Scientists have remodeled the most successful of all vaccines and plan to seek approval before the end of the year to test it on humans as a protection against AIDS.

The new vaccine was modified from the vaccinia virus, the only vaccine that has eradicated a human disease, smallpox.

Experts had estimated that the first successful AIDS vaccine would not be developed before the 1990's. If the next stages of the current research are successful, that timetable might be shortened considerably.

Seeking Federal Approval

Before the drug is tested on humans, approval would have to be obtained from the Food and Drug Administration.

Two research teams successfully used genetic engineering techniques to remodel the vaccinia virus to carry a key gene of the AIDS virus. The gene directs the production of two proteins that act as a disguise, in effect fooling a cell into treating the vaccinia virus like an invading AIDS virus.

Vaccinia virus vaccine, by far the most widely used vaccine ever developed against human disease, has not been used for the general population since smallpox was conquered almost a decade ago.

In the new experiments, mice infected with the remodeled vaccinia virus developed antibodies against the AIDS virus. One of the research teams also reported that the virus evokes antibody production in monkeys; their response is likely to be more relevant to the prospects in humans.

Value Against AIDS Tested

Neither research group has yet demonstrated that the antibodies protect against infection with AIDS virus. Studies on this point are in progress. Antibodies are best known for their ability to help the immune system protect against virus invasion, and conventional vaccines work by stimulating the body to produce antibodies against an invader.

AIDS is such an unusual disease, however, that protection by antibodies cannot be taken for granted without direct proof. AIDS patients themselves have antibodies against the virus, but evidently get no protection from them. In addition, the AIDS virus is unusually variable in its chemistry. Whether this would affect a vaccine is still unknown.

An advantage of using either the remodeled vaccinia virus or the purified AIDS virus protein is that neither would pose a risk of producing the disease AIDS in the recipient.

In the April 10 issue of Nature, scientists at the National Institutes of Health in Bethesda, Md., and a group from subsidiaries of the Bristol-Myers Company in Seattle reported success in splicing a key gene of the AIDS virus into vaccinia virus.

The gene is the blueprint for two surface proteins of the AIDS virus: one is necessary to the process by which the virus attaches to and invades cells, the other has important structural functions. In the animal tests, cells innoculated with the modified vaccinia virus react as if they had been invaded by an AIDS virus and produce antibodies against it.

Although the two research groups worked independently of one another, they accomplished essentially the same feat. Both remodeled the vaccinia virus and demonstrated that it could be used to produce the AIDS virus proteins in their natural form and evoke antibody production in experimental animals. 

A Critical Step'

''We consider it to be a critical step,'' said [Dr. Robert Charles Nowinski (born 1945)] of the Bristol-Myers group.

He and his colleagues at the drug company's biotechnology subsidiaries in Seattle said they are planning to test the remodeled virus soon to see if it can protect chimpanzees against AIDS virus infection. Their group reported sucessful antibody production in seven of eight monkeys tested.

[Dr. Robert Charles Nowinski (born 1945)] and [Dr. George Joseph Todaro (born 1937)] of the Seattle group said that by the end of this year, they expect to ask the Food and Drug Administration for permission to start safety testing of their experimental vaccine in human volunteers.

Authors of the report from the national institutes are Dr. Sekhar Chakrabarti and Dr. Bernard Moss of the National Institute of Allergy and Infectious Diseases and Dr. Marjorie Robert-Guroff, [Dr. Flossie Wong-Staal (born 1946)] and [Dr. Robert Charles Gallo (born 1937)] of the National Cancer Institute. The institutes are major units of the National Institutes of Health.

[Dr. Shiu-Lok Hu (born 1949)] and Steve G. Kosowski of [Oncogen Company], a Bristol-Myers subsidiary in Seattle and Dr. Joel M. Dalrymple of the Army Medical Research Institute of Infectious Diseases, Frederick, Md.. are the authors of the other report.

In a telephone interview, Dr. Moss said he favors initial use of the AIDS virus proteins themselves rather than the vaccinia virus as experimental vaccine material. He did not give any timetable for human testing in connection with his group's research. Dangers Posed by Virus

Dr. Moss, a pioneer in research to remodel the vaccinia virus for uses against other diseases, noted that vaccinia virus could be dangerous to an AIDS patient whose immune defenses were suppressed by the disease.

