The federal government agreed to pay $165 million to Human Genome Sciences Inc. under a contract to supply ABthrax (raxibacumab) to the Strategic National Stockpile.
The order calls for 20,000 courses of the therapeutic from the Rockville, Md.-based company, which first must receive licensure under an emergency use authorization before delivering the product. Then it would receive about 90 percent of the total payment. The events are expected concurrently in 2008, and fulfilling the contract's terms would provide HGS its first product sales.
"It's nice to have a top-line number of $165 million," said Andrew McDonald, an analyst with ThinkEquity Partners LLC in San Francisco. But he cautioned that the payment horizon remains a couple of years away. "There is a lot of work that has to be done to earn that money," he told BioWorld Today.
On Tuesday, shares in the company (NASDAQ:HGSI) gained 16 cents to close at $9.96.
The award, HGS President and CEO H. Thomas Watkins said in a conference call, represents "one more important step" in transforming HGS from a discovery firm into a development and commercialization company. He suggested that HGS could supply additional ABthrax doses to the stockpile down the road - HHS could have ordered up to 100,000 doses - as well as to other nations seeking to shore up their biodefense capabilities.
But McDonald warned that stockpiling is viewed as "more of a one-time event rather than something that's going to occur periodically." As a result, he said any potential payments for future orders would be "discounted heavily" given that "it's really hard for investors to value" such projections.
The award, made under the Project BioShield Act of 2004, was meted out by the Department of Health and Human Services. It follows on the heels of another BioShield contract announced earlier this month, a $362 million award for a botulism treatment from Cangene Corp., of Winnipeg, Manitoba. (See BioWorld Today, June 2, 2006.)
ABthrax's efficacy has been demonstrated in multiple animal models, with blood levels of the product exceeding those needed to provide protection from anthrax toxin, and its safety and tolerability has been shown in a Phase I trial that involved 105 healthy adult volunteers. The government decided to move forward with the order after reviewing those findings in conjunction with its own comparative laboratory testing of ABthrax that HGS supplied in October.
The company will produce ABthrax in its manufacturing facilities in Rockville, a 130,000-square-foot site at which it has developed required assays and a scalable purification process. "ABthrax will be the fifth monoclonal antibody that we have scaled up in this facility," Watkins said, "and our success rate in delivering cGMP material from this facility is excellent."
HGS also will complete additional laboratory and clinical testing required to support a biologics license application with the FDA, and to support the use of ABthrax in patients with inhalational anthrax disease in the event of an emergency prior to agency approval.
"We expect to meet very soon with regulatory authorities to confirm their agreement with the program that we've designed," David Stump, the company's executive vice president of drug development, said in the conference call.
He noted that the company expects to conduct multiple clinical tests in several hundred people, including a confirmatory safety study in healthy volunteers and smaller studies to investigate interactions with antibiotics and vaccines.
Confirmatory animal efficacy studies will employ survival endpoints, including a combination trial with antibiotics, as well as a vaccination study to ensure that ABthrax will not interfere with a person's ability to mount a natural immune response.
"We expect to complete these studies well within the timeline as required by the contract," Stump said.
The FDA has conferred fast-track and orphan drug status on the product, which was the first investigational agent against anthrax infection to be evaluated in a clinical study following the 2001 anthrax attacks in the U.S. A human monoclonal antibody to Bacillus anthracis protective antigen, it was discovered and developed by HGS using technology integrated into the company as part of a collaboration with Cambridge Antibody Technology plc, of Cambridge, UK.
ABthrax is designed to overcome limitations associated with vaccines and antibiotics that combat anthrax, "a third option" to complement the other two, Stump said. Compared to the current anthrax vaccine, which takes multiple injections to reach and maintain immunity, ABthrax confers immediate protection in a single dose once appropriate blood levels of the product are achieved. In addition, ABthrax acts against anthrax bacteria's deadly toxins, against which antibiotics are not effective. ABthrax also could prove effective against antibiotic-resistant strains of anthrax.
The government has named anthrax a material threat to national security, along with botulism and smallpox, as well as radiological hazards.
The contract marks the second major event for HGS in recent weeks. Earlier this month, the company partnered its chronic hepatitis C product, Albuferon (albumin-interferon alpha 2b), in a deal potentially worth $550 million with Novartis AG, of Basel, Switzerland. Already it has partnered cancer product LymphoStat-B with GlaxoSmithKline plc, of London. (See BioWorld Today, June 7, 2006.)
Both products are expected to enter Phase III before the end of the year.
McDonald noted that the eventual ABthrax payment would help support the growing expenditures at HGS, which he said burns more than $250 million per year. With cash reserves projected at about $715 million at the end of this quarter, bolstered by full compensation on the ABthrax contract in 2008, he estimated that the company's balance would carry it through Albuferon's projected approval in 2010. McDonald has not forecast an approval timeline for LymphoStat-B.
"We are fully confident of our ability to move all three of these programs forward," Watkins said. "We are very well positioned for the future, and we have the resources to accomplish what we need to."