West Coast Editor

With about $15.3 million in cash and marketable securities as of the third quarter's end - enough to last through the first half of this year - Iomai Corp. is getting a welcome revenue shot in the arm for its dose-sparing skin patch: $14.5 million from the government, as part of allocations in the pandemic-influenza program.

"This is a contract we'd been aware we were likely to get for the past six to nine months," said Stanley Erck, president and CEO of Gaithersburg, Md.-based Iomai, which raised $10 million in interim cash through a financing in October.

The $14.5 million in new money comes through a contract that runs through March of next year with the U.S. Department of Health and Human Services, and if a product is developed through licensure over the next five years or so, the total payout for Iomai from HHS is about $128 million, plus the fixed fee.

Unlike some federal contracts, Iomai's is not milestone based, Erck told BioWorld Today. "We accrue costs; we bill them and get paid," he said. News of the deal perked Iomai's stock (NASDAQ:IOMI), which closed Wednesday at $5.88, up 73 cents, or 15.3 percent.

The adjuvant patch would be used with any available vaccines against the avian H5N1 strain. Applied over the injection site, it releases the adjuvant into Langerhans cells, which transport it to the lymph nodes. Gregory Glenn, Iomai's chief scientific officer, published a 1998 paper in the journal Nature, explaining how he and researchers at Walter Reed Army Institute of Research stimulated an immune response in mice using the transcutaneous immunization (TCI) technology.

"This contract was based on bringing to the [flu] problem a mature product," Glenn told BioWorld Today, noting that Iomai has a patch in advanced Phase II development for traveler's diarrhea. "That same formulation is being used as an adjuvant."

Preclinical TCI work indicates the patch could cut by as much as tenfold to 100-fold the amount of flu vaccine needed to block disease - important, since there may be enough vaccine to protect only about 10 percent of the population. The patch is perfect for stockpiling, too, since it can be stored and shipped at room temperature.

Iomai, which went public earlier this year by selling 5 million shares at $7 each, also will submit a production plan explaining how the firm could crank out 150 million patches in six months, but the HHS contract does not fund all aspects of commercial production. (See BioWorld Today, Feb. 2, 2006.)

"Covered in the contract is the design of the plant, and it pays for the equipment that goes into the plant," Erck said. "What is not covered is the actual purchase of the patch for stockpile. That would be a separate contract, and it's not clear what the timing of that contract would be."

A Phase II trial with the flu patch will begin in the fourth quarter. But if the feds believe an avian flu pandemic is imminent, Iomai might not have to wait until approval before getting the manufacturing contract.

Erck said the cost could be $5 to $10 per patch. "It's a good range," he said, pointing out that contracts for vaccines themselves have ranged between $20 and $50 per dose.

In March, Iomai got $1.4 million from the National Institutes of Health for the continued development of the TCI patch for flu vaccines. The award was the second installation of a two-year, $2.9 million grant first announced in January 2005 under biodefense initiatives. In the fall, the FDA cleared the firm to start a head-to-head Phase I trial comparing the patch with traditional vaccine.

The patch for travelers' diarrhea - so-called "Montezuma's revenge," mainly caused by enterotoxigenic E. coli infection - is under way in volunteers traveling to Mexico and Guatemala. Data are expected in the first quarter, and the placebo-controlled field study will prepare Iomai for Phase III trials.

In a large Phase I trial is Iomai's patch containing trivalent flu antigen with an adjuvant, which is intended to replace the standard flu shot. Later this year, Phase II trials will begin with a patch for the elderly, designed to be used atop their regular flu vaccination to provide better immune response.

Big pharma vaccine players got slices of the avian flu cash pie, as well, in the latest round of awards. HHS inked five-year contracts with London-based GlaxoSmithKline plc for $63.3 million and to Novartis Vaccines and Diagnostics Inc., a division of Novartis AG, of Basel, Switzerland, for $54.8 million.

So far, H5N1 has spread to more than 40 countries, killing hundreds of millions of birds, and the number of avian cases in humans has reached more than 260 cases in 10 countries. More than half of the people infected have died.