New York

Biotechnology companies — battling for survival after three years of waning investment — are turning to the US government's war on bioterrorism as a source of much-needed revenue.

The companies are eyeing initiatives such as Project BioShield, which will provide an estimated $6 billion over ten years for the development of drugs and vaccines against agents such as anthrax and smallpox.

“It's an opportunity created by fear,” says Charles Cantor, a biodefence expert and chief scientific officer at Sequenom, a genomics company based in San Diego, California.

VaxGen of Brisbane, California, suffered a blow to its long-standing objective of developing an AIDS vaccine in February, when it announced disappointing clinical-trial results for such a vaccine (see Nature 421, 877; 200310.1038/421877b). But last October, the company was awarded $13.6 million by the National Institute of Allergy and Infectious Diseases for trials of a vaccine against anthrax. “You have to shift with the times,” says Lance Ignon, a company spokesman.

SIGA Technologies of Corvallis, Oregon, is hoping that the government will support the development of its prototype vaccines, which use harmless bacteria that are genetically engineered to produce anthrax, smallpox or plague molecules to stimulate an immune response. The company hopes to take advantage of a change made in June last year to the Food and Drug Administration's regulations. Under the new rules, vaccines against bioweapons can be approved on the basis of animal experiments alone.

Apart from generating revenue, bioterrorism projects are helping to shore up investors' confidence in some biotechnology stocks. Last month, shares in Human Genome Sciences of Rockville, Maryland, went up by about a quarter when the company announced the success of an antibody-based drug for anthrax in trials using rabbits and monkeys.

Industry analysts warn that biodefence research is unlikely to fuel a long-term revival in biotechnology investment. “I don't think it'll pull them out of a hole,” says analyst Stephen Burrill of Burrill and Co., a San Francisco investment bank that specializes in biotechnology.

Part of the problem is that there is no sustainable market for biodefence drugs and vaccines after the government has stockpiled them, says Jeff Bird of venture-capital firm Sutter Hill Ventures in Palo Alto, California. And with many companies plumping for drugs and vaccines against the same diseases, they will have to compete with each other to supply the stocks.