it through 2007.

- see VaxGen's release on the terminated contract
- read the article on VaxGen's contract woes from The Washington Post

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FDA puts hold on Phase II anthrax vaccine trial. Report