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7-Business: Feds grant rare Cuba embargo exception to biotechcompany

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TITLE:  Feds grant rare Cuba embargo exception to biotech company
SOURCE: Associated Press, by Paul Elias /, USA
DATE:   15 Jul 2004

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Feds grant rare Cuba embargo exception to biotech company

In a rare exception to long-standing American foreign policy, U.S.
officials have approved drug developer CancerVax Corp.'s deal with the
Cuban government to develop three experimental cancer drugs created in
Havana, the biotechnology company announced Thursday.

It's the first such commercial deal approved by the U.S. government
between a U.S. biotechnology company and Cuba, which has spent US$1
billion building a biotechnology program that is among the most advanced
in the Third World. One of the three drugs included in the deal is a
promising drug that attacks a cancer cell in a novel way.

Government approval comes at a time when U.S. President George W. Bush is
getting even tougher with the 41-year-old economic embargo of the
communist nation. On June 30, Bush implemented new rules that sharply
reduce Cuba-bound dollar flows from the United States and curtail visits
to Cuba by cultural and academic groups as well as Cuban-Americans.

CancerVax will develop the drugs in its Carlsbad laboratories and share
profits with the Cuban government, if any of the drugs are approved for
sale in the United States. CancerVax is a small, money-losing company
that doesn't have any drugs approved for sale. It just recently began
selling its stock publicly.

The deal also calls for CancerVax to pay Cuba US$2 million annually over
the next three years.

Underscoring the complex political backdrop against which this deal took
place, CancerVax agreed to U.S. government demands to pay Cuba in food
and medicines instead of cash. The State Department recommended approval
of the deal, which was ultimately granted by the Treasury Department.
Both departments said the U.S. government is open to considering similar
drug deals, but that it will continue to restrict the flow of U.S.
currency to Cuba.

"This is a unique case in that there is the potential to successfully
treat a deadly disease using technology not otherwise available," U.S.
State Department spokeswoman Darla Jordan said. "As a matter of policy
the United States will continue to consider license requests where there
is the potential to benefit public health."

Analysts also said the U.S. approval of the CancerVax deal is not a sign
the Bush administration is easing its current policy of tightening
enforcement of the embargo.

"The goal was to provide a benefit to the citizenry of the United States
while limiting the monetary and public relations benefit to the
government of Cuba," said John Kavulich II, who keeps U.S. businesses
informed on Cuba as president of the U.S.-Cuba Trade and Economic Council
in New York.

Kavulich said the Bush administration walked a political tightrope since
CancerVax applied in November for government permission to complete the deal.

"The Bush administration doesn't want to be seen as potentially denying a
treatment to a sick child in the United States," he said.

Five years ago, former President Bill Clinton waded through a similar
political thicket when it allowed the pharmaceutical giant now known as
GlaxoSmithKline to enter a similar deal with Havana to develop and market
a Cuban-made meningitis B vaccine, which is now undergoing human testing.

That deal was a template for the granting of the current U.S. license,
which occurred July 9. The company also enlisted bipartisan support from
some members of Congress.

"Saving lives shouldn't be a political issue. It should be a human
issue," deal supporter Sen. Christopher Dodd, a Conneticut Democrat, said
in a prepared statement released by his office.

CancerVax chief executive David Hale said he and Cuban government
officials formally sealed the deal in Havana late Tuesday, culminating a
three-year courtship begun at a cancer conference in San Francisco where
two Cuban scientists presented positive data on one of the three drugs.

Cuban President Fidel Castro attended Tuesday's meeting, as shown on
state-run television Thursday night.

All three drugs are known as cancer vaccines, a technology that aims to
train the body's own immune system to fight the disease. Hale said the
most developed of the three experimental drugs is called SAI-EGF, which
the company hopes to first use to combat some forms of lung cancer. Hale
said the company hopes to begin human testing in the United States by
early next year.


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