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Canadian biotech firm signs flu-vaccine contracts for U.S. market

By Luke Timmerman
Seattle Times business reporter

Todd Patrick is president of ID Biomedical.

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Related stories Archive: Flu-vaccine shortage a boost for little-known biotech firm

But ID Biomedical, a vaccine company with operations in Canada and Bothell, nonetheless is charging ahead to establish itself as a long-term supplier to the U.S. market. It has locked up new contracts with U.S. distributors through the next decade worth an estimated $2.3 billion that would make it the No. 3 supplier to the United States behind Aventis Pasteur and Chiron, if its vaccine wins Food and Drug Administration approval.

That may help fix the U.S. vaccine shortage in the long term, but the short-term outlook is less clear. ID Biomedical President Todd Patrick, in an e-mail message, said his company was informed last week by the Canadian government that "they [Canadian officials] are out of vaccine and may want us to deliver those [1.2 million] doses to them and as a Canadian company, our Board believes we have an obligation to do what they want, and a contractual commitment."

ID Biomedical finds itself in the limelight after it had the good fortune of buying a flu-vaccine factory in Quebec, one of only two of its kind in North America, weeks before the United States lost half its supply. At the time, ID Biomedical was shipping 7 million doses to the Canadian government and had the 1.2 million doses left over because it overestimated demand.

A shortage has not been officially announced north of the border, but demand for flu vaccine there has reportedly increased as Americans have flocked there for shots. Health Canada officials are talking with the U.S. Department of Health and Human Services over what to do with the remaining 1.2 million doses, Patrick said.

This season's shortage was created in early October, when the United States lost 46 million doses because of contamination at a Chiron factory in Liverpool, England.

ID Biomedical Founded: 1991 Employees: 450, including 90 in Bothell Headquarters: Vancouver, B.C. What it does locally: Research, development and small-scale manufacturing of next-generation vaccines against flu, strep throat and bioterrorism agents Top executives: Anthony Holler (chief executive officer in Vancouver) and Todd Patrick (president in Bothell) Ticker: IDBE (Nasdaq) Source: ID Biomedical

The U.S. Department of Health and Human Services said later in October that it had identified 5 million doses made by GlaxoSmithKline in Germany and by ID Biomedical that could potentially be imported.

Weeks later, FDA officials inspected ID Biomedical's Canadian factory to determine whether the vaccine was acceptable. The vaccine, Fluviral, has been approved in Canada for eight years but hasn't cleared regulatory hurdles in the United States. The FDA has not announced whether the vaccine can be imported this season.

More importantly for the future of U.S. vaccine supplies, ID Biomedical says it believes it can help solve the long-term problem. It has plans in motion to quadruple its flu-vaccine production capacity, to 50 million doses a year, by 2007. The company has said it hopes to win an FDA license to market its vaccine as early as the next flu season or by 2007-08 at the latest.

The new long-term supply contracts are expected to secure ID Biomedical's future as a vaccine supplier as long as FDA gives its approval. The contracts call for the company to pump out up to 38 million doses of flu vaccine a year to U.S. distributors, over at least eight years, for an estimated $2.3 billion based on 4 percent annual price increases. If the vaccine can win accelerated FDA approval, Patrick said the company should be able to supply 10 million to 15 million doses to the United States next flu season, 20 million to 25 million doses for the following season and 38 million or more the remaining years.

The company also has commitments to supply Canada with up to 12 million doses a year through 2011.

"These transactions will ensure a potentially significant revenue stream for years to come," Patrick said in a statement.

The company plans to elaborate on what it may do with the 1.2 million doses and describe the new long-term U.S. supply contracts in a public conference call early today.

ID Biomedical, which does research and development of next-generation vaccines at a branch in Bothell, has signed the contracts with three of the largest flu-vaccine wholesalers in the United States: Henry Schein, AmerisourceBergen and McKesson. The deals call for all three to purchase vaccines starting when FDA approval is granted and running through the 2014-15 flu season.

The agreements do not immediately solve the shortage in the United States, which is still at least 40 million doses short of meeting demand this year.

Currently, the country's main suppliers are Aventis Pasteur, which is providing 58 million doses, and MedImmune, which is providing 3 million doses of its nasal-spray flu vaccine.

David Miller, president of Biotech Monthly, an industry newsletter in Seattle, said the long-term contracts are a significant milestone for ID Biomedical. But the possibility that the company's current leftover doses may stay in Canada are a blow to the U.S. public-health system, added Miller, who owns shares in the company.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

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