Biotech wins anti-pandemic vaccine grant

NEW YORK (CNNMoney.com) -- The biotech developer Vical got a shot in the arm - in the form of a federal grant - to ramp up its method of vaccine manufacturing to help head off the risk of a pandemic threat.

Vical Inc., (up $0.02 to $4.97, Charts) based in San Diego, said Tuesday that it was awarded a $6 million grant from the National Institutes of Health that will be used to increase the speed and scale of its vaccine manufacturing. A company spokesman said it makes vaccines by replicating DNA strands of viruses.

The company's stock rose 3 percent on the news.

The government wants vaccine makers to come up with a faster way to manufacture their products than with the cumbersome, time-consuming and traditional method of producing the vaccines inside chicken eggs. The feds fear that the current method, which takes months, would not allow the government to produce vast quantities of vaccine in the wake of a quickly-moving bird flu pandemic, if one ever happens.

Fast production is considered more important that stockpiling, because a vaccine cannot be matched to a pandemic until the exact flu strains are identified.

Vical's CEO Vijay Samant says he already has a better method in his RapidResponse manufacturing technology, and the grant will allow him to expand his capacity so he can make millions of doses in days instead of months.

"RapidResponse would make several million doses within several days," said Vical chief executive Vijay Samant in an interview with CNNMoney.com, referring to his DNA-based technology.

A faster production method could come in handy fighting seasonal flu as well as the threat of a bird flu pandemic or SARS, and it is seen as a positive step for Vical in breaking into the $15 billion vaccine industry.

"This is an exciting potential for Vical and this sets the stage for future programs," said Mark Monane, analyst for Needham & Company, noting that the biotech has proved itself worthy of a multi-million dollar grant, setting itself up for further business opportunities.

But Vical isn't alone in the market of faster production. Vical competes with GlaxoSmithKline (down $0.30 to $52.12, Charts), the recipient in 2006 of a much larger federal grant - $274 million - to ramp up the speed and scale of vaccine production.

Other companies, such as Sanofi-Aventis (Charts), Novartis (Charts) and VaxGen (Charts), have received federal grants to develop vaccines for bird flu, anthrax and other viruses with pandemic or bioterrorist potential.

Monane does not own Vical stock.

CORRECTION: An earlier version of this story contained an inaccurate description of Vical's technology based on misinformation from an outside spokesman for the company.