Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News

The House approved a budget for Homeland Security that is $1.1 billion below FY ’11 spending.

The mass murder of 2,977 people on American soil by al-Qaeda terrorists forever stained September 11, 2001, as this generation’s day of infamy. Ten years later the federal government’s 9/11-inspired biodefense effort faces its greatest funding challenge.

Biodefense is among federal spending priorities coming under increased scrutiny as Congress and President Barack Obama scramble to end trillion-dollar annual deficits and shrink the $14.7 billion-and-climbing national debt. The result could be a second year of spending cuts that are more sizeable than those made earlier this year.

That threat is not evident from the numbers gathered by Crystal Franco, associate, and Tara Kirk Sell, analyst, at the Center for Biosecurity in their most recent annual study of federal biodefense funding. Writing in Biosecurity and Bioterrorism, a sister publication of GEN published by Mary Ann Liebert, Inc., Franco and Sell note that the federal budget for FY 2012 includes $6.42 billion for civilian biodefense. That would be up a healthy 17% from the $5.5 billion estimated for FY 2011.

As Franco and Sell state in their report, however, the FY 2012 numbers are likely overestimated because federal agencies have consolidated and combined several programs under larger budget line item headings, for example, combining biodefense with chemical defense.

Also overestimated was the figure for FY ’11, since that estimate was reached before details of the April 8 budget agreement, or “continuing resolution,” by President Obama and Congress became known. The deal, designed to cut $38 billion in federal spending, sliced $300 million overall from biodefense spending for the U.S. Department of Health and Human Services (HHS), Franco told GEN.

Franco said that while a few programs saw some additional money, three programs bore the brunt of the cuts:

  • $300 million less for NIH biodefense infectious disease research through NIAID, down from $1.3 billion in FY 2010.
  •  $85 million less in grants for state and local public health preparedness programs, the lowest amount in a decade. Last month the Centers for Disease Control and Prevention announced that $613 million in grants was available this year, down from $698 million in FY 2010.
  • $60 million less for Hospital Preparedness Program grants, for which $352.6 million was made available in FY 2011, down from $390.5 million a year earlier.

What to Expect in Funding

Even more cuts may be coming for FY ’12. In June, the House of Representatives approved a budget for the U.S. Department of Homeland Security that was $3 billion below what President Obama proposed, and $1.1 billion below FY ’11 spending. A research program focused on biological threats was among seven programs funded by the bill, for which the House approved $807 million. Homeland Security’s science and technology budget appropriation, which includes biodefense programs, is proposed to be cut in half.

“If that’s any indication, it doesn’t look like biodefense will be getting additional money in FY 2012,” Franco said.

She added that the extent of cuts for FY ’12 will also depend on whether Congress can reauthorize funding at FY ’11 levels for programs created by the Project BioShield Act of 2004 and Pandemic and All-Hazards Preparedness Act of 2006 (PAHPA). Project BioShield created a Special Reserve Fund to purchase for the Strategic National Stockpile medical countermeasures against such diseases as anthrax, botulism, and smallpox. Funding for the stockpile stands at $523.5 million in the current fiscal year, down 12% ($72.5 million) from FY 2010.

PAHPA established the Biodefense Advanced Research and Development Authority (BARDA) within the HHS. BARDA aids developers of medical countermeasures to biological, chemical, and radiological threats by funding R&D expenses.

Rep. Mike J. Rogers (R-MI), who chairs the House of Representatives’ Intelligence Committee, has introduced a bill to reauthorize funding for BARDA and the special reserve fund at their FY ’11 levels. The reserve fund would be authorized at up to a total $2.8 billion, to be spent between FY ’14 and FY ’18. BARDA would be authorized at up to $415 million annually between FY ’12 and FY ’16.

“That’s key to ensuring, or at least giving biodefense funding, a better chance over the next few years. It is encouraging that Congress is seeking to fund BARDA and BioShield separately, giving them their own funding streams, and also limit the amount of BioShield funds that can be transferred out for other purposes,” Franco said.

While BioShield’s reserve fund began with $5.6 billion in FY 2004, money was transferred to homeland security three times: $885 million in FY 2004 and $2.5 billion in FY ’05 for use through FY 2008; and $2.175 billion in FY ’09, usable through FY 2013.

