A single line from a government request for information about available anthrax vaccines has raised new problems for VaxGen Inc.

The Brisbane, Calif., company, which lost a deal to produce 75 million doses of vaccine last December, has been trying to sell its technology to another pharmaceutical company.

But while the Department of Health and Human Services has made it clear it is interested in buying a second-generation vaccine like VaxGen’s, it also is sending overt hints that it is not interested in buying VaxGen’s protein.

In a notice earlier this month seeking information about available anthrax vaccine technologies, HHS said it would not accept information about any product on clinical hold by the Food and Drug Administration.

VaxGen’s product was placed on hold with the FDA for stability issues in December. It therefore missed a clinical trial deadline, which allowed HHS to void the $877.5 million contract.

Industry insiders said the statement in the government’s Sources Sought Notice was explicitly intended to keep out the VaxGen product, even if it is purchased by another drug company.

“HHS is basically sending a message with this,” one insider said.

And that has downgraded the value of VaxGen as a company, and its anthrax technology.

VaxGen had continued to work on its anthrax vaccine since losing the contract, believing it could sell the technology, or merge with another drug company.

Industry officials say what VaxGen has created has value.

“The antigen is very good, by all accounts,” said Robert Kadlec, director for biodefense and public health at PRTM, a management consulting firm. “What doesn’t have value is what VaxGen tried to do with it, which is stabilize it and form it into a product.”

The company ended all development of its anthrax vaccine last week and laid off the 20 workers assigned to the project. It is unclear whether the layoffs were directly tied to the HHS language.

“We have developed it to a stage we felt was appropriate,” said Lance Ignon, the company’s vice president for corporate affairs. “The next stage would be fairly extensive animal tests that I don’t think we ever planned to proceed with.”

But others suggest cutting ties with its staffers showed it no longer believes it can sell its anthrax assets.

“The company was developing it in hopes to sell the compound, because it looked like there was a market for it,” the analyst said. “You only stop development if there isn’t a market.”

Insiders said the HHS notice highlighted the risk to any potential buyer of VaxGen’s protein.

“If you’re looking to acquire a drug to go after that market, but they say you can be anybody but [VaxGen’s product], it quells your enthusiasm,” the insider said.

Kadlec added that the antigen could have a stigma attached to it, and could be devalued, because of the problems VaxGen has experienced with it.

Some have speculated that HHS is concerned that only one other company — Avecia Biologicals Ltd. — is working on a recombinant Protective Antigen (rPA) vaccine which HHS is specifically seeking.

Moreover, if VaxGen’s product is able to compete for a new contract, and win, it would raise questions about HHS’ decision to cancel the original deal.

An HHS spokesman, Mark Wolfson, said the clinical hold clause in the Sources Sought Notice was added in an attempt to raise the bar for products HHS will consider, and ensure they are free of problems.

But he said companies that do not provide information to HHS now will still be able to apply for the eventual contract. The notice said the government anticipates a solicitation will be announced in July, with proposals due in November.

Kadlec said if the antigen is manipulated by another company, including a different stabilizing agent, it may not be subject to the current clinical hold.

VaxGen officials acknowledge the contract cancellation has left them with little choice but to sell the company.

“Our effort to develop biodefense products will ultimately lead to the disappearance of VaxGen as a free-standing company,” Ignon said May 25.

But the company denies the value of its anthrax vaccine work has diminished because of HHS’ recent actions. Ignon said he originally believed the HHS notice would impinge on the company’s ability to sell its assets, but that it has not.

He declined to comment on details of possible mergers or acquisitions.

“We’re more confident than ever, and if HHS is going to produce an rPA vaccine, it would seem our product would be a contender,” he said. “But only through the hands of another company.”

Matthew E. Berger can be reached at mberger@cq.com.