(Updates with details of contracts and adds more information starting in the second paragraph.)

By Jennifer Corbett Dooren

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The Department of Health and Human Services Thursday awarded more than $1 billion worth of contracts to continue development of a new technology aimed at more quickly producing influenza vaccines.

Companies that won the contracts include Novartis AG (NVS), GlaxoSmithKline PLC (GSK), MedImmune Inc. (MEDI), Solvay Pharmaceuticals (SOLB.BT), and a unit of Computer Sciences Corp. (CSC). The contracts are aimed at developing so- called cell based vaccine production technologies to replace the current method of producing influenza vaccines in eggs, a process that takes months.

The technology could be used to produce vaccines to protect against both seasonal influenza and a pandemic influenza virus. Health experts are concerned that the H5N1 virus responsible for avian flu could mutate and begin rapidly spreading among humans.

Specifically, GlaxoSmithKline was awarded $274.75 million; MedImmune, $169.46 million; Novartis, $220.51 million; and Solvay, $298.59 million. All of the contracts are valued over a five-year period. DVC LLC, a unit of Computer Sciences Corp. (CSC), was awarded a contract worth $40.97 million through July 31, 2007, to develop seasonal and pandemic influenza vaccines using the cell- based culture technology in collaboration with Baxter International Inc. (BAX). However, DVC said the contract is valued at $242.5 million over five years, assuming the government keeps the contract funded after July 2007.

The money for the contracts is coming from $3.3 billion worth of funds approved by Congress for the current fiscal year that are earmarked for flu pandemic planning.

Novartis has been testing an influenza vaccine manufactured using cell lines that were originally derived from dog kidneys in the 1960s. New lines can continually be grown in the lab. Such cell lines can be quickly produced and frozen for later use. Cells derived from other sources could also be used. Novartis said it plans to file for approval of a cell-based vaccine with European regulators by the end of the year.

Health and Human Services Secretary Mike Leavitt said the goal of the contracts would be to allow all Americans to receive a flu vaccine that could protect against a pandemic virus within six months of the time it appears a new flu virus is circulating among humans. Pandemic influenza occurs when a new virus emerges that humans have no natural immunity to and is a virus that can spread easily among humans.

The current chicken egg-based technology used to produce vaccines simply can't produce enough vaccines to protect nearly 300 million Americans in the event of a flu pandemic, Leavitt said. Cell-based technology would also allow for increased production of annual, seasonal influenza vaccines and would eliminate periodic shortages.

While the companies are all in various stages of developing cell-based technologies and vaccines, Leavitt said he believed the technology overall would become viable in about three-to-five years.

The H5N1 flu virus, or the avian flu, has killed millions of birds in Asia and has spread to Europe and the Middle East. It has infected 206 people and killed 113, according to the most recent World Heath Organization tally. The human cases have been linked to those who have had contact with infected birds and so far the virus has not achieved the ability to easily spread among humans.

-By Jennifer Corbett Dooren, Dow Jones Newswires; 202-862-9294; jennifer.corbett@dowjones.com

  (END) Dow Jones Newswires   05-04-06 1354ET   Copyright (c) 2006 Dow Jones & Company, Inc.