The reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA), coupled with the government's intent to purchase a large order of drugs to stockpile against the threat of a radiological/nuclear attack, should make it easier for biotechs developing medical countermeasures (MCMs) to attract investors.

The reauthorization and a recent request for proposals (RFP) for 2.8 million courses of a granulocyte colony-stimulating factor (G-CSF) demonstrate the government's commitment to funding MCM development and its willingness to make large acquisitions for the national stockpile, John McManus, president and CEO of Aeolus Pharmaceuticals Inc., told BioWorld Today.

Both actions provide much-needed certainty for drugmakers focused on developing products for uses that everyone hopes never become reality.

For industry, the most significant aspect of the PAHPA reauthorization, which was signed into law Wednesday by the president, is that it provides increased MCM funding for the next five years, McManus said. It also allows government funders to go back to Congress for more money once that funding is depleted.

That commitment is "really, really important," McManus said, as it assures sponsors, and investors, that multiyear government contracts will be funded. Aeolus, of Mission Viejo, Calif., has more than $150 million in government contracts, including a 2011 contract from the Biomedical Advanced Research and Development Authority (BARDA) worth up to $118 million over five years to develop AEOL 10150, an MCM intended to combat the pulmonary effects of acute radiation sickness. (See BioWorld Today, March 30, 2011, and Sept. 8, 2011.)

The new law also smoothes the regulatory path for MCMs, directing the FDA to draft regulatory management plans (RMPs) with sponsors to map out goals, development plans and meetings with agency officials. While it's good to have the RMPs in the law, the FDA has been moving in that direction already, McManus said, adding that Aeolus has had a lot of collaboration with agency staff in its development of AEOL 10150.

No Surprise

The reauthorization came as no surprise since the bill enjoyed strong bipartisan support in Congress. The House approved it with a 395-29 vote in January, and the Senate unanimously passed it earlier this month. The only surprise was that it took as long as it did. (See BioWorld Today, Jan. 24, 2013, and March 4, 2013.)

The bill came close to passing last year, as both the House and Senate had passed similar legislation to continue funding for BARDA and Project BioShield. The House approved a compromise bill in December, but the measure failed in the Senate due to extraneous provisions attached to it.

PAHPA was first passed in 2006, giving BARDA the ability to fund advanced development of promising MCMs through a milestone contracting process. It also expanded MCMs to include noninfectious agents, swinging the door wide open for biotechs pursuing products that could be used in national emergencies.

Several small biotechs have walked through that door, using BARDA funding to develop drugs that have the potential as an MCM, as well as a treatment for other diseases. Some of those companies have been seeing increased interest from investors, due in large part to the government's continued commitment to the biodefense space, McManus said. Aeolus itself recently closed a $3.5 million financing deal with a new group of investors.

Shares of the company (OTC:AOLS) closed at 40 cents Thursday, up 11 percent on the news of the reauthorization.

However, not all biotechs working on MCMs saw a similar bump. Cleveland BioLabs (NASDAQ:CBLI), which reported its fourth-quarter and fiscal 2012 earnings Thursday, was down 9 cents, closing at $1.51. The Buffalo, N.Y.-based biotech is developing its Entolimod as a radiation countermeasure.

More Competition

Given the government's commitment to MCMs, the space could become more competitive with larger companies shouldering their way in. The RFP for G-CSF acquisition, expected to be awarded in the next quarter, is likely to draw interest from large biopharma companies that have developed products that might qualify for the contract.

The granddaddy of them all is Amgen Inc., with its blockbuster drugs Neupogen (filgrastim) and Neulasta (pegfilgrastim). Other products in the space include Genzyme Inc.'s Leukine (sargramostim) and Teva Pharmaceutical Industries Ltd.'s tbo-filgrastim. Several other companies are developing filgrastim biosimilars.

The FDA has scheduled an advisory committee meeting May 3 to discuss the safety and efficacy of the currently approved drugs as potential treatments for radiation-induced myelosuppression associated with a radiological/nuclear incident.