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New Smallpox Vaccine Contract: Five Years in the Making

On December 13, 2002, fifteen months after the 9/11 terrorist attacks, President George W. Bush went to Room 450 of the Dwight D. Eisenhower Executive Office Building next door to the White House and said:

"We know that smallpox still exists in laboratories, and we believe that regimes hostile to the United States may possess this dangerous virus...Our government has no information that a smallpox attack is imminent. Yet it is prudent to prepare for the possibility..."(1)

Smallpox, a highly infectious disease, kills about one-third of the people it infects. It was declared eradicated in 1980, but since 9/11 there has been concern that terrorists might acquire the smallpox virus and purposely release it.

In Denmark, the biopharmaceutical company Bavarian Nordic was ahead of its time in smallpox vaccine development. The company had been working since 1999, long before 9/11, to develop its advanced, third-generation smallpox vaccine called Imvamune(R), an injected vaccine designed to be fast-acting and safe for everyone, regardless of their health condition.

The smallpox vaccine stockpiled by the U.S government, continues to be administered to the military, laboratory workers and some health care professionals but it is not recommended for as much as 25 percent of the population - the young, pregnant women, sufferers from eczema, and persons with immune-compromised systems caused by HIV/AIDS and other conditions - due to side effects and complications caused by the live virus in the vaccine.

Bavarian Nordic's new, patented vaccine, Imvamune(R) is based on the Modified Vaccinia Ankara (MVA) virus. In contrast to stockpiled vaccines, MVA is a live virus but does not replicate in human cells, so the potential for adverse side effects is greatly diminished. This potential - as a new safe and effective smallpox vaccine - attracted significant interest and led to the creation of a government program in 200 2 which then resulted in the award of development contracts for Bavarian Nordic from the National Institute of Allergy and Infectious Disease (NIAID).

When the Department of Health and Human Services (HHS) moved in 2005 to begin a public tender process to purchase an MVA-based smallpox vaccine, Bavarian Nordic was quick to respond. This week, after two years of detailed review, HHS announced that it was awarding a contract to Bavarian Nordic for the manufacture and delivery of Imvamune(R) worth an initial $500 million with contract options that, if exercised, would extend the value to $1.6 billion.

The award highlights a success for the U.S. government's biodefense preparedness programs. This contract is the first time that HHS has utilized all of its existing and newly-acquired payment authorities (Advance Payment, Milestone Advance Payment, and Performance Based Payment) as granted under the original Bioshield legislation (2004), the recently-enacted Pandemic All Hazards Preparedness Act (2006) and the FAR subpart 32.10. Under the contract, Bavarian Nordic will receive $150 million in payments of which $125 million in advance payments will be paid out over the first two years of the contract as milestones are achieved, and $25 million paid during the licensure process.

In addition to its MVA-based smallpox vaccine, Bavarian Nordic is also active in a number of other fields including cancer immunotherapy with a subsidiary in California, BN Immunotherapeutics, Inc., to research and develop MVA-based vaccines against cancer.


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