LOS ANGELES, Sept 23 (Reuters) - Shares of VaxGen Inc.(NasdaqNM:VXGN - News) soared as much as 30 percent on Monday on expectations it will win a government contract for research into vaccines against possible biological weapons like anthrax and smallpox, analysts said.
Shares of Hollis-Eden Pharmaceuticals Inc. (NasdaqNM:HEPH - News) also extended gains on expectations it will win a U.S. contract for its anti-radiation treatment.
Awarding of new research contracts under U.S. Project BioShield, a government initiative aimed at encouraging development of vaccines and drugs to combat potential bioterror agents, is expected to benefit both companies, analysts said.
A spokeswoman for VaxGen said anthrax vaccine contracts from the National Institutes of Health were set to be announced on Thursday, but last week’s East Coast hurricane may have delayed that schedule.
Project BioShield was established because diseases caused by potential bioterror agents occur so rarely in a natural setting that few, if any, companies are researching them.
Plans for the development and acquisition of vaccines against anthrax and smallpox suggest that VaxGen (NasdaqNM:VXGN - News) could win contracts worth $2.86 billion over the next 10 years, with a net present value of $813 million, Punk, Ziegel & Co. analyst Sharon Seiler said in a report on Monday.
She raised her price target on the stock to $11 from $8. Shares of VaxGen, based in Brisbane, California, rose $2.33 to $12.21 in afternoon trade on Nasdaq. Earlier, they rose as high as $12.80, their highest level since February. The shares had risen 13 percent on Monday.
Seiler said the only contractor other than VaxGen to have received funding under an earlier U.S. anthrax vaccine development contract was British contract manufacturer Avecia.
A smallpox vaccine made by Britain’s Acambis Plc (London:ACM.L - News) is now being stockpiled by the U.S.
Shares of San Diego-based Hollis-Eden (NasdaqNM:HEPH - News), which rose 10 percent on Monday, were up 3.5 percent at $34.41 on Nasdaq. The company’s stock has more than quintupled so far this year.
Hollis-Eden has said its Neumune drug would protect most of a population outside the immediate ring of a nuclear attack from death or hospitalization.
The drug cannot be tested in humans because it would be too dangerous to expose them to radiation, but it appears in a preclinical trial to reduce the loss of infection-fighting cells in monkeys.
Death by radiation is usually caused by a depletion of infection-fighting white blood cells. Neumune speeds up the body’s ability to produce new white blood cells to help replace those that are destroyed and also helps blood to clot, according to Hollis-Eden.
Jeffries & Co. analyst Adam Walsh has estimated that U.S. government stockpiling of the drug could generate more than $500 million in revenue for the company.
