Operation Warp Speed

a high warp factor, well things can go wrong. And yet, amid the horrors of the pandemic and America's mishandling of the crisis, Operation Warp Speed is looking like a rare bright spot for the United States. So far, Operation Warp Speed has awarded more than twelve billion dollars in vaccine related contracts and has an overall budget of as much as eighteen billion dollars, all of which may end up looking like a bargain if it helps end the pandemic,

and there's a chance that may happen relatively soon. You wouldn't bank your future on someone you don't know. Financial advice is simply better when your banker gets to know you. That's what City National Bank believes. The better they know you, the better they can help you. Achieve yours. See what personal can do for you at CNB dot com. Here it comes, amid the horrors of the pandemic and America's

mishandling of it, some good news. Operation Warp Speed is likely to produce a vaccine zoon by Stephanie Baker and Cynthia Coon's On a late August day, in an industrial corner of Baltimore that had been mostly silenced by the pandemic, a red brick manufacturing plant was buzzing with activity. Deep in the building, in a zone called Area three, the stainless steel shell of a bioreactor lay on its side, Having just arrived from Massachusetts. Employees had begun the task

of making the bioreactor operational. Within weeks, it would be the center of a production line for coronavirus vaccines. When the owner of the plant, Emergent BioSolutions, ordered the bioreactor, one supplier said some critical parts wouldn't arrive until November or December, and so Emergent enlisted the help of Operation

Warp Speed. The federal government's mission to accelerate development of a COVID nineteen vaccine officials working with OWS, a couple of whom are embedded with Emergent called the supplier to say the order couldn't wait, throwing the weight of the government behind the request. It's almost like having that bat signal, says Sayed Hussein, who heads the company's contract manufacturing business. They've been a great partner for US. Emergent might be

the ultimate operation warp speed company. In June, it secured a six hundred and twenty eight million dollar no bid contract to produce vaccines and therapeutics, one of the biggest allocations of OWS funding outside of the pharmaceutical companies actually developing the vaccines. It subsequently signed two hundred and sixty one million dollars in contracts to make doses for astra Zenica, and then a four hundred and eighty million dollar contract

with Jensen Pharmaceuticals, a subsidiary of Johnson and Johnson. Those companies are themselves Elves recipients of billion dollar plus OWS awards. Earlier in the year, Emergent produced vaccines for trials by the biotechnology company Novavax, which subsequently received one point six billion dollars from OWS. Emergent is in business with three of the six vaccine makers. OWS is known to have backed Over the past decade, Emergent turned itself into a business.

The US government couldn't live without, the sole producer of approved anthrax and single dose smallpox vaccines stockpiled for emergencies. When the novel coronavirus hit earlier this year and the US government went hunting for surge capacity to make vaccines, it turned to Emergent. This was actually a kind of global race to secure manufacturing capacity, says Paul Mango, Deputy chief of Staff for Policy at the Department of Health

and Human Services and a key figure at OWS. We knew we would need an enormous amount of manufacturing capacity to get this done, hundreds of millions of doses in a time that has never been done in history. There wasn't a lot of idle manufacturing capacity laying around in

the US. Operation warp Speed isn't an agency as such, but rather a mechanism to coordinate among private companies and an array of US government bodies, the Department of Defense HHS, the Food and Drug Administration, the Centers for Disease Control and Prevention, and beyond. More than six hundred people in HHS and ninety people from the d o D are involved. It's a coordination activity that helps to cut through the bureaucracy faster, says Paul Stoffel's chief scientific officer at Johnson

and Johnson. O WS has awarded more than twelve billion dollars in vaccine related contracts and has an overall budget of as much as eighteen billion dollars. As if the logistics and science aren't challenging enough, President Trump has dialed up the pressure to get a vaccine cleared before the

November third election. F d A Commissioner Stephen Hahn dashed those hopes in lates September when he drew up tough new safety guidelines for approving coronavirus vaccines just after he was released from the hospital for his own case of COVID. Trump attacked Han by tweet just another political hit job

at Steve. F d A. The precedent's single tangible, constructive contribution to the pandemic response has been to bless the establishment of ows, Denying the virus was a real threat for months, Trump failed to come up with a national strategy to control it spread and left it to the states to respond. Then he endorsed a company driven approach. Mango says There are now more than twenty five manufacturing sites producing or gearing up to make vaccines, vials, and

other things necessary for a mass vaccination program. With ows tracking progress through streams of spreadsheets, it appears to be a conspicuous exception to the otherwise disastrous management of the pandemic. The only part of the pandemic Trump responded to was

things he could get companies to manufacture. As Peter Hotez, dean for the National School of Tropical Medicine at Baylor College of Medicine in Houston, there was never an understanding that the hard part is giving adequate time to make sure the vaccines work. It was always reframed as a manufacturing problem. It was Trump bringing in his personal relationship with CEOs to get them to make stuff. Calling the search for a vaccine operation warp speed hasn't always engendered confidence.

