VaxGen Biopharmaceutical Manufacturing Plant, San Francisco, California, USA

VaxGen Inc. has opened a new biopharmaceutical manufacturing facility in South San Francisco, California, US in June 2003. The facility has 17,000ft² of floor space for the manufacture of protein therapeutics, vaccines and monoclonal antibodies, using recombinant bacterial fermentation and mammalian cell cultures.

The plant is situated adjacent to an existing VaxGen research and development facility and was to be used initially to manufacture VaxGen's AIDS and anthrax vaccine candidates.

The company was awarded a US government contract for the development of a recombinant anthrax vaccine; 75 million doses of the vaccine would have been worth around $877m in revenue to the company. Problems with the stability of the vaccine led to the Food and Drug Administration (FDA) cancelling clinical trials and finally the government contract from Project Bioshield was cancelled in December 2006.

This has meant that the company shares have plunged in value from around $16 to just over $2. The company has also had problems with the AIDS vaccine it was developing and this has also proved to be a non-starter.

One ray of hope is VaxGen's sale of its Celltrion shares in January 2007, which has given the company cash reserves of $96.6m. The shares were worth around $51.3m.

The latest plan for VaxGen, as of December 2007, is to merge with Raven Biotechnologies, a private company working in monoclonal antibodies. Raven already has a deal with Wyeth to develop certain applications for the commercial market.

CONTRACTORS AND FINANCE

The San Francisco facility, which as of 2007 is still owned by VaxGen, was constructed and outfitted by Fluor Enterprises Inc. The facility and installations cost $11m. Validation was completed in early 2004. Some of the facility validation was carried out by VaxGen QA, although Fluor was the main validation contractor responsible for the majority of utility and process systems.

FACILITIES AT THE NEW PLANT

The new biologics manufacturing plant was designed to manufacture biopharmaceuticals under cGMP. The bioreactor suites include 1,000l, 200l and 20l capacities as well as downstream processing, filtration and purification facilities. There is also space for two more 1,000l reactors. The bioreactor suites occupy some 17,000ft², while an additional 30,000ft² is available to support production and quality control operations and also to allow for additional expansion of bioreactor capacity when it is required.

ANTHRAX VACCINE

The facility's first product would have been its anthrax vaccine candidate. By the end of 2007 the first 25 million doses of vaccine for the stockpile were supposed to be delivered.

But as the company was testing the vaccine it was noticed that it was being broken down too rapidly. This was because of an unexpected interaction with an adjuvant, which was meant to increase the vaccine's effectiveness. The contract with health and human sciences has now been completely and irrevocably cancelled.

SMALLPOX VACCINE AND AIDS VACCINE PRODUCTION

VaxGen also had an important candidate for an AIDS vaccine, a protein, gp120, which had problems in Phase III clinical trials. This trial eventually failed and the vaccine provided no protection. In addition, VaxGen also acquired the rights from Chemo-Sero-Therapeutic Research Institute (Kaketsuken), a Japanese company, for a safer smallpox vaccine. The smallpox vaccines could still be produced at the San Francisco plant.

JOINT VENTURE PARTNERS

The development of the new facility was part of a major joint venture that included Celltrion Inc. Celltrion is a partnership between VaxGen and South Korean Nexol Corp, Korea Tobacco & Ginseng corporation (KT&G) and J Stephen and Co Ventures Ltd. The joint venture included a much larger plant for biologics manufacture, which was completed in Incheon, South Korea in 2006. The whole venture attracted an investment of $120m.

The San Francisco facility is operated solely by VaxGen for the development and production of its own products and has also been used to train Celltrion personnel in US cGMP biologics manufacture as part of a technology transfer agreement with Celltrion.

The VaxGen contribution toward the joint venture included manufacturing technology originally developed at Genentech Inc and improved at VaxGen and also expertise and training. VaxGen has not had to contribute any cash or equity to the project. However, the company sold its Celltrion shares for over $50m.

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