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VaxGen Rises on U.S. Plans to Buy Vaccine

March 13, 2004|From Bloomberg News

Shares of VaxGen Inc., which makes vaccines against potential bioterrorism agents, rose 6.8% on Friday in the wake of news that the U.S. would buy as many as 75 million doses of experimental anthrax vaccine.

The Department of Health and Human Services confirmed Friday that it was opening bidding on contracts for the production of the doses, which would be put into a stockpile to protect the public in the event of an anthrax attack.

Two firms, Brisbane, Calif.-based VaxGen and Britain's Avecia Group, already have government contracts to produce a certain amount of the experimental vaccine, and test it on people to see whether it is safe. First-stage testing is underway.

The government by law must open bidding for the rest of the production to any interested company, but their early involvement makes VaxGen and Avecia front-runners in consideration of the new contracts. Avecia is owned by closely held investment firms Investcorp and Cinven Group Ltd.

"VaxGen is well-positioned to be one of the contractors," said Sharon Seiler, an analyst at Punk, Ziegel & Co. in New York who owns VaxGen shares and rates them "market perform."

The National Institutes of Health has given VaxGen more than $100 million to develop the vaccine, called rPA102.

Shares of VaxGen closed Friday at $11.15, up 71 cents, on Nasdaq, after climbing to $12.42. They have more than quadrupled in the last 12 months.

The 2001 anthrax attacks by mail prompted calls for a next-generation vaccine that would require fewer injections than the current vaccine does and would cause few side effects. The vaccine program is funded by the federal program Project BioShield, which began last year.

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Associated Press was used in compiling this report.

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