Since the first serious outbreak of avian flu set off an international panic four years ago, pharmaceutical giants including Novartis and GlaxoSmithKline have been experimenting with new ways of making vaccines quickly. But one of the most innovative approaches is being tested by a 70-employee biotech firm that has yet to sell a drug.

For years, pharmaceutical companies have prepared vaccines by using World Health Organization data about the virus strains it expects will spread in the coming year. Scientists then incubate the strains in fertilized chicken eggs, extract the vaccine, and bottle it for shots given ahead of flu season. But if there were a sudden, large-scale avian flu outbreak, the six-month production process would be dangerously long.

Development of a Vaccine

Enter Novavax, a Rockville, Maryland, R&D firm with a $244 million market cap. Since 2005, the publicly traded firm has been working with DNA technology to perfect a process to make an avian flu vaccine that would be ready to administer eight to 12 weeks after a strain is identified. Novavax's innovation is to use the flu's gene sequence to create a virus decoy. Since it's quicker to manufacture decoys than to grow a virus in an egg, the theory is that it would also be faster to produce a vaccine this way.

Like many other biotechs and large companies working on avian flu vaccines in the U.S., Novavax is still in the early stages of its research. It started its first human trials in July and has not begun the lengthy F.D.A. approval process. Meanwhile, the biopharmaceutical firm Baxter is testing a method that would incubate viruses in cell cultures derived from the African green monkey rather than from chicken eggs, and GlaxoSmithKline is in clinical trials with an egg-based vaccine.

Progress has been slow, in part because the financial incentives are relatively weak. Vaccines are usually mass-produced, sold cheaply, and unlikely to become blockbusters. Merck's new Gardasil vaccine, which helps prevent cervical cancer, generated $723 million in sales in the first half of this year. By comparison, Vioxx, one of Merck's pain medications, brought in $1.3 billion in the first six months of 2004 before it was pulled from the market. Many big drug companies say they make vaccines to earn the public's goodwill, but for a newcomer like Novavax, the success of an avian flu vaccine would help the firm break into the lucrative drug business and raise its profile with investors. (Novavax's stock is trading in the $3 to $4 range, down from a high of $15 in late 2001.) Currently, only one avian flu vaccine has been approved in the U.S.—a stopgap product from Sanofi Pasteur with a success rate of 45 percent.