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BIOTECHNOLOGY

PowderJect: Beauty isn't just skin deep

Vaccines for sale at a supermarket near you.

By Michael Parsons

June 21, 2002

PowderJect Pharmaceuticals got some unwelcome publicity in April, when the U.K. government was forced to reveal that it had granted the firm a £32 million ($46.3 million) contract to produce a vaccine for smallpox. The government faced blistering criticism over the deal, but PowderJect can afford to be tight-lipped. It's a rare company--a U.K.-based biotech startup that's actually making money. It boasts, as you'd expect, innovative technology and a pipeline of products, but also revenue of more than $140 million.

Based in Oxford, England, the eight-year-old firm is the sixth-largest provider of vaccines in the world, and the sole manufacturer of vaccines in both the United Kingdom and Sweden. PowderJect sells vaccines for influenza, cholera, and yellow fever. It is also developing a needle-free injection system that uses a burst of hydrogen to push tiny vaccine particles into the skin, inviting comparison to a gadget from the original Star Trek series.

PowderJect's chairman and CEO, Paul Drayson, likes to tell his company's creation myth. After helping him sell his first business, a confectionary company called Lambourne Food, the U.K. venture capital giant 3i Group took him along to check out several technology opportunities. One was a needle-free injection system being developed by Brian Bellhouse at the University of Oxford. Mr. Drayson says he was struck by two things when he met Dr. Bellhouse: "His technology and his daughter." In 1993, Mr. Drayson provided seed capital to set up a business based on Dr. Bellhouse's technology. And he married Dr. Bellhouse's daughter, Elspeth.

The firm researched various applications for the needle-free injection system, including drug delivery, vaccines, medical diagnostics, and delivery of chemicals through skin, mucous membranes, and artery walls. In 1994, the vaccine data looked promising, but a U.S. firm was working on a similar concept. Agracetus, owned by the U.S. chemical company W.R. Grace, had developed a needle-free process for delivering DNA-bearing gold particles directly into cells. In 1996, Mr. Drayson negotiated a joint venture and then bought W.R. Grace's share of the firm in exchange for a 7.5 percent stake in PowderJect.

A shift to vaccine development began in 1999, when Mr. Drayson realized that the most successful U.S. biotech firms develop and manufacture their own drugs. And governments around the world had begun to see vaccination programs as a cost-effective way to deliver health care. "We thought, This is the one chance we have, we are going to make the change to a product company," recalls Mr. Drayson.

The company announced the plan in its 1999 annual report. According to Mr. Drayson, the share price suffered, and half the shareholders were skeptical, but now the strategy is looking pretty smart.

PowderJect consolidated its vaccine expertise by purchasing the vaccine assets of biotech firm Medeva Vaccines in 2000. Medeva's vaccines business, now called Evans Vaccines, gave PowderJect Fluvirin, a vaccine for the flu virus, which is licensed in 28 countries and accounts for about half of the firm's revenue. Then in 2001, the company bought SBL Vaccine, Sweden's only vaccine manufacturer. In just eight years, PowderJect had morphed from a purveyor of Star Trek injection technology into a real-world vaccines business.

In other words, getting into vaccines turned out to be the right move. In searching for better HIV/AIDS treatments, researchers have directed their funds toward investigating the human immune system, and developments in immunology have created opportunities for new types of vaccines. On this front, PowderJect is joined by firms like Acambis, Corixa, and Vical, all of which are investing heavily in vaccine technologies. Armed with a more detailed understanding of immunity, these companies are targeting specific components of the immune system, like individual cell types. They are also researching therapeutic vaccines for cancer, allergies, and autoimmune system disorders.

PowderJect has a strong position in traditional vaccines and a pipeline that includes powdered versions of its vaccines for needle-free injection. It has also shown promising results in DNA vaccine research to trigger cellular immunity for hepatitis B, HIV, and influenza. And if PowderJect does make a significant breakthrough in HIV or cancer research, it has a strategic partnership with GlaxoSmithKline to ensure its products can hit the market in the right way.

Mr. Drayson also hopes vaccine products will become even more lucrative as patients continue to take more control of their own treatment. "Why can't you buy vaccines in the supermarket?" he asks. If one day travellers get their yellow fever vaccine in powder form from a vending machine at the airport, PowderJect wants the contract.

Contributing editor Michael Parsons is based in London.

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