The name comes from Star Trek, and trek eas know that when a spaceship travels at a high warp factor, things can go wrong. More to the point, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases NAID, has expressed concern that the name suggests recklessness. No one is cutting corners. Fauci insists perception issues aside. The idea

behind OWS makes sense. A top notch vaccine specialist from the private sector, former Glaxo Smith Klein executive of Monsef Sloughie is paired with military logistics expert Gustav Perna, a four star general who led the U. S Army Material Command and is now the OWS Chief operating officer. They are a study in contrasts. On a recent visit to a Cincinnati hospital taking part in a vaccine trial, Perna was in camouflage fatigues while Sloughie wore a blue button

down shirt. Guided by Sloughie, a Moroccan born Belgian American scientist, OWS selected a portfolio of coronavirus vaccine candidates being developed by some of the world's top pharmaceutical companies, as well as some untested newcomers. By betting on several horses, OWS, in theory, increased the chances that one or more would cross the finish line everyone hopes at a warp like speed. Sloughy steered investments not just to different companies, but also

to different ways of making vaccines. MODERNA and Viser, which is teamed up with Germany's bio in Tech are testing vaccines that use messenger RNA, a genetic material that instructs the body to make viral proteins that in turn trigger and antibody response, in this case against stars cove to the virus that causes covid J and J and Astra Zeneca are using a viral vector technology that deploys an altered common cold virus to carry the genetic material of

the coronavirus and produce an immune response. The novavax vaccine and one from Glaxo and France's Sinophi are based on the virus is spike protein and use an immune boosting adj evan to spark antibody production. Fiser might be first out of the gate. The company has said it could

be ready to apply for authorization by late November. Unlike the others, the company chose to pay for its own testing and production and will recoup some of its investment only when its vaccine gets authorized and OWS buys the shots. Slowey says his being new to government is an advantage.

Everybody is party to a given kingdom, he says, having somebody from the outside come in that's effectively blind to all the history and politics the bureaucracy that may exist and is uniquely focused on integrating their work was an essential element of how warp speed was able to go very fast. O WS released a document in mid September outlining how it would distribute vaccine doses. It has a military tone. The title is from the Factory to the

front Lines. General Paul Ostrowski, perna's deputy, has said the goal is to begin delivery within twenty four hours of any approval or emergency use authorization, with distribution centralized and farmed out mainly through McKesson, a Texas drug distributor that had an existing contract with the CDC to deliver vaccines. To track where every dose goes, OWS is building an integrated computer system that brings in the CDC's existing systems o w S, as it expects to have as many

as seventy five thousand injection sites across the country. States have sent the CDC proposals for how to manage distribution locally, but in mid October, the bipartisan National Governors Association submitted a long list of questions to the Trump administration about everything from funding to storage, making it clear the states don't see a workable federal plan in place. Some observers have questioned how a victory for Joe Biden might affect

the course of the program. According to Mango, the point is largely moot. The US is on track to produce more than one million doses of coronavirus vaccines manufactured by multiple companies by the end of the year, he says, and by inauguration day, the vast, vast majority of the heavy lifting will be behind us. The Biden campaign says

it will back scientists involved with warp Speed. Joe Biden and Kamala Harris will provide the leadership that has been lacking under Trump, to empower scientific professionals throughout our government, including those involved in warp Speed, to ensure that a safe and effective vaccine is distributed equitably, efficiently, and free to all our Americans. Spokesman Andrew Bates said. Mango says more than six hundred million shots should be available by April.

Behind those big numbers are a lot of variables and uncertainties. Five of the six OWS backed vaccine candidates require two doses. It's possible the FDA will not approve all of them, which means untold millions of doses could end up in the garbage, and indeed, Astra Zeneca and J and J have had to pause their U S trials because of safety concerns. Both companies resumed on October. Visers needs to be kept at negative seventy five degrees celsius, which makes

distributing it across the country a daunting task. The creation of Operation Warp Speed might have been unnecessary if not for a series of decisions that now look tragically myopic. Public health experts had been sounding the alarm about the lack of pandemic preparedness for the past two decades, but they were drowned out by con turns over a bioterrorist attack.