Rogers’ bill—the Pandemic All-Hazards Preparedness Act Reauthorization (HR 2405)—would also expand the role of HHS’ Assistant Secretary for Preparedness and Response (ASPR), a position created by PAHPA; reauthorize public health preparedness programs; and enhance FDA’s role in reviewing medical countermeasures.

On July 28, the measure unanimously passed the House Committee on Energy and Commerce, where Rogers is senior member—no mean feat in this era of hyper-partisan government. It was reported out to the full House, where it awaits action. If as expected the House passes the measure, the Senate is expected to take up a similar bill.

Trends for the Industry

Washington will likely cut down on the number of companies it partners with and gives grants to in biodefense, predicts Chris Garabedian, AVI’s president and CEO. He told GEN that he believes government will favor those that have more experience with biodefense contracts.

Another trend he’s noticed relates to how contracts are structured. “So we see a pattern here where it starts with the rapid response exercise, then there’s funding to do the preclinical animal feasibility, then there’s funding to get us to an open IND, and then a big contract award comes for full NDA filing,” Garabedian explained.

Part of the U.S. Department of Defense (DoD), the Defense Threat Reduction Agency’s (DTRA’s) Joint Project Manager-Transformational Medical Technologies conducted a rapid-response exercise completed by AVI in June. Collaborating with the Naval Medical Research Center, AVI conceived, designed, and manufactured two new RNA-based drug candidates in 18 days: one against a gram negative bacterial target, the other against a viral target.

This rapid-response exercise was the most involved of four completed by AVI since it produced an oligonucleotide targeting West Nile virus for the Wisconsin Zoo, saving its remaining penguins after a few began to die from the disease. The first three exercises involved producing drugs targeting ebola virus in five days, H1N1 influenza virus in seven, and Dengue virus in 11.

The Dengue exercise has sparked interest in possible feasibility work for AVI’s drug candidate in animals and screening of various compounds. AVI hopes that will blossom into full FDA licensure agreement, just as the influenza exercise led to a contract worth up to $18 million awarded last year by DTRA to develop the company’s drug candidate AVI-7100, following a $4 million contract toward preclinical evaluation of AVI-7100 against H1N1, H5N1 (avian flu), and drug-resistant H1N1 and H3N2 flu.

“The rapid response exercises that we do are typically to produce small-scale quantities that can be used in preclinical animal testing,” Garabedian explained. “There’s no reason that we wouldn’t be able to produce those small scales for what we would call an emergency use IND. And so, if there was a tiny outbreak, and we needed to treat a handful of patients, that’s something that we would potentially appeal to the FDA, and say, based on the activity, or the animal work we’ve done, will you allow us to dose this in humans?”

DoD’s Chemical and Biological Defense Program, through the U.S. Army Space and Missile Defense Command, last year awarded AVI BioPharma up to $291 million over six years toward development of its hemorrhagic fever therapeutics: AVI-6002 for Ebola and AVI-6003 for Marburg virus. It’s the largest by far of more than $300 million in contracts awarded to the company for its programs, a number that could double.

“We have an RFP [request for proposals] that’s being considered for a pandemic flu prophylaxis program that will help us get through FDA licensure and that would be in excess of $300 million if we were to get that contract awarded,” Garabedian pointed out.

Leadership and Investment

HHS accounts for the greatest spending on civilian biodefense initiatives, with nearly $4.5 billion budgeted for FY 2012, up from $3.85 billion estimated for FY 2011. Next highest is the DoD with $1.03 billion, up from an estimated $733.7 million this year; then homeland security at $511.4 million, up from an estimated $487.1 million. Additional civilian biodefense spending is carried out by the NSF, the EPA, and the departments of agriculture, commerce, and state.

These eight agencies cited by Franco and Sell are among more than 12 federal agencies with biodefense responsibilities, according to the U.S. Government Accountability Office (GAO). Whatever the number, the piecemeal nature of the nation’s biodefense effort was faulted earlier this year by the agency.

