WSJ Blogs

Venture Capital Dispatch

• April 27, 2009, 3:23 PM ET

By Brian Gormley

Venture-backed start-ups are readying swine-flu vaccines in case the recent outbreak escalates into a larger emergency.

The Department of Health and Human Services declared an emergency Sunday after 20 swine influenza A-virus infections were confirmed in the U.S., including eight in New York City and seven in California. U.S. cases have been mild, but some biotech start-ups are set to respond if officials decide existing vaccines aren’t enough.

Over the weekend, Vaxart Inc. secured the gene sequence for the swine-flu virus from the Centers for Disease Control and Prevention, said Sean Tucker, vice president of research for the San Francisco company, whose investors include Bay Partners and Quantum Technology Partners. The DNA sequence, pulled from a CDC database, will enable Vaxart to begin developing a vaccine that it will be ready to test in animals in four to six weeks.

The CDC said Sunday that it is working with the Food and Drug Administration and the National Institutes of Health to develop a vaccine precursor that could be used to make a swine-flu vaccine. The antigens that trigger a protective immune response in today’s vaccines, however, are grown in eggs over a period of six months or more. If the swine flu spreads rapidly, the government may turn to companies whose experimental technologies promise to yield large batches of vaccines more quickly. This could put start-ups like Vaxart in line to lock up lucrative contracts to supplement the government’s store of vaccines.

Vaxart makes vaccines by combining an antigen – in this case, the swine-flu DNA –  with a non-replicating viral vector and an adjuvant that boosts the immune response. This “modular” approach is about two months faster than egg or cell-culture systems, said Chief Executive Mark Backer. If swine flu becomes a large problem, U.S. regulators may permit Vaxart and others to move rapidly from animal research to human studies, he said.

Vaxart, which is also developing seasonal and avian-flu vaccines, may slow or suspend those programs if the swine flu affords it an opportunity to move its products more rapidly into human studies, Backer said.

Another company taking aim at seasonal and avian flu, VaxInnate Corp., plans to use the spate of swine-flu infections to see how rapidly it can come up with a vaccine candidate, said CEO Alan R. Shaw. The company, funded by CHL Medical Partners, HealthCare Ventures, and others, uses molecular biology to produce vaccines in e. coli instead of eggs or cell culture, which enables it produce a product in about six weeks. VaxInnate, based in Cranbury, N.J., already has tested a vaccine in clinical trials for Solomon Islands flu, which is similar to the swine flu, Shaw said.

While swine flu may be quickly contained, the government will need speedier vaccine-production technologies to manage future influenza outbreaks. “They’re going to need a tool like this sooner or later,” Shaw said. “This will happen over and over, it’s just a matter of how frequently.” 

Not all venture-funded concerns are jumping at swine flu. Vaxin Inc., a Birmingham, Ala., company funded by Greer Capital Advisors, and others, will not shift course to target what so far has been manageable problem in the U.S., said CEO William Enright. Instead, Enright intends to continue to concentrate on its intra-nasal vaccines for two more-established threats: seasonal and avian flu, he said.

“Vaxin is a pretty small company,” Enright said. “We need to stay focused on moving toward the marketplace.”