Staying Alive

An AIDS vaccine should be our government's highest priority. So why is one researcher forced to seek funding from the War on Terrorism?

The antibodies produced in Francis' volunteers reacted specifically to a virus cultured in a Genentech lab. Given HIV's chameleonlike talent for genetically refashioning itself, critics say the vaccine had little real-world meaning. And when these artificially provoked HIV antibodies were mixed in a test tube with real-world HIV, the antibodies had no effect at all.

It was scientific skepticism about gp 120 that turned Francis into an entrepreneur: AIDS czar Fauci decided seven years ago that government money shouldn't be used to fund Phase 3 trials. Volunteers around the U.S. are expected to finish the AidsVax trial next summer. Even if the cause of vaccine science gains -- in the form of insights into vaccine technology, experience in conducting AIDS-related vaccine trials, behavioral data about the high-AIDS-risk groups who participated in the VaxGen trial -- the VaxGen investors lose.

They would have, that is, if Francis hadn't a month ago assembled an odd joint venture with, among other investors, a Korean tobacco company. ("If I can help wean them from the tobacco business, I'm glad to," Francis says.)

Three Korean companies will put up $120 million to build a "bio-reactor" factory in Inchon, Korea, and a smaller factory in South San Francisco. VaxGen will provide its personnel and expertise to the venture, but no cash. In exchange, VaxGen will receive a 44 percent interest worth $58 million -- enough of a stake in the commodities manufacture business to make the VaxGen investors if not whole, then certainly happier.

Official statements about the deal touted the potential role of the two plants in manufacturing VaxGen's proprietary AidsVax vaccine. But if the current trials should fail, the new factories will live on as freelance bio-reactors, producing other inventors' drugs much in the way Asian sewing factories make skirts for Calvin Klein. In this case, their client might be the Fight Against Terrorism.

"It's too early to discuss where we would fit in. But we are talking to appropriate government offices, the Office of Homeland Security, and have had mutual discussions of their needs and ours," says Francis. "What we want to do is capitalize on our skills. We know the diseases, we have remarkable laboratory skills, so I think we have something to offer."

Francis hopes to attract some of President Bush's massive anti-bioterror budget to help cover the more than $200 million VaxGen has so far invested in AIDS vaccine research.

"There are other potential biodefense vaccines that we might be interested in getting into and are in active discussion with the government right now," Francis says, adding that his experience as a former Centers for Disease Control epidemiologist could be enlisted in the fight against terror. "I have worked on those sorts of diseases. I worked on Ebola. Our current CEO, Lance Gordon, worked on smallpox. We're part of that small club that worked on these crazy bugs, we're part of that small club that has great familiarity with these diseases."

VaxGen's financial burden further lightened in January, when the Centers for Disease Control gave $8 million toward a study connected with the VaxGen vaccine trial. While a relatively small amount in the realm of medical research funding, the grant went a long way toward enhancing Francis' reputation as a financial sharpie; last month the Chicago Tribunereported that one of the Centers for Disease Control officials who participated in the grant-making decision became a VaxGen vice president three months later.


Francis has followed this unusual path to drug financing in part because vaccine research has so far been an afterthought in the world of AIDS science. Only 2 percent of the $20 billion the world spends annually on AIDS goes to vaccines, though there exists widespread scientific enthusiasm about the potential of the 30 or so vaccine prototypes under development. This year's National Institutes of Health budget includes $422 million for AIDS vaccine research -- a 24 percent increase over the previous year and nearly triple the fiscal year 1998 funding level. Bill Gates' charitable foundation has pledged millions more for AIDS vaccine research. But the fact remains that the increased funding represents only twice the amount it cost just to develop the VaxGen vaccine. The few vaccine activists who exist are the AIDS-world equivalent of highly specialized policy wonks, in part because vaccines make a lousy rallying flag compared to AIDS treatment. Who, after all, believes him- or herself to urgently need a vaccine? While the potential popularity of a 100-percent effective AIDS vaccine is indisputable -- wouldn't you take an FDA-approved HIV vaccine? -- the real-world economics of vaccine research are more subtle. When a successful vaccine does arrive, it's likely to be less than perfect: 40 percent effective is a theoretical possibility often bandied about. In that form, an AIDS vaccine might be a harder sell

Pharmaceutical companies have pushed vaccine research beyond the back burner. VaxGen spun off from Genentech seven years ago; Merck is one of the few larger pharmaceutical companies doing important AIDS vaccine research. The bad economics of the vaccine business are simple: Vaccine development is hugely expensive and risky. AidsVax is 17 years and $200 million in the making, and it is widely expected to produce only limited protection at best. A perfect AIDS vaccine wouldn't fit the profile of a successful consumer product in the way Coca Cola or protease inhibitors do; by definition, vaccines don't draw return customers. According to a report last year by the consulting firm McKinsey & Company, vaccine research is so expensive that even the possibility of mass inoculations aren't sufficiently attractive to lure pharmaceutical giants to make the necessary investments in research.

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