SIGA Technologies is planning to buy Plexus Vaccine Inc., looking to expand its vaccine offerings and capitalize on government funding for the development of biowarfare defense agents.

SIGA, of New York, signed a nonbinding letter of intent to acquire "substantially all the assets" of San Diego-based Plexus, planning to give up an undisclosed number of shares in exchange. Although SIGA has been working in biowarfare defense for three years - well before Sept. 11, 2001 - the acquisition would add bulk, said Thomas Konatich, chief financial officer and acting CEO at SIGA.

"[Plexus] offers the ability to us to effectively [turn] out vaccines," he told BioWorld Today. "To rationally design them, combine them with our delivery system and produce a broad range of vaccines. And it will increase our capability for biowarfare defense products."

SIGA's stock (NASDAQ:SIGA) rose 2 cents Tuesday to close at $1.20.

SIGA has been working on both a smallpox vaccine and a drug to treat smallpox infection, with the latter being further along in development. Work on the smallpox vaccine will be enhanced by the presence of Plexus, Konatich said. Both companies in the past have received funding from such government bodies as the Army and the Department of Defense. Plexus uses a platform of computational biology combined with pharmacogenomics to predict B- and T-cell vaccine epitopes. It began operations in July 2001.

That technology, coupled with SIGA's mucosal commensal vaccine delivery system, not only should expand SIGA's biowarfare defense research, but also lend itself to smallpox, anthrax, plague and botulism vaccines, among others, SIGA said.

About a year ago, SIGA announced its intention to acquire Allergy Therapeutics Holdings Ltd., of Worthing, UK, which focuses on allergy drugs and vaccines. That deal never happened, though, as the companies backed away, citing market conditions. (See BioWorld Today, March 12, 2002.)

The reason for the nixed merger, Konatich said, was that "the money Allergy needed to keep going was more than the combined companies could raise."

Allergy still exists. It recently restructured its board and terminated an alliance with Elan Corp. plc, of Dublin, Ireland. It also signed in December a licensing agreement with Pliva, a pharmaceutical company based in Zagreb, Croatia, for Pliva to market and distribute Allergy's products in Central and Eastern Europe, Turkey and Russia, among other locations.

For SIGA and other parts of the biotechnology industry, the unfortunate events of Sept. 11 have opened up a niche of funding through the ratcheting up of homeland defense. And with the two-animal rule for biowarfare products, revenues might not be far off.

"There is a huge pool of government funding out there," Konatich said. "We anticipate government agencies will fund some programs going forward."

The company hopes to have a smallpox drug on the market in two years, and in the "not-too-distant future, we'll see some animal data" on the product, he said. The company collaborates with TransTech Pharma Inc. in a deal signed in October to seek small-molecule therapeutics to treat infectious diseases, including smallpox and anthrax. The companies are sharing costs and any revenues. With Plexus, SIGA's scope increases even more.

"We think we are well positioned with this acquisition," Konatich said. "We are now offering more than just a rifle shot at what we think is a serious problem. We offer an entire portfolio."