BioWorld International Correspondent

SYDNEY, Australia - Two Australian companies received grants totaling $10 million from the National Institute of Allergy and Infectious Diseases (NIAID) for two projects - one to develop a flu vaccine and another to develop a vaginal cream designed to prevent HIV infection.

Both projects, involving Biota Holdings Ltd. in Melbourne and a consortium of U.S. and Australian companies led by Starpharma Holdings Ltd., also in Melbourne, involve innovative technology. It also is notable for non-U.S. companies to obtain NIAID grants.

But the deal that has caught public attention in Australia is the Biota project to develop a new influenza drug, using what Biota calls its second-generation technology of long-acting neuraminidase inhibitors (LANI). Biota, in collaboration with Sankyo Co. Ltd. in Tokyo, is developing a drug that is administered once a week, instead of the more frequent dosing required by existing flu drugs. One LANI compound has completed a Phase I safety study.

NIAID, part of the National Institutes of Health in Bethesda, Md., wants to develop a flu drug that does not require frequent dosing and stockpile it in the event of a bioterrorist attack or a pandemic. The grant is for development work and there is no guarantee to buy stocks of the drug being developed, but the choice of Biota has surprised the Australian investment community.

Biota in May sued GlaxoSmithKline plc, of London, alleging that it abandoned marketing of the first-generation flu vaccine Relenza, which originated with Biota. As a result, Biota alleged that its drug lost most of the flu market to rival product Tamiflu, marketed by F. Hoffmann-La Roche Ltd. of Basel, Switzerland. That suit is still in its preliminary stages.

The Australian government also recently ordered A$124 million (US$89.3 million) worth of Tamiflu for its own national stockpile, without taking the contract to tender.

Biota CEO Peter Molloy said that the grant was a tribute to Biota's "recognized expertise" in the influenza field.

Investors agreed, pushing Biota's share price up 26 percent to A$0.66 last week. By Friday the shares had settled back to A$0.61.

The consortium includes U.S. company ReProtect Inc., of Baltimore, and a string of U.S. and Australian research groups such as Johns Hopkins University, also in Baltimore. Starpharma's technology involves assembling arrays of large molecules, which the company has developed into a topical microbicide gel. That product has received clearance from the FDA for clinical trials.

The ReProtect product is complementary, as it can be combined with the Starpharma gel, and is in clinical trials. The combined product also is expected to be effective against other sexually transmitted diseases, including herpes and chlamydia.

John Raff, CEO of Starpharma, said that the company would get the grant then distribute funds to others in the consortium as the work required.

He said the NIH had supported development of the Starpharma technology through animal trials, so the grant was the latest sign of NIH support.

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