Feds woo, then jilt, biotech firm over radiation drug

WASHINGTON — At first, Richard Hollis thought his firm would be a "poster child" for the government's BioShield program to stockpile medical antidotes in case terrorists attack with nuclear, biological or chemical weapons.

Hollis-Eden Pharmaceuticals had a breakthrough drug that promised to keep some people alive after strong doses of radiation and the government said it would provide the market.

But after nearly six years of research and an investment of more than $85 million, Hollis, the drug maker's chairman and CEO, now calls the San Diego company a "poster child" for everything that's wrong with BioShield.

Last week, the Department of Health and Human Services rejected its drug for failing to meet "technical requirements." The agency said it would start a fresh search for another treatment of radiation poisoning. HHS declined to elaborate further.

Congressional committees, disturbed by the development, are expected to conduct hearings soon examining the procurement and the entire BioShield program, which also recently halted an $877.5 million contract for a second-generation anthrax vaccine and another pending award for a third-generation anthrax vaccine.

The latest decision left HHS, the nation's lead agency for emergency preparedness, with no immediate prospect of a drug that might limit fatalities in a radiological or nuclear attack. It also sheds light on the starts and stops that have plagued the BioShield program and threatens to shrink participation from the biotech industry.

Researchers at the Armed Forces Radiobiology Research Institute first approached Hollis-Eden in the summer of 2001 about joining in development of the drug for revitalizing bone marrow, the body tissue most vulnerable to radiation. Hollis said the Sept. 11 terror attacks soon persuaded him there might be a market.

In animal tests, the drug not only had boosted production of white blood cells that fight infection, but also increased platelets that protect against unchecked bleeding.

In early 2003, Hollis attended a conference of top officers of biotech firms where President Bush and then-Commissioner Mark McClellan of the Food and Drug Administration described the government's plan to create BioShield to woo private investors into footing the heavy costs of developing medicines for victims of weapons of mass destruction.

Seeing the Pentagon's interest, Hollis-Eden began the rigorous and expensive testing needed to bring it to market. In early 2004, Hollis said, "HHS told us that when BioShield was approved by Congress, they would give us a contract."

After Congress created BioShield in June 2004, Hollis said, HHS officials told the company it must file an Investigational New Drug application with the FDA.

And agency officials declined to divulge how many doses they ultimately would buy, saying the Department of Homeland Security first must complete a threat assessment on the risk of a radiological "dirty bomb" or nuclear attack, he said.

HHS issued a solicitation for bids in late 2005, but it sought only enough medicine to treat 100,000 people, too little for the company to recover its development costs. Hollis said HHS assured him this was an "initial" purchase.

The agency also dropped the requirement that the drug boost platelets, a change that opened the door to competitors. Hollis said the revision seemed inconsistent with the FDA's position that a new radiation drug had to boost people's survival prospects because people need platelets to stay alive.

On Tuesday, HHS officials told the company that a major issue was that tests showed the drug to be effective only if it is administered within four hours of radiation exposure, a company spokesman said. That would leave emergency personnel little time to give the drug.

The company argues the drug could be deployed in advance, would be an aid against a radioactive "dirty bomb" and could be given to people fleeing the blast or a plume of radioactive fallout who wouldn't know for sure whether they were exposed to radiation.

Hollis said the National Institute for Allergies and Infectious Diseases has set up a program that has distributed $94 million in grants for anti-radiation research over the last two years.

Now, Hollis said, Congress is moving to fund research on new BioShield drugs.

"The only companies that are going to be willing to participate in this today," he said, "are going to be companies interested in getting grants from the government. They're not going to use investor money."