Updated from 9:14 a.m. EDT

VaxGen ( VXGN), a biopharmaceutical company, saw its shares skyrocket Wednesday morning on word the Food and Drug Administration has cleared the investigational new drug application for its prospective anthrax vaccine.

The move allows VaxGen to begin clinical development of the investigational vaccine with the goal of producing an emergency stockpile for the U.S. government and licensing the product for commercial sales. The next step will be to begin a Phase I human clinical trial involving about 100 volunteers at Baylor College of Medicine in Houston, Emory University School of Medicine in Atlanta, Johns Hopkins University in Baltimore and Saint Louis University Health Sciences Center.

In premarket Instinet trading, shares of VaxGen were gaining $2.56, or 77%, to $5.90. The stock was one of the most active issues before the opening bell.

VaxGen said the clinical trial will evaluate the safety and immunogenicity of the candidate vaccine compared with the existing licensed anthrax vaccine. The vaccine candidate's effectiveness will be established by comparing the immune responses in humans to those shown to protect animals from the inhalation of anthrax spores.

"The ability to begin Phase I clinical trials advances our ultimate goal of supplying the next-generation anthrax vaccine to the U.S. and foreign governments, as well as private markets," the company said in a press release. "Since winning our anthrax contract, VaxGen has overseen the manufacture of more than 2,000 doses of vaccine available for clinical studies, completed all required pre-IND development and cleared an IND."

The company expects the U.S. government to award two additional anthrax vaccine contracts later this year. VaxGen also expects that the Department of Health and Human Services or the Department of Homeland Security will issue a separate contract for a stockpile of 25 million doses.

VaxGen's anthrax vaccine candidate is based on the work of the U.S. Army Medical Research Institute of Infectious Diseases and is being developed through collaboration with Battelle Memorial Institute in Columbus, Ohio. The vaccine candidate, which is designed to induce antibodies that neutralize anthrax toxins, can't cause anthrax infection.

Another company, Medarex ( MEDX), was also drawing buying interest for its work on an antibody against anthrax.

Medarex said in a preclinical animal study, rabbits were exposed to lethal doses of anthrax spores by inhalation, then received varying doses of the company's antibody and were observed for two weeks. All of the rabbits in a control group that didn't receive the antibody died within days of exposure. But the rabbits that received the antibody were protected from the deadly effects of the anthrax bacteria and its toxins to the endpoint of the two-week study.

The company said if it continues to see encouraging results following further evaluations of the antibody, it could file an investigational new drug application for the product as early as 2004.

Shares of Medarex were rising 90 cents, or 15%, to $6.85 in premarket trading.