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Return to Virginia Business - December 2001

Germ Threat
Virginia biotech firms get a boost helping defend Americans against terrorist biowarfare. They are searching for new detection systems and antidotes. But will they have enough resources to succeed?

by Paula C. Squires

The sign on the laboratory door is hard to miss. Bubblegum pink and taped at eye-level it warns, "Experiment in progress: please use other door." Dr. Ken Alibek, a swarthy, soft-spoken man with distinctive Asiatic features, waves a visitor through. On a counter sit assays of vacinnea, a virus similar to deadly smallpox. "They aren’t infectious," he says reassuringly. "They won’t hurt you."

Few people know more about lethal germs than Alibek. In his earlier life, visitors would never be allowed in his labs. The former Soviet army colonel was second in command of Moscow’s vast and secret biological weapons program. His job: militarize lethal microbes for use as battle weapons. Once, he was ordered to manufacture enough anthrax to fill the warheads carried by giant SS-18 intercontinental ballistic missiles. Within 30 minutes of launch, they could strike major U. S. cities and kill millions of Americans. He defected after the Soviet government collapsed in 1991, fled to Washington and stunned the U.S. intelligence community with his accounts of the size and sophistication of the Soviet program.

Today the native Kazakh, whose grandfather was a Communist revolutionary, is president of Hadron Advanced Biosystems Inc. in Manassas, a small, biotechnology company. After years of trying to stimulate interest in his research, which addressed a seemingly remote threat, Alibek suddenly finds himself cast as the prophet of bioterrorism.

These days, he manages a team of 30 scientists who are developing a universal antidote of sorts to the world’s 70 known biowarfare agents, including anthrax. New medical defenses against pathogens are in tremendous demand as America investigates outbreaks of anthrax occurring over the past two months. The toll so far: four dead and 22 infected in attacks believed linked to the Sept. 11 jetliner strikes that killed 5,000.

Alibek’s team is trying to develop an immune-boosting spray that could be inhaled at the first sign of a biological assault. The remedy would jump-start the respiratory system’s mucous membranes to fight off infections caused by biological agents. The spray would be like sending in extra troops until germ-specific treatments could be applied. Alibek says tests on laboratory animals, including those exposed to anthrax, have been promising. "We are sure we can develop such a product."

Alibek’s biodefense company is one of several in Virginia thrust into the spotlight by circumstances that were beyond most peoples’ imaginations only a few months ago. The anthrax attacks have moved the biowarfare threat from the realm of suspense novels to terrifying reality. As national priorities shift, a number of the state’s 180 biotech firms stand to benefit. Not only are Virginia’s biowarriors developing new medical defenses, they are offering safety assessments and devising ways to detect infectious pathogens everywhere from corporate mailrooms to public sports arenas. It doesn’t hurt that Virginia’s $2.5 billion biotech industry and its 18,000 workers are located in close proximity to defense, intelligence and law enforcement agencies in the Washington area, where federal officials are leading the counterattack against terrorism.

Until recently, the biotechnology sector had languished behind other high-tech areas such as information technology and telecommunications. It recently got a boost from new developments in stem cell research but with the events that began on Sept. 11, a number of Virginia companies are poised to take off. Huge drug companies with much greater political and marketing clout — such as Bayer, which makes the anti-anthrax drug Cipro — are ramping up to meet the threat. Yet industry analysts say that small size may actually be an advantage. The pharmaceutical giants are geared to selling drugs to mass markets over long periods of time; little guys need sell only one customer — the U.S. government — for a crash program.

Virginia’s scrappy biofirms do need financial help. Alibek, for instance, has built Advanced Biosystems, a subsidiary of Hadron Inc., on $12 million in federal grants. Now he is seeking $50 to $60 million in private investor dollars to bring his immune-boosting research to clinical trials in 24 months. Such a sum would be chicken feed to huge drug makers such as Pfizer or Merck.

Yet, since terrorist attacks have occurred sporadically so far, making big vats of antidotes at once is less appealing to the big companies that prefer steady production. Plus, Hadron would likely have one customer — the U.S. government — and wouldn’t have the wiggle room on pricing that big companies prefer.

By getting a portion of the new government funding for homeland defense, Virginia’s biotechnology firms could face an unexpected business windfall. "Virginia has a large number of defense contractors who have been working in this field for a number of years," says Mark Herzog, executive director of the Virginia Biotechnology Association. "Since Sept. 11 the number has increased dramatically."

The association, along with Virginia’s Center for Innovative Technology, is creating a new Virginia BioDefense Industry Council that will serve as a clearinghouse for firms working on devices, vaccines and other products and services for the war against bioterrorism. A special conference Dec. 13 at the Center for Innovative Technology in Herndon also will shine the spotlight on the biodefense sector. "We’ll be trying to get our hands on how many companies are involved and what the investment is," Herzog says.