In some rare cases, vaccinia virus has dangerous, sometimes fatal, side effects, including encephalitis. Many experts have said that taking vaccinia out of retirement would only be justified if the disease in question was, like smallpox, deadly and widespread. Presumably, AIDS could fit those criteria.

A vaccine would not be expected to help patients who already have AIDS. It would be used only to protect people who had not yet been infected with the AIDS virus.

Two Solutions Possible

[Dr Anthony Stephen Fauci (born 1940)], coordinator of AIDS research at the national institutes and the director of the allergy institute, suggested two possibilities: use of the remodeled vaccinia virus directly as a vaccine or using the virus as a means of producing large quantities of the surface, or envelope, proteins for use as vaccine material.

The remodeled vaccinia virus can be ''an important new tool'' in the study of AIDS and ''may have potential as a vaccine against the disease,'' said an announcement from the institutes.

Live vaccinia virus was the vaccine that totally eradicated the disease smallpox after a worldwide effort that took more than a decade. Smallpox is believed to have been the only major human disease ever to have been eradicated totally by vaccine.

In recent years a few scientific groups, notablly that of Dr. Moss, have been seeking to adapt the vaccinia virus to other uses. The research has shown that the virus can be engineered to protect against the liver disease hepatitis B, against some varieties of herpes virus and other infections as well. None of the research has gone beyond the stage of animal experimentation, however.

Dr. Todaro said many scientists involved in AIDS research have achieved remarkable things within only about three and a half years: discovering the virus that causes the disease, developing diagnostic and screening tests, cloning the virus genes and now finding potential ways of producing a protective vaccine.

Problems With Other Strategies

Many possible strategies for developing a vaccine against AIDS have been considered in recent years, but each has presented serious problems.

In a special article on the subject in the New England Journal of Medicine in December, two experts said the best option may be that of using recombinant DNA techology, known popularly as gene splicing and genetic engineering, to develop substance for use in vaccines.

The authors, [Dr. Donald Pinkston Francis (born 1942)] of the Centers for Disease Control and John C. Petricciani of the Food and Drug Administration noted in particular the possibility of producing proteins or parts of proteins from the AIDS virus. A problem with this approach, they said, is that the vaccine recipient's body might not react against these substances in quite the way they would react to the virus itself.

Other experts noted that the vaccinia virus approach also has problems, including the risk of serious adverse reaction if the vaccine is given inadvertently to a person already compromised by the disease.

From cold fusion to high-temperature superconductivity, from robotics to neural networks, many of the recent ''revolutions'' in science and technology seem to have the half-life of an average teen-age crush. Each one strides onto center stage to the boom of the media's timpani, promising to revitalize our sluggish economy, trounce our competitors, light up our homes, levitate our trains and otherwise make life easier, cheaper and more entertaining for all Americans. And almost inevitably, the ''miracle breakthroughs'' prove disappointing: the science behind them is either wrong or too difficult to meet the demand for instant results.

Perhaps the biggest letdown in recent history has been the business of biotechnology, which involves the manufacture of vast quantities of genetic material by isolating the DNA from the cells of one species (usually human) and splicing it into the cells of another (usually bacteria).

Not only did biotechnology seem to guarantee America's resurgence on the world market - after all, we invented genetic engineering - it also held forth the hope of curing our most intractable scourges. Through recombinant DNA and related techniques, enterprising scientists would spin out amazing new therapeutics to thwart cancer, heart disease, diabetes and infectious diseases. Even the names of the vaunted disease-busting agents had a muscular rhythm to them: interferon, interleukin, monoclonal antibodies. They had to work. And if they worked, some lucky visionaries would get very, very rich.

As Robert Teitelman recounts with delightful verve, occasional bite and persuasive detail in ''Gene Dreams,'' the promise of biotechnology whipped Wall Street into an unprecedented state of near-religious febrility. In the early- to mid-1980's, investors who knew as little about DNA and RNA as they did about muons and quarks poured tens of millions of dollars into a passel of aggressive biotechnology ventures, among them Genentech, [Cetus Corporation] and Biogen. More astonishing still, the investments were made despite one niggling detail: all the biotech companies went public long before they had generated a single marketable or effective product. Their goods were either in the most embryonic stages of development and testing, or remained to be discovered. A few astute observers realized that the Wall Street frenzy - dubbed ''biomania'' - was faintly ridiculous. ''Interferon,'' one scientist told a Forbes magazine reporter in 1980, ''is a substance you rub on stockbrokers.''

