What better way to turn around a company than on the government's dime?

Such is the most cynical view possible of companies lining up in economically troubled (and otherwise troubled) times to grab research dollars from Project Bioshield, the federal initiative designed to develop protection against attack by biological agents.

But turnarounds take much more than the proverbial dime, of course, if they can be pulled off at all. And the overall significance of Bioshield to the industry is hardly expected to be huge, even given President Bush's ballyhooed $6 billion to be allocated for anti-terrorist efforts.

A favored target: the dreaded Bacillus anthracis, regarded as an agent that, aerosolized, might be deployed by those who would attack Americans. In January, Avant Immunotherapeutics Inc. nailed down an $8 million deal with the U.S. Department of Defense - a deal that may be worth more eventually - to come up with a combination vaccine for anthrax and plague (Yersinia pestis). The cash will be used to further the company's other, non-war related efforts. (See BioWorld Financial Watch, Jan. 27, 2003.)

The agreement was hailed as an example of how biotechnology firms might exploit anti-terrorist efforts and gain ground of their own at the same time, the prototypical "win-win situation" sought by firms in collaborations.

Last week came stock-boosting news from another company, Vical Inc., which said it would begin testing its anthrax vaccine in humans later this year, becoming the first company to use the FDA's two-animal rule in the testing of a new vaccine. Word from Vical added more than 34 percent of value to the company's shares, which closed that day at $3, up 77 cents.

Though already undervalued as a result of past therapeutic failures, noted Eric Schmidt, analyst with SG Cowen Securities Corp., Vical was making itself heard on Wall Street as the company went about "quietly trying to reinvent itself as a vaccine company," he told BioWorld Financial Watch.

With Ohio State University as its collaborator, Vical has shown the vaccine is effective in protecting rabbits against lethal inhalation challenge with aerosolized anthrax, and has met with the FDA to discuss filing an investigational new drug application.

The compound has shown promise in mice, too, and is potentially eligible for consideration under the agency's two-animal rule - calling for proof of efficacy in two animal species as well as safety in humans - which would make Vical the first to use the rule in developing a new vaccine.

Vical's research is partly supported by a grant from the National Institute of Allergy and Infectious Diseases, a division of the National Institutes of Health in Bethesda, Md. The company has applied for a Phase II Small Business Innovation Research grant, too.

The current-generation anthrax vaccine calls for a series of six injections over an 18-month period and confers immunity only gradually, over weeks of time. Vijay Samant, Vical's CEO, said the company has reduced the number of shots required to two.

Vical, though cash-rich (ending 2002 with $112 million), had met with setbacks. The company said last fall it would not complete its Phase III low-dose trial of Allovectin-7 in metastatic melanoma, would close a Phase II trial of Allovectin-7 for early stage head and neck cancer, and no longer would develop Leuvectin for prostate or kidney cancer.

Also last year, Vical discontinued a Phase II trial of Leuvectin, a product that used a lipid DNA complex with a gene encoding interleukin-2 to stimulate an immune response, in kidney cancer. It has one clinical program remaining, with Allovectin-7, which also deploys a lipid DNA complex, in a high-dose Phase II trial for multiple tumor types.

Results from the high-dose trial are expected to be disclosed at the American Society of Clinical Oncology's meeting in late May and early June.

But the company also said in February that it would begin by the end of this year Phase I trials in its first independent development program - in this case, a DNA-based vaccine against cytomegalovirus. The initial indication is in humans at greatest risk of serious complications from CMV infection - that is, patients undergoing bone marrow or solid organ transplantation. Down the road could come a vaccine for immunocompromised individuals, for women of reproductive age and, eventually, a universal vaccine for pediatric use.

It was the anthrax vaccine that most recently gained headlines, though, and brought some attention to the two-animal rule. The rule applies to products that would be unethical to test in humans. Samant told BioWorld Financial Watch that the recently instated FDA rule calls for proof of efficacy in two animal species, as well as safety in humans, and is "not clear about which two species of animals" must be tested. He said Vical is talking with the agency and might conduct its own non-human primate study.

The rule, said Gillian Woollett, vice president of science and regulatory affairs for the Biotechnology Industry Organization, represents "a problem and an opportunity." It's been in the works for about 10 years and is "not specific to bio-preparedness," she added, although the way in which anti-terrorist efforts such as Vical's coincide with the two-animal rule may significantly represent the "challenge" side of the equation.

"What's not clear to me is whether the FDA has to invoke the two-animal rule," Woollett said, noting Bayer AG's effort to get its antibiotic Cipro (ciprofloxacin) approved for tularemia.

"They were told they needed animal models, and there weren't any animal models, although there was a huge human database [on the efficacy of Cipro against various organisms]," she told BioWorld Financial Watch.

Ciprofloxacin is used to treat infections of the skin, lungs, airways, bones, and joints, as well as urinary infections caused by Escherichia coli, and inhalational anthrax.

Generally, she said, the FDA seems to want experiments with "one small animal and a [non-human] primate model, with appropriate bridging. There's definitely a preference for primates, but they are inherently a problem because of supply issues."

For Vical and others, how and when the two-animal rule will be applied, especially with reference to developing anti-terrorist agents, is yet to be sorted out.

"It's an important area," Woollett said.