Thanks in part to its closeness to Washington and Virginia’s own strong defense industry sector, the state is "in a very positive position to assist the national security effort," observes Carl Feldbaum, president of the national Biotechnology Industry Organization in Washington. Overall, he expects the country’s 1,273 biotechnology companies with a market capitalization of $353 billion to be uniquely positioned to help the government counter biological threats and to continue as one of the drivers of the new economy. "With its strong university science base and entrepreneurial spirit, I view Virginia as a particular comer, if you will, in what is coming to be a race among the states for fostering a robust new industry."

Business has already picked up for a unit of Versar Inc. Since the anthrax scare began, employees at the Springfield-based company have been working seven days a week testing corporate mailrooms for biological agents. In the past, the publicly held professional services firm — whose business has slumped recently in other areas — worked primarily for government and military agencies. Banks, insurance companies and media outlets are calling for anthrax tests that can cost anywhere from $15,000 to $25,000. "There’s a great demand for initial screening and advice on organizing mailrooms, but it’s quickly moving over to other types of services," says James C. Dobbs, senior vice president. Fear of another terrorist attack has companies scrambling for vulnerability assessments, continuity planning and protective equipment for people who work in mailrooms or other high-risk areas.

Investors have been busy as well buying up stock in biodefense companies, particularly those that expect increased orders from U.S. government agencies for defense and detection. The day before the terrorist attack, Versar’s stock closed at $2.10. By October 30, the price shot to $7 a share and was trading in the $4.50 range in November on the American Stock Exchange. Stock prices rose also for Hadron Inc. The week before Sept. 11, the share price range was $1.16 to $1.40, and now the price is hovering at just under $3.

Analysts are high on Hadron and other smaller Virginia biotech firms. "They have a very good chance to compete with antidotes," says Richard Evans, a New York-based drug industry analyst with Sanford C. Bernstein & Co. Big drug companies will, for patriotic reasons, make public statements about boosting production of biodefense antidotes. But, in fact, economics favor small companies such as Alibek’s. Demand, for example, is likely to be episodic rather than constant, depending on the level of terrorist attacks. "You won’t need to be producing 24 hours a day, but rather in huge batch production, so companies like Hadron have a really good shot at this," Evans says.

In other spheres of biodefense, a premium is being put on consulting services from people with high levels of expertise in chemical and biological terrorism. Jack McGeorge, president of Public Safety Group, Inc. in Woodbridge, easily fits the bill. He’s worked as a munitions specialist for the U.S. Secret Service and as a lead investigator for government research projects. He recently qualified as a weapons inspector for a United Nations inspection commission. McGeorge says his company can hardly keep up with demand. "As soon as I put the phone down, there are three more calls on the voice mail. It has been nonstop."

McGeorge’s small consulting company has been around since 1981. It provides databases, updated quarterly, for companies that need objective, third-party information on chemical and biological warfare. The firm’s information technology system, designed to run on Windows software, provides data on specific agents, countries, and incidents as well as an emergency response guide. Like Versar, most of McGeorge’s business—95 percent—came from government law enforcement agencies before Sept. 11. Now he’s doing work for a medical group, a large insurance company and a pilots’ association.

But the picture isn’t entirely rosy. McGeorge, a 25-year-veteran in his field, is suspicious about some of the inquiries. "I’m getting lots of calls from hustlers about trying to come up with a company that would corner the market on biodefense."

Legitimate people are eyeing the market as well. Herzog says he’s hearing from people in the private sector who want to get into a new business—the art of protecting large public places with pathogenic detectors. "This is a whole new area that’s taking off."

One example of this new type of start-up can be found in Richmond in the Virginia Biotechnology Research Park, home of REDD/MMAD which stands for Rapid Epidemic Detection and Delineation/Multi Matrix Assessment Data. Simply put, it means the company can test large public venues for pathogens in soil, water or air by using polymers that pathogens will attach themselves to.

Yet it’s not a testing company per se, says founder John Barnett. More specific testing occurs only if the detection company finds something wrong. Since opening its doors just prior to Sept. 11, Barnett says he has snagged jobs with 29 major enclosed arenas around the country, mostly sports arenas, to conduct the equivalent of a wellness checkup. None of the centers even suspect anthrax contamination. But apparently they’ve bought into Barnett’s idea of establishing a baseline of what’s normal in terms of naturally occurring pathogens in their environments. "Then anything above the baseline level can be established as an anomaly, and you’re not using people as guinea pigs," he explains. Barnett says he funded his private concern with profits from another business, but recently received help from Richmond’s Commonwealth Bank in restructuring his business so it can grow. "We’re being formed to grow from one person to a 600-person firm in 90 days," he says. Barnett says he never dreamed that business would be so good so fast.

Another Richmond company, Commonwealth Biotechnologies Inc., has spent three years developing methods for atmospheric detection of pathogenic organisms and toxins that could be used in a biological attack. Senior Vice President Thomas R. Reynolds is mum, though, when it comes to details. "How we do it is a secret," he says. Security is necessary, he adds, because of the company’s security clearances with the federal government. Currently, CBI has $2 million in government contracts to work on the project. "We’ve been working on this since 1999. It’s amazing to me that it’s finally happening," Reynolds says of the recent anthrax contaminations.