Those fears were amplified in June two thousand one when a group of US officials and policymakers convened for Dark Winter, an exercise which simulated a biological weapons attack involving smallpox. In many ways, the exercise gamed out much of what is unfolded in the US during the COVID pandemic, including the lack of surge capacity to treat victims and the

difficulty of controlling the outbreak. After Dark Winter came September eleven and a series of highly publicized anthrax attacks in the US, ushering in a new round of government spending to ward off a bioterrorist attack. Emergent, then called Bioport, was the loan producer of the only FDA licensed anthrax vaccine.

The federal government soon began stockpiling millions of doses. In two thousand four, Congress passed the Project BioShield Act, which provided five point six billion dollars over the following decade to develop and purchase medical counter measures, vaccines, and therapies against biological and chemical attacks for the strategic national stockpile,

including emergence anthrax shot. The Act wasn't designed to tackle naturally occurring infectious diseases, despite coming right on the heels of severe acute respiratory syndrome or STARS, which was caused by a coronavirus. STARS had by that time infected eight thousand people globally and killed seven dred and seventy four with outbreaks still popping up in Asia that year. Drug companies weren't eager to invest in the development of drugs

and vaccines needed for the strategic national stockpile. They're often risky research bets with an uncertain payoff. So in two thousand six, Congress created the Biomedical Advanced Research and Development Authority known as BARDA to fill that void. Through a series of BARTA contracts and acquisitions, Emergent consolidated its grip on the bio defense industry. In two thousand seven, it secured a contract to deliver nineteen million doses of its

anthrax vaccine for the national Stockpile. It then acquired and renovated a facility in Baltimore, the one now producing COVID vaccines. There's a world in which those vaccines might have come sooner. In Hotez, the Baylor scientist, got a large NAAID grant to devise a vaccine against stars. By twenty seventeen, the grant ended, and even though the vaccine looked promising, he

couldn't find money to begin testing it in humans. He says it might have provided some protection against the new coronavirus. We had it in the freezer. He says, these are not really money making products. President Obama said in an October speech that he left the Trump administration a sixty nine page document on how to deal with emerging pathogens, including coronaviruses. We literally left this White House a pandemic playbook, he said. But the Trump administration has made a habit

of pulling the plug on Obama era initiatives. Int eighteen, Trump's National Security adviser John Bolton dissolved the Directorate for Global Health, Security and Bio Defense, created by Obama after the Ebola epidemic of to coordinate the White House response to outbreaks of infectious diseases around the world. Bolton said via Twitter that global health remained a top priority of the National Security Council and that its experts effectively handled

the nineteen Ebola outbreak. Responsibility for pandemic planning has long been scattered across the federal government. There's nothing as visible as a federal emergency management agency. Perhaps the closest thing is the Office of the Assistant Secretary for Preparedness and Response, headed by Robert Cadolick, a doctor and retired Air Force colonel.

A year after being appointed to the position by Trump, cadlik took control of the six fifty million dollar budget for the Strategic National Stockpile, which had been managed by the CDC. Catholic was at one time a paid consultant for Emergent and had been in business with the company's founder.

The Washington Post reported in May. Asked whether emergence relationship with Catholic put it in a favorable position, the company said it's worked with multiple administrations, both Democratic and Republican. Under the Trump administration, Emergence revenue has more than doubled to one point one billion dollars in twenty nineteen from

four hundred and eighty eight million in twenty sixteen. When the pandemic hit, the Strategic National Stockpile had millions of doses of anthrax vaccine and enough smallpox vaccine to inoculate every U s citizen. It's not as though Cadolic didn't recognize the risk of a naturally occurring pandemic. In twenty nineteen, his office oversaw a simulation of an influenza pandemic emanating

from China. The exercise, called Crimson Contagion, laid bare how unprepared the US was for something like the novel coronavirus. In testimony before Congress in December twenty nineteen, Catholic said the US lacked sufficient manufacturing capacity for almost all necessary pandemic supplies, vaccines, therapeutics, needles, syringes, and masks. If the simulation was designed to spark significant changes to the government's planning,

they didn't come in time. On January, Shaan Kirk, Emergent's head of manufacturing and technical operations, grew worried as he watched the news about a respiratory illness spreading in Wuhan, China. He walked down the hall to his colleagues running the company's global supply chain and told them to start locking up critical raw materials. I was fearful that this thing could blow up, he recalls. Later that month, Emergence submitted an in depth white paper to BARDA reminding the agency

of everything the company could do. Rick Bright, who was serving as director of BARDA as the virus hit the US, filed a whistleblower complaint earlier this year that painted a picture of a federal government that was slow to act on vaccines. He says he was ousted in April after fighting pressure to allow use of hydroxy chloroquine, an anti malaria drug that Trump had been pushing despite the lack of rigorous trials to prove it was safe and effective.

