Washington Editor

The new defense appropriations bill, which is worth nearly half a trillion dollars for the coming government fiscal year, is notable to the drug development industry because of its myriad provisions related to pandemic flu preparedness. Also, it includes funding that will benefit biotech firms with other programs of interest to the Department of Defense.

Among those companies is AVI BioPharma Inc., which is receiving an $11 million allocation to fund ongoing defense-related programs to develop therapeutic drugs against Ebola, Marburg and dengue viruses, and for countermeasures to anthrax and antidotes for ricin toxin. The Portland, Ore.-based company's Neugene technology is central to all those efforts.

"We're pioneers in antisense or gene-targeted therapeutic drug approaches," said Michael Hubbard, AVI's director of investor relations, later calling the technology "ideal" for viral diseases and for controlling certain regulatory genes in toxin models. "So it's ideally suited for the bioterrorism programs."

He stressed the importance of the Neugene technology's specificity in targeting certain gene sequences, and also the ability to rapidly produce compounds in response to outbreaks. That was the case a couple of years ago, Hubbard said, when AVI turned out compounds against Ebola following an accident at the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID).

The award is more than double last year's $5 million allocation for AVI to evaluate its Neugene antisense agents in collaboration with USAMRIID.

The latest funding follows successes reported a few months ago by the company in those areas: Ebola studies at USAMRIID demonstrated robust efficacy in multiple experiments conducted on mice, guinea pigs and nonhuman primates; and in guinea pigs challenged with high doses of Marburg virus, a high survival rate was observed in single-agent protocols targeting distinct Marburg genes.

Also, cell culture studies established the proof of principle for Neugene antisense agents against ricin and anthrax. In studies with 100 percent lethal ricin, greater than 75 percent cellular viability was achieved with antisense targeting the ricin binding site on ribosomal RNA, and antisense targeting anthrax's host proteins significantly down-regulated its expression, which led to increased cell survival without extensive apoptosis.

AVI's collaborative research agreement with the Centers for Disease Control and Prevention in Atlanta also has been extended to test the Neugene antisense agents against all four serotypes of the dengue virus, a program that began last year. AVI works on the antisense targeting, and its government research collaborators at USAMRIID and the CDC conduct the studies.

The federal funding news gave a 25 cent boost to shares in the company (NASDAQ:AVII), which closed Wednesday at $3.64.

The Department of Defense appropriations measure for fiscal year 2006, HR 2863, totals $453.5 billion, and other biotech companies receiving funds include a pair of blood substitute companies.

Northfield Laboratories Inc. is receiving $3.5 million for the continued development of PolyHeme, its human hemoglobin-based oxygen carrier. The product, which has a shelf life of more than a year, is in a Phase III study that is recruiting patients.

The Evanston, Ill.-based company attributed its latest allocation in part to Sen. Richard Durbin (D-Ill.), a member of the Senate Appropriations Committee who visited Northfield's manufacturing facility and stressed that the "research has the potential to save lives," given its possible use for first responders, surgeons and rural physicians or others in remote settings with limited blood supplies.

The funding is an extension of previous money granted to Northfield.

Similarly, Cambridge, Mass.-based Biopure Corp. is getting $4 million in congressional funding for its investigational oxygen therapeutic Hemopure (hemoglobin glutamer - 250 [bovine]).

As a result, the U.S. Navy will continue to research the room-temperature-stable product's potential use in military and civilian trauma applications and use the funding for a proposed clinical trial called RESUS (Restore Effective Survival in Shock) and for preclinical studies in animal models of acute blood loss, including those that mimic military trauma scenarios.

To date, Congress has appropriated a total of $22.5 million to the Navy and Army for Hemopure's development.

Simultaneous with government funding news, Biopure said it would begin to sell the product in the only country in which it has regulatory clearance, South Africa. Compliance with new import regulations and a new support structure that includes Abazali Bio Ventures (Pty.) Ltd. as its sales agent have cleared the way for Hemopure, which is approved there for treating acutely anemic adult surgical patients and for the purpose of eliminating, delaying or reducing the need for allogenic red blood cell transfusions in them.

On Wednesday, Northfield's stock (NASDAQ:NFLD) gained 65 cents to close at $14.17, while Biopure's shares (NASDAQ:BPUR) tacked on 7 cents to close at 80 cents.