Mr. Teitelman, a writer for both Financial World and Oncology Times, begins his tale with the story of Genentech, the largest and most ambitious of the fledgling biofirms. Genentech was the creation of Herbert Boyer, one of the fathers of gene splicing, and Robert Swanson, a venture capitalist turned entrepreneur. Based in South San Francisco, Calif., Genentech was to be an entirely new species of company, one that ''could combine both the pure science of the academic world and the product development of the drug industry.'' It hired employees from the legions of post-doctoral fellows being churned out by the universities and it cultivated a freewheeling atmosphere with Friday afternoon beer bashes, during which Mr. Swanson, Genentech's chief executive officer, often dressed up in a grass skirt or a bumblebee outfit.

The quirky, folksy formula looked like the future of corporate America. And though Genentech had nothing immediately salable, Wall Street wanted it. On Oct. 14, 1980, Genentech and its underwriters offered one million shares of stock at $35 each. That was quite high for an untested company - but not high enough. Within 30 minutes after market opening, the stock had been bid up to $89 a share by eager buyers - a record for an initial public offering - before dropping down to $70 on the final bell.

The Genentech offering was a revelation to many other biologists and entrepreneurs, including those who started up Genetic Systems, a Seattle-based operation and the primary object of Mr. Teitelman's attention. In the Genentech mold, Genetic Systems was the dual creation of a scientific luminary: Robert Nowinski, then with the Fred Hutchinson Cancer Research Center in Seattle, and David and Isaac Blech, brothers and financial wizards. Yet it was the ''strong, aggressive'' Bob Nowinski, with his ''quick wit, boundless confidence, and a real talent for articulating the romance of science,'' who was to wheel and deal so relentlessly that his little company became someone else's.

Genetic Systems was built around Mr. Nowinski's specialty, monoclonal antibodies - designer molecules or ''magic bullets'' that can home in on specific targets, such as viral proteins and cancer cells. Mr. Nowinski had a two-fold plan: to develop monoclonals for the diagnosis of venereal and other infectious diseases; and to use the profits from the diagnostic kits to fashion more sophisticated therapeutic monoclonals that would destroy tumor cells. Even the first step required money, however, so the company's founders cobbled together a complex financial plan and took Genetic Systems public in June of 1981. Trading once again was manic, millions of dollars cascaded into the company coffers and research began. So, too, did an attitude of extravagance - business affairs were catered by the priciest gourmet shop in Seattle, while Bob Nowinski drove a company Ferrari and always went first class.

Financial troubles were not far behind, and by the end of 1981 the company was ''burning'' cash at a frightening rate. To ease the pressure, Mr. Teitelman tells us, Mr. Nowinski and other principals went chasing money again, offering warrants, limited partnerships and similar paper promises. Mr. Nowinski also struck a deal with George Todaro, a renowned biologist at the National Cancer Institute, to start an offshoot of Genetic Systems, dubbed Oncogen, which would explore the potential profitability of research in cancer genes.

Indeed, striking deals seemed to become a habit with Mr. Nowinski. Whenever Genetic Systems ran into difficulty developing a particular product, he negotiated with other, better-equipped companies - an approach that, while broadening the technical base of the enterprise, effectively spread real or potential profits too thin. And despite the best efforts of scores of young scientists, some biological problems were just too complicated, too messy, for the corporate balance sheet. Far from being the ''magic bullets'' of Mr. Nowinski's dream, monoclonal antibodies have not proved to be the long-sought cure for cancer.

By 1984, Genetic Systems' outlook was bleak. Profits from its diagnostic kits were barely dribbling in, executives were at each other's throats, the accounting records were in chaos and nobody knew how much cash was on hand. A year later, Bristol-Myers, an old-fashioned, bureaucracy-riddled, distinctly nonentrepreneurial pharmaceuticals giant, bought Genetic Systems. ''The [ biotechnology ] revolution clearly was dead,'' the author writes, ''or it had not yet begun.''