In January, Bright says he tried and failed to persuade Catolic and HHS Secretary Alexaser to allocate money for COVID drug and diagnostics development. In a written statement, the HHS said that from his position, Bright couldn't know everything being done to combat the pandemic. Bright didn't respond to requests for comment for this story. BARDA pressed ahead on COVID anyway.

In January, the agency contacted Johnson and Johnson to discuss using the same approach for the novel coronavirus that it had used for its Bola vaccine, recalls Staffles, the chief scientific officer, we know the technology you have is developed and you can scale it, he recalls BARDA experts, saying over three meetings in Washington in February, Staffel says the company and BARDA came up with a development plan. As at hammer out the initial contract, J and J began

talking to Emergent about locking up manufacturing capacity. On marcht HHS announced four hundred and fifty six million dollars in funds to support clinical trials and manufacturing of J and J's eventual candidate, followed by an additional four dred and

eighty three million dollars for Maderna. In April, Emergent signed an initial one thirty five million dollar agreement to manufacture J and J's vaccine, with some work starting in twenty and large scale production beginning in By mid April, daily deaths from COVID were surging and the pressure to act was growing. HHS officials were fleshing out how to set

up OWS. The decision to create a new body struck some as an unnecessary gimmick, given there were existing inter agency structures in place that the government used to respond

to Ubola. Although OWS wasn't formally announced until mid May, HHS and the d D started laying the ground work by interviewing as many as ten people for the role of Chief Advisor ASAR, Defense Secretary Mark Esper and White House advisor and Trump's son in law Jared Kushner interviewed Slowie and decided he was the right person for the job.

He joined OWS as an outside contractor instead of as a government employee, which meant he wasn't subject to federal ethics rules regarding disclosure and investment of shareholdings that might conflict with his role. Slowly agreed to work for OWS for a nominal one dollar salary, with his expenses covered under an HHS contract awarded to Advanced Decision Vectors based in Alexandria, Virginia, which is handling compensation for several OWS consultants.

Sloughie has come under fire from congressional Democrats who say he has too many conflicts of interest with OWS companies. He vociferously denies that. He says he's a registered Democrat who joined o w S because he believed finding a vaccine was more important than party politics. After heading vaccines at Glaxo Smith Klein, he'd taken board seats at Maderna and briefly the Swiss drug manufacturer Lonza Group, Maderna's vaccine

manufacturer of choice. When he agreed to join o WS, he resigned from Lonza and Maderna and promised to sell all his Maderna shares. He insisted on keeping his multimillion dollar stake in Glaxo, which he's called his retirement, but pledged to donate any gains to the National Institutes of Health. From the day he started at OWS, he says he wasn't involved in negotiating the deals with Maderna or the Sinophi Glaxo partnership. I stayed completely out of it, so

Lowie says. On July two, Francis Collins, the NIH director, and Gary Disbrow, acting bar to director, testified on o WS before Congress, but refused to provide details on how the program would pick vaccines to fund. At that point, o w S had announced one point to billion dollars for Astra's Enica's vaccine, developed with the University of Oxford. Democrats asked how many vaccines it would back more than one, dis Brows said with a chuckle, I'm sorry, it really

is procurement sensitive. Over the next six weeks, OWS handed contracts worth more than eight million dollars to back five additional vaccines, those from Johnson and Johnson, Maderna, novavax Biser, and Sonophi jointly with Glaxo. The government reluctantly released some of the contracts heavily redacted over the summer in response to Freedom of Information Act requests. Slowe says the fuss

is unnecessary. They are playing vanilla contracts. There's nothing special about them apart from the amount of money, which relates to the cost of developing the vaccines. In mid October, the advocacy group Public Citizen filed a lawsuit demanding the release of coronavirus vaccine contracts. SLOWI says the contracts will be released soon. On October, HHS released the Maderna contract heavily redacted. Ows has provided a huge payday for many

pharma executives. Maderna executives netted a profit of one and fifteen point five million dollars from selling shares in their company from May fifteenth to August thirty one, according to Accountable Pharma, a nonpartisan watchdog group. A Maderna spokesman said the share sales were done through previously scheduled programs and

in accordance with insider trading regulations. Emergent executives netted five million dollars selling shares during the same period, and in September, the company's executive chairman, fouled l Hebre sold an additional eighty thousand shares for a net profit of eight point one million dollars. Emergent said in a statement that executives regularly sell stock following all laws governing financial transactions. Emergence shares were up seventy eight percent this year through October.

