AnalysisInvesting in biodefense companies, II

Published 20 June 2008

Billions of dollars are being spent on finding vaccines and treatments for possible bioterror attacks; investment analyst says that these billions of dollars in government spending notwithstanding, when considering an investment in a company doing R&D in the bioterror field, you should consider its non-terror-related biotechnology efforts, and the quality of its management team

Earlier this month we ran a detailed discussion by Seeking Alpha’s Ketan Desai’s of the investment potential in biotehcnology companies working on smallpox (HS Daily Wire, 6 June 2008). The following discussion offers Desai’s insights into the potential of biotechnology companies developing treatments for anthrax.

Anthrax is caused by the gram-positive bacterium Bacillus anthracis. The bacterium exists in nature in two forms: vegetative and spore. A spore can persist for long periods of time (even decades) in the environment. When it enters a human or animal host, the spore becomes a vegetative cell that produces three toxins. Anthrax Protective Antigen [PA] initiates the onset of the illness by attaching to cells in the infected person where it then facilitates entry of the two additional destructive toxins - Lethal Factor [LF] and Edema Factor [EF] into the cell.  Anthrax in humans can be pulmonary, cutaneous, or gastro-intestinal depending on the mode of entry (inhalation, contact, or consumption of tainted food). Anthrax is currently considered one of the most serious bioterrorism threats. Beginning in the second half of the twentieth century, anthrax was developed by several countries (including the Soviet Union and the United States) as part of a biological weapons program. Since that time, the United States, Russia, and many other countries have discontinued these programs. However, rouge programs still may be in operation. Non-state groups have used anthrax. Most dramatically, in October 2001, anthrax attacks were perpetrated in the United States through the mail, when seven envelopes containing B. anthracis spores were sent through the U.S. postal system. Twenty-two cases of anthrax resulted (11 inhalational, 11 cutaneous), and 5 people died from inhalational anthrax. Investigations into the origin of the attacks are ongoing, and the perpetrator(s) have yet to be identified.

A number of factors contribute to concern about the use of anthrax as a biological weapon:

  • Availability of B. anthracis in laboratories: Evidence that techniques for mass production and aerosol dissemination of anthrax have been developed
  • High fatality rate: Low infectious dose (as few as 1 to 3 spores may cause infection)
  • Genetic manipulation so as to make anthrax resistant to antibiotics

An analysis in 1993 by the Office of Technology Assessment (OTA) of the U.S. Congress estimated that 130,000 to 3 million deaths could occur following the release of 100 kilograms of aerosolized anthrax over Washington, D.C., making such an attack as lethal as a hydrogen bomb


Antibiotics: Antibiotics are the first line of defense against anthrax infection. Early identification