BioWorld International Correspondent

LONDON - Acambis plc is planning large-scale investment of the revenues from its U.S. government smallpox vaccines contracts to create a stronger entity that will reduce reliance on partners and put the company in control of its own destiny.

"Now that the majority of income from ACAM2000 is behind us, we are looking forward to 2005 as a year of investment that will see us emerge as a fully integrated biopharmaceutical company," Gordon Cameron, CEO, said at an analysts' meeting held last week to discuss Acambis' 2004 financial results.

Winning the contracts to supply smallpox vaccines to the U.S. government has made Acambis financially stronger, and it ended 2004 with more than £100 million (US$191.1 million) in cash. But revenues halved to £85.5 million in 2004 from £169.1 million in 2003, as the company delivered 182.5 million doses of ACAM2000 but the government did not place an anticipated order for another 26.5 million doses.

At the same time, Acambis was sucked into Chiron Corp.'s problems at its plant in Liverpool, UK. In February 2004, Acambis was forced to withdraw a biologics license application for Arilvax, a yellow fever vaccine licensed from Chiron and manufactured in Liverpool, as a planned investment meant the facility would not be ready for inspection.

Subsequently, Chiron has been occupied solving shortcomings with the manufacture of its Fluvirin flu vaccine, and Acambis does not know when the BLA for Arilvax can be resubmitted.

The lack of progress is frustrating, Cameron said. "We will continue our dialogue with Chiron, but this a classic example of [the consequences of] not controlling your own destiny," he said.

To increase control, Acambis will invest to develop a more predictable revenue stream, and is pursuing opportunities to acquire, in-license or co-market products. Those will probably be vaccines, but Cameron said he would consider other products if the company's core capabilities were applicable. In particular, he would like more travelers' vaccines to sell in the U.S., and to manufacture products for third parties.

All that would take time, and meanwhile Acambis faces further uncertainty over U.S. smallpox vaccines contracts. It is expecting news about a proposal submitted to the Centers for Disease Control and Prevention in Atlanta for warm base manufacturing to maintain supplies of ACAM2000. It also is in the thick of a $76 million contract to develop modified vaccinia Ankara (MVA) (an alternative smallpox vaccine for the 20 percent of the U.S. population that cannot be given the full-strength version) and waiting to hear if an option to manufacture 2.5 million doses of MVA, worth $55 million to Acambis, will be activated.

Beyond that, a much larger contract for a stockpile of 60 million to 75 million doses of MVA is expected to go out to tender sometime later this year, when Acambis will find itself competing with Bavarian Nordic, of Kvistgard, Denmark, and its MVA product Imvamune. Cameron claimed Acambis is well positioned to win that contract.

"Our competitive advantage is shown - we have a plant in place, Bavarian Nordic hasn't," he said.

Acambis may owe its fortune to Project BioShield, but Cameron vented his frustration at the ups and downs of the commercial relationship with the government last month when he testified before a U.S. Senate subcommittee on health and bioterrorism. He claimed Acambis had suffered financially as a result of the decision to cut the order of ACAM2000 from 209 million doses as stated originally, to 182.5 million, and said contracts should provide automatically for warm base manufacturing, to provide an incentive to reserve capacity for biodefense. He added that if the MVA contract is below the number of doses projected, "It may be difficult to dedicate staff and facilities."