It's a perfect business, says Eli's Upnick, a spokesman for Accountable Armor of the OWS companies, their downside is covered by taxpayers, and their upside is already in their pockets. After announcing the six d and twenty eight million dollar OWS award for Emergent in June, Perna and Slowie visited the company's Baltimore manufacturing facility to deliver a message that the entire U. S. Military was ready to help work out supply chain glitches. He had said that everything is

on the table Emergence. Hussein recalls of Perna's message, every day counts, every hour counts. Some farmer executives described the military's role in speeding up vaccine manufacturing as a genuine bright spot in the federal pandemic response. Much of the work, however, remains opaque. Ostrowski, Perna's number two, says, OWS intervened on behalf of suppliers working with Maderna to expedite orders of key equipment and supplies, but he didn't offer any specifics.

My hat goes off to these great America ends that want to be part of the solution to this national pandemic, he said. An emailed responses to Bloomberg Business Week's questions. Maderna is the largest recipient of taxpayer funds a total of two point five billion dollars to advance and supply its vaccine, including a three hundred million dollar milestone payment if it's able to deliver one hundred million doses by January thirty first one under an FDA Emergency Use Approval

or full license. Maderna said in a statement that it interacts with several federal agencies, but declined to say what support it's getting. The milestone payment didn't require the company to accelerate timelines for its trials, spokesperson says. Amid widespread fears there would be a shortage of key materials for a mass vaccination program, OWS signed contracts to finance large

scale manufacturing of hundreds of millions of aisles. Corning secured two hundred four million dollars in funds from OWS in June to expand its capacity need to produce specialized glass vials. The company has weekly calls with OWS and has used a system under the Defense Production Act to gain priority with suppliers. It's been a helpful tool to make sure we're not getting stuck in line behind anything that's non critical,

says Brendan Mosher, Corning's head of pharmaceutical Technologies. We're doing things at least three times faster than we would have not. Every company is treating its relationship with OWS like a military secret. PSI O to Material Science of Auburn, Alabama, won a one three million dollar award in June to produce one and twenty million plastic vials with a thin glass coating from a Dernas vaccine and several others it

declined to disclose. Lawrence Ganty, si O two's president of consumer Operations says the company has used the Defense Production Act to solve myriad problems to keep production humming. Over the summer, one of its suppliers outside Chicago shut down because of a local power outage. Ganti. He says he got the power company's head of legal affairs on the phone, gave her the suppliers Defense Production Act letter, and got the power restored within forty five minutes. They understood the

gravity of what we were working on, he says. Mango says he's confident the US will be ready to begin vaccinating millions of people by the end of the year. The vaccines will be ready on the shelf, he says, declining to say which vaccine he's referring to. We'll have all the needles, syringes, stoppers, and vials. All of that stuff will be ready to ship literally the day the FDA gives us a green light. If Emergent is anything

to go by, that timeline looks like a stretch. Its first doses of the astros ennica vaccine won't be available until late January at the earliest. Production finally started in mid September, but it will take ninety days to produce bulk doses, which will then be shipped to a separate company, Cattalent, based in Somerset, New Jersey, for filling into vials, the process that takes another forty five days, including quality control checks.

With so many vaccines in the race, o w S can turn to others if the candidates made an emergent don't cross the finish line, but fewer approvals would diminish the chances of delivering millions of doses quickly. The world needs more than one shot to get back to normal. Success for Operation Warp speed is not six vaccines all working. It's enough vaccines and enough quantities by year end to

vaccinate the most vulnerable Americans. Mango says, the odds of six out of six hitting in the time frame we want, I mean, you'd sooner get struck by lightning. The biggest threat to o w s's success may end up being not the science, not the logistical challenges, but people refusing to take an approved vaccine. A Pew Research Center study in September showed that just fifty one percent of US adults say they would definitely or probably take it, down

from seventy two percent in May. I think this is a result mostly of the politicization of this process and the fact that it's happen around an election year and the kind of politics that are going on in the country. So Loowi says his hope is that six Americans will be immunized, at which point, though COVID won't disappear, the pandemic will subside. The circulation of the virus will be hugely impaired, he says, infections will go down, susceptible people

will survive, and life will go back to normal. I look forward to that with David Koshnevski, and that's our cover story. Check out more stories in the current issue of Bloomberg Business Week magazine. That issue is on newsstands. It's also online at Bloomberg dot com, and it's on the Bloomberg terminal. I'm Carol mass Sir. Be sure to also check out Bloomberg Business Week Radio live Monday through Friday at two pm Wall Street Time, and catch our daily podcast feed, and also you can check us out

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