Pharmaceutical companies have been leaving the vaccine market claiming unprofitability, and investment in vaccine companies has been slack, but there are bright spots on the horizon for certain types of vaccines and for new funding sources, said industry representatives attending the Vaccines meeting held October 22–24 in Arlington, Va., cosponsored by The Scientist.

“The only sizzle in the vaccine space is in the area of cancer vaccines, which is believed to be a $10 billion marketplace,” said Stan Yakatan, an industry consultant with Katan Associates, Hermosa Beach, Calif. “That's where I think the action is for the investment market.”

Since the “genomics bubble” in 2000, commitments to venture capital funds have decreased significantly, Yakatan said, although he expects the public markets to be more open in the near future. Part of the problem, said Yakatan, is pediatric vaccines, which are a low-margin commodity business accounting for 70% of the current global vaccine market. The inability of venture capitalists to make money from vaccines has also dampened investment.

The end of 2003 has seen an increase in follow-on investment in biotech companies, noted Russell Wilson, vice president, chief financial officer, and general counsel of Iomai Corporation of Gaithersburg, Md., who agreed with Yakatan that the biotech initial public offering market is not opening up yet.

But collaborations between smaller biotech companies developing vaccine technologies and larger pharmaceutical companies are a good alternative to both public and private financial markets, Wilson said. Although the number of these collaborative deals has been decreasing, the size of the deals, particularly for late stage products, has been increasing, he noted.

The commitment of some US government agencies to funding vaccine development is also encouraging, Wilson said. Through National Institutes of Health–supported testing and evaluation units, a company can conduct proof-of-principle and early clinical trials at little cost to itself. Public–private partnerships linking together government, nongovernment organizations, industry, and academic partners may accelerate the discovery and/or development of vaccines that none of the partners could accomplish singly, he added.

There is also a recent trend among foundations toward funding the for-profit sector, Wilson noted. The Bill and Melinda Gates Foundation has awarded at least $2.5 billion in grants to global health organizations, including the Vaccine Fund, the Malaria Vaccine Initiative, and the International Vaccine Institute. The Gates Foundation “has a lot of capital and is easy to get money from if you have a good plan,” Yakatan agreed.

While the Gates Foundation is currently funding a significant proportion of vaccine research, said Lance Gordon, chief executive officer of Vaxgen Corporation, the increased interest in biodefense funding, such as the president's Project BioShield, could scale up the global vaccine market by 20%.

But Rep. Henry A. Waxman (D-Calif.) expressed concern that BioShield funds may be appropriated on a yearly basis. Waxman said that he would prefer automatic appropriation, so that factors such as the resolution of the current military action in Iraq don';t distract the administration from following-up on bioterrorism work.

This is crucial, Gordon added, saying that experts he has consulted are convinced that some biological weapon will be used within the next 5 years.

However, Waxman also wants to make sure that funds for development of bioterrorism countermeasures are not appropriated at the expense of other public health care measures.