Caution on Bioterror

Next week the Senate is expected to revamp Project Bioshield, a $5.6 billion spending plan meant to shore up the nation's defenses against a bioterror attack.

The original law, enacted in June 2002, was supposed to provide inducements for biotech companies to work on vaccines and antidotes for threats such as anthrax and Ebola. However, the structure of the bill actually served as a disincentive.

That's because companies weren't going to get paid until the products they developed were approved for use. Large biotechs such as Amgen (AMGN) and Genentech (DNA) had little interest in the government's program. After all, they had businesses to run.

At the same time, several smaller firms were salivating over the possibility of large contracts and eagerly signed up. The problem has been that participating companies have had a difficult time successfully developing products and getting through the period before a treatment is successfully launched, when cash is going out but none is coming in.

The newest bill, sponsored by Sen. Richard Burr (R., N.C.) will, among other things, add $1 billion to the program to fund companies prior to product approval. That should ease the financial strain for firms developing products that the government deems essential to protecting our nation's health.

Below are some of the publicly traded companies that are researching ways to protect the American public from bioterror threats. Just keep in mind that many of these companies have very low market caps, are thinly traded, have little or no revenue or track records and should be considered very speculative.