“While some high-level biodefense strategies have been developed, there is no broad, integrated national strategy that encompasses all stakeholders with biodefense responsibilities that can be used to guide the systematic identification of risk, assessment of resources needed to address those risks, and the prioritization and allocation of investment across the entire biodefense enterprise,” GAO concluded. “Further, neither the Office of Management and Budget nor the federal agencies account for biodefense spending across the entire federal government. As a result, the federal government does not know how much is being spent on this critical national security priority.”

The closest GAO came to answering how much is being spent was to offer, with attribution only to “a private sector analysis,” the $6.48 billion figure cited by Franco and Sell as the estimated total spent on civilian biodefense efforts by eight federal agencies in FY 2011, according to last year’s edition of their report, also published in Biosecurity and Bioterrorism. Franco and Sell lowered that 2011 estimate to $5.5 billion in this year’s report because of their inability to get full details of biodefense programs affected by the April 2011 continuing resolution.

“Because responsibilities and resources are dispersed across a number of federal agencies, the nation’s biodefense enterprise could benefit from designated leadership—a focal point—that provides leadership for the interagency community,” GAO stated in its report.

HHS says it is working to become that focal point. In testimony July 21 before the House Energy and Commerce Committee’s subcommittee on health, the agency’s ASPR Nicole Lurie, M.D., cited HHS’ 2009 release of the National Health Security Strategy (NHSS). She pointed to one recommendation in the review that HHS will undertake, having committed $50 million in FY ’11 to create a Concept Acceleration Program at NIH’s NIAID.

She said the program will “work with partner agencies, academic researchers, biotechnology companies, and large pharmaceutical companies to identify promising scientific discoveries and expedite their transformation into practical, usable products.” HHS will also create a private not-for-profit corporation that would act as a strategic investor to promising biodefense companies, Dr. Lurie added.

Fostering business investment in bioterror projects is welcome, though the acceleration program and any new initiatives face an uphill climb as Congress hunkers down on new spending. Companies are wise not to plan for it happening soon.

Even existing federal programs such as Project BioShield have not been funded to the extent originally envisioned. Companies looking to fund medical countermeasures are better off pursuing funding through existing programs or better still by raising their own funds.

Biodefense Contracts

BARDA and other agencies involved in funding companies have kept busy. BARDA’s most recent contract was signed with GlaxoSmithKline on September 7. The firm received an initial $38.5 million from the authority to support ongoing clinical development of its boron-based Gram-negative systemic antibiotic called GSK2251052 for both bioterrorism and public health applications. The contract is for an initial two years but could be extended for a further two years, with an additional $55.5 million in funding. BARDA will also provide technical support for the program.

Last month, the authority awarded two contracts for drugs to treat gastrointestinal tract injuries associated with acute radiation syndrome. Avaxia won a two-year, $2.9 million contract and Apogee Biotechnology a two-year, $2 million contract.

In March, the authority inked a five-year, $231 million deal with Australian firm Biota Scientific Management for CS-8958, a long-acting single-dose antiviral drug for use in the U.S. A month earlier, Chimerix won a BARDA contract covering its broad-spectrum antiviral drug candidate CMX001 as a countermeasure for smallpox. Chimerix was approved for $24.8 million during the first year, with the total contract valued at $81.1 million.

Chimerix hopes CMX001 will be the second antiviral approved for the Strategic National Stockpile when BARDA seeks competitive proposals. The company touched off a U.S. Government Accountability Office review by protesting a sole-source BARDA contract to deliver two million courses of the first antiviral approved, SIGA Technologies’ ST-246®.

SIGA won a base five-year contract in May worth $433 million, with the value climbing to $2.8 billion based on options that included delivery of up to 12 million additional courses of ST-246. After Chimerix protested, BARDA dropped the 12-million-course option and a stipulation that SIGA produce 300,000 courses using HHS funds awarded earlier but kept the base number of courses at 1.7 million. SIGA also faces a legal challenge over ownership of ST-246 from PharmAthene.

PharmAthene won a biodefense award last month from the Department of Defense. The $5.7 million contract covers development of an advanced expression system for production of its nerve agent medical countermeasure.

Alex Philippidis is senior news editor at Genetic Engineering & Biotechnology News.

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