PharmAthene pays up to $40M for vaccines

Annapolis biodefense company acquires anthrax and plague programs

PharmAthene postponed its scheduled 2007 earnings report to announce the deal, according to a recent filing with the U.S. Securities and Exchange Commission.

The purchase includes acquisition of Avecia’s anthrax vaccine that has completed two separate phase 2 clinical trials and a recombinant DNA plague vaccine that successfully tested for safety in a phase 1 trial and is ready for phase 2. Also, PharmAthene and Avecia have entered into a long-term manufacturing contract for the supply of vaccine drug substances to PharmAthene.

Wright said the British company had come to a strategic decision that it needed a U.S. partner with a track record of biopharmaceutical development and a strong relationship with the federal government.

‘‘There is a tremendous unmet need for a second-generation anthrax vaccine,‘‘ Wright said. We believe that Avecia’s vaccine is uniquely position to meet the current government requirements.”

Last month, the Department of Health and Human Services issued a request for proposal for an anthrax protective antigen vaccine for the strategic national stockpile. The agency is seeking 25 million doses of an anthrax vaccine. Wright estimated that the initial market opportunity will be $350 million to $400 million, as the company prepares a proposal.

Under terms of the deal, PharmAthene will acquire 56 employees from Avecia including five already in this country. The other 51 employees will remain in the United Kingdom. Rather than lay off any employees through redundancies, the company plans to hire more, Wright said.

When the deal closes, PharmAthene will pay Avecia $10 million in cash, with another $10 million one year later. Future milestone payments could total $20 million on contracts procured for the anthrax and plague vaccines and royalties of sales to the U.S. government.

Avecia, with headquarters in Manchester, has been developing biodefense technology since 1998. PharmAthene is 5 years old.

Avecia has been awarded $220 million in government grants and contracts for its biodefense vaccine programs. PharmAthene has been awarded $260 million in biodefense grants and contracts, pending certain milestones.

‘‘Through our acquisition of these vaccine [programs], we have expanded our portfolio to include three new major biodefense programs,” Wright said. The third program acquired is Avecia’s development of a third-generation rPA anthrax vaccine. Wright said the new programs have created a ‘‘critical mass” in his company’s portfolio and open new opportunities.

Kevin Price, Avecia’s senior vice president for vaccines said in a statement, ‘‘We are confident that the combined capabilities of Avecia and PharmAthene will significantly enhance the overall timeliness and opportunity for success of the development and commercialization programs.”