Virginia’s undisputed kingpin in biowarfare is Ken Alibek, who worked for 17 years as a bioweaponeer in the shadowy world of military laboratories under KGB security in such remote places as the Aral Sea between the dry republics of Uzbekistan and Kazakhstan. The son of an influential Communist family of Kazakh origins, Alibek, then known as Kanatjan Alibekov, graduated from the military side of the Tomsk Medical Institute in Siberia and later earned a Ph.D. in microbiology and a doctorate of science for developing the technology to manufacture anthrax on an industrial scale.

Despite his privileged background, which awarded him living standards well beyond the means of typical Soviets, Alibek’s work was so secret he couldn’t discuss it even with his family. His career rose, as he served from isolated outpost to outpost. From 1988-92, he served as deputy chief of Biopreparat, the Soviet Union’s offensive biological weapons program that operated in violation of a 1972 arms treaty. America ran a secret program for years, too, but it was dismantled by the Nixon administration in 1969.

The deadly nature of Alibek’s endeavors was brought home to him personally in 1983. In a book he wrote about his Soviet career, he recounts a moment of sheer panic when a maintenance problem caused tularemia to leak onto a laboratory floor. The germ, commonly found among wild animals, can cause debilitating illness — chills, nausea, fever, headaches — and death if left untreated. And the strain Alibek encountered, souped up by Soviet scientists, was more potent than anything found in nature. "When I finally hit the switch and looked down, I found I was standing in a puddle of liquid tularemia. It was milky brown — the highest possible concentration. The puddle at my feet was only a few centimeters deep, but there was enough tularemia on the floor to infect the entire population of the Soviet Union." After a crash dose of tetracycline, which he took to cover up his illness, Alibek recovered.

In September 1992, nine months after the collapse of the Soviet Union, Alibek along with his wife and three children defected to the U.S. He had been in the states in 1991, participating in diplomatic inspection tours of germ warfare labs. After coming here permanently, his revelations about the Soviet germ warfare program — at one point 60,000 people worked at more than 100 facilities — shocked Congress and officials of the CIA and the Defense Department.

His former world of secret labs and KGB escorts now seems a distant memory. In an office one floor beneath his lab at a Prince William County satellite of George Mason University, Alibek, now 51, lunches on a very American meal of pepperoni pizza. On a calendar, he has scrawled the word "Thanksgiving" across the block for Nov. 22, one of the few empty spaces on the 60-day planner. Alibek speaks in low, accented tones about America’s anthrax outbreak, apologizing for a cell phone that beeps incessantly. These days he eats, talks, and works on the run, in between meetings with high-level government officials such as Health and Human Services Secretary Tommy Thompson and numerous media representatives. It seems everyone wants to talk to the man who once mingled with the world’s deadliest microbes to get his take on the unsolved mystery. Who’s responsible for sending the lethal anthrax spores through the mail? "My personal opinion is that it’s not something being done by a small group of white supremacists or something like that. It’s real."

With hundreds of microbe banks selling anthrax legally for years for research purposes under more relaxed export restrictions than those in effect today, Alibek is doubtful American investigators will be able to trace the origin of the anthrax strain that has killed people. And while he thinks Americans need to "lose our innocence" over the possibility of further attacks, he isn’t convinced that highly infectious smallpox will be used. For one thing, it’s hard to get, he notes, even though illegal strains are rumored to exist in countries such as Iraq and North Korea. Still, "I don’t believe any government, including Iraq, would sell it." He gives a succinct explanation: "Nobody wants to be captured red handed and then nuked ... If Saddam Hussein gave the smallpox virus to al Qaeda and they used it and killed thousands of American citizens and we know this for sure, it would be fair in this case to use something powerful against Iraq."

Looking back at what Alibek calls "quite a piece of life," the former bioweaponeer speaks softly of the dream he had as a young scientist. "I always had a dream to do real work in the field of medical defense. It was not possible in the Soviet Union." As he acknowledges in his 1999 book, "Biohazard." "I cannot unmake the weapons I manufactured or undo the research I authorized…but every day I do what I can to mitigate their effects. The realization that even today, in Iraq or China, another father of three may be sitting down at a conference table to plot the murder of millions of people is what spurs me on."

And so Ken Alibek has come full circle. He moves ahead with Hadron, planning to open a new laboratory in Rockville, Md., to expand the research. Perhaps the promise of biodefense, though, is best seen through the eyes of the young. Chris Bradburne is a 30-year-old biochemist and a 1995 graduate of Virginia Tech who joined Alibek’s team six months ago. "When I first came here, I had some questions about the science, because it’s a very lofty goal," he says. "But the way Ken has put it together, it’s a good approach. I feel like we’re on the front lines of this whole terrorist war."

Return to Virginia Business - December 2001

 


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