Washington Editor

WASHINGTON - The Biomedical Research and Development Authority (BARDA) is canceling its request for proposal (RFP) for contracts to buy a recombinant protective antigen (rPA) anthrax vaccine for the Strategic National Stockpile, and was instead issuing a development funding proposal, a move that sent shares of PharmAthene Inc. tumbling 52.5 percent Tuesday.

Shares of competitor Emergent BioSolutions Inc., whose BioThrax is the only approved anthrax vaccine marketed in the U.S., also took a hit, but much less severe, with only an 8 percent drop.

Annapolis, Md.-based PharmAthene's stock (AMEX:PIP) closed at $1.55 Tuesday, a loss of $1.71, while shares of Rockville, Md.-based Emergent (NYSE:EBS) closed at $13.25, a loss of $1.15.

The companies had been waiting since last year to hear about the contract awards, which potentially were worth $500 million or more, Emergent President and Chief Operating Officer Daniel Abdun-Nabi told BioWorld Today.

But BARDA said a technical evaluation panel of government, academic and industry experts determined that the vaccine makers that proposed to the RFP, issued in February 2008, and were in the competitive range could not meet the Project BioShield statutory requirements of having an rPA anthrax vaccine ready for licensure within eight years.

BARDA would not disclose the identities of the vaccine makers that were in negotiations with the agency for the rPA anthrax vaccine contract awards, but Emergent and PharmAthene officials said they were the only two firms they were aware of in the running.

Although it canceled the RFP, BARDA said it remained committed to the development of a second-generation anthrax vaccine, and therefore, was asking vaccine makers to submit product development plans under special instructions to an existing broad agency announcement (BAA), a competitive solicitation procedure used to obtain proposals for government funding of research and development, but not manufacturing or delivery, according to a government spokesperson.

The deadline for the BAA, which was modified to include the rPA anthrax vaccine special instructions, is Feb. 1, 2010, a date that was pushed back a month by BARDA to accommodate companies seeking to respond.

A company can either submit a proposal by the Feb. 1 deadline or a 10-page synopsis, or white paper, of the firm's technical and business plan, which would give the vaccine maker an opportunity to obtain feedback from BARDA in the event the company is requested to submit a proposal.

The companies that had submitted and met the rPA vaccine RFP's competitive range likely have completed up to 90 percent of the work needed for the BAA special instructions proposal, a BARDA official said.

BARDA is holding a pre-proposal conference on Jan. 11, 2010, for companies interested in seeking general instructions or hearing more information about the BAA special instructions for the rPA vaccine.

The public meeting is an opportunity for industry to have face-to-face interactions with BARDA contract officers and scientists so the firms can better position their proposals before submitting them, an official said.

The conference also provides an opportunity for companies to meet with other firms seeking potential teaming arrangements for the BAAs.

Firms also can submit specific questions until Dec. 21 to BARDA for the rPA anthrax vaccine BAA.

While the contracts that were intended to be awarded under the RFP for the rPA anthrax vaccine came from Project BioShield's special reserve fund, which initially was $5.6 billion - with $3 billion left in the pot - the BAA funds come from BARDA's advanced research and development budget, appropriated by Congress.

BARDA officials said the rPA anthrax vaccine BAA R&D contracts likely will be five-year awards, with a one-year base period and four one-year options, in which the remaining funds are based on a firm's ability to demonstrate that it is meeting certain milestones.

PharmAthene CEO David Wright said that while his firm was "disappointed" by the RFP cancellation, it remained encouraged by BARDA's continued support for the development of a second-generation anthrax vaccine. "We will continue to work with BARDA to determine how to provide a next-generation anthrax vaccine to the American public in the shortest period of time," he said in a statement.

PharmAthene planned a conference call Wednesday morning to provide investors and analysts an update on its rPA anthrax vaccine program.

Emergent's Abdun-Nabi said that while BARDA's decision to cancel the RFP "came as a total surprise," given that the firm was expecting any day to move into the final contract negotiation process with the agency, at the end of the day, the change of direction "makes a lot of sense, from the government's perspective and the developers' perspective."

After all, he said, the BAA still gives vaccine makers the opportunity to obtain government funding to develop their rPA vaccine candidates, "but now in a more of an incremental approach," which Abdun-Nabi noted would be "outside the confines of the rigid BioShield requirements."

BARDA's move also positions Emergent's BioThrax to be the only product for the government's stockpile.

Emergent has received contracts for 48.25 million doses from Health and Human Services and the Department of Defense worth $1.2 billion.

"As we step back and take a look at the landscape after the dust settles, I think it ends up being quite a positive for us," Abdun-Nabi said.