Whether explaining difficult biological concepts or tortuous financial stratagems, Mr. Teitelman writes with lucid grace and an insider's grasp. He points out that there have been some genuine successes in biotechnology, most notably Genentech's development of tissue-plasminogen activator, which dissolves clots in clogged arteries. Yet Mr. Teitelman believes that nature is profoundly complicated, and that the battle against cancer might well be ''not a sweeping victory'' of ''powerfully elegant simplicity,'' but a ''long, difficult war one tumor type, one disease, at a time.'' No stock prospectus can make it otherwise. THE PROOF IS IN THE PUDDING

Biotechnology sold itself on the belief that it could remedy the most profound economic and medical ills of the age, and please Wall Street as well. . . . Talk of medical breakthroughs became pretexts to raise more money; capital accumulation was confused with speculation; rhetoric was mistaken for reality. . . . Genetic Systems, for all its flaws, was a solid scientific enterprise; Alfacell, on the other hand, has proven thus far to possess the substantiality of smoke. But both appeared . . . dressed in similar gaudy costumes. They were joined by scores of others. Most featured the same apparatus: advisory boards, mice, consultants, forecasts, and laboratory miracles. . . . Like the art market, biotech posed complexities and uncertainties that created a role for experts as powerful and indispensable guides. . . .

Selling Genetic Systems or Alfacell was not that much different from selling, say, a painting by Warhol, Robert Rauschenberg, or Jasper Johns. . . . Substance or technique begin to matter less than ideas and style. . . . Fortunately . . . art and medicine are finally very different things. Art must wait for history to judge its merit; until then, the game belongs to dealers and critics. In biotechnology and medicine, theories must sooner or later prove themselves among the sick and dying - an unforgiving jury - and in the marketplace. . . . Does the tumor shrink? Are there side effects? Can the technology be sold profitably? . . . Does it provide much help to the physician? In that way, it finally gains exit from the world of fashion and hype. From ''Gene Dreams.''

AS venture capitalists and the public market have cooled to early-stage biotechnology and pharmaceuticals companies, these concerns have had to become more creative in raising money. Many have turned to alliances with established companies, trading their technology for capital now and royalties later. But in three recent deals, the young companies went directly to private investors.

For the companies, such private placements typically put a higher valuation on shares than would a venture capitalist. For investors, primarily wealthy individuals rather than funds, these deals allow a chance to buy into a company at an earlier stage, and thus at a lower price, than in a public offering. Because the risk is higher at this stage, the potential reward is greater.

Athena Neurosciences Inc. completed a $13.3 million private placement on Monday. Founded in 1986, Athena is pursuing products for the diagnosis and treatment of central nervous system disorders, primarily Alzheimer's disease.

While Athena's science is highly regarded, the company's goals are long term and uncertain. Having gone through three rounds of venture capital totaling $15.9 million, the company found that source of financing closed, but also felt it was not ready for a public offering.

"Having done three rounds, we were looking for a valuation higher than the venture capitalists were comfortable with," said John Groom, Athena's president and chief executive. Athena, which is based in South San Francisco, sold units, consisting of 20,000 shares, at $60,000 each, for a stock price of $3 a share. "This was certainly a better price than we would have gotten from the hostileventure-capital market," Mr. Groom said.

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In the mid-1980's, many biotech companies at a comparable stage of development to Athena's were taken public on the promise of products and profits to come. But a number of those companies have yet to deliver, or have found the market for their drugs smaller than anticipated. This has nearly eliminated public offerings of early- to mid-stage biotech companies, which in turn lowers venture capitalists' interest.

"Clearly the venture capitalists seem to feel a little more caution," said Viren Mehta, an analyst with Mehta & Isaly: Worldwide Pharmaceutical Research in New York. "They have learned the lesson painfully that time horizons in biotech are longer than they expected and the risk/reward ratios are not easy to figure out."

Still, for biotech entrepreneurs with a track record, money is available. The Icos Corporation, a Seattle-based company founded to develop anti-inflammatory drugs, raised $33 million in a private placement in July, when it was only 9 months old. At such an early stage, investors had to be bankingon Icos's founders: George Rathmann, the former chairman of the Amgen Corporation; Robert Nowinski, founder of Genetic Systems Inc., now part of Bristol-Myers, and Chris Henney, co-founder of the Immunex Corporation.

Like Athena's offering, the Icos deal was managed by a group led by Stelios Papodoupolis at Paine Webber Capital Markets, which sold 440 units, consisting of 50,000 shares of common stock, at $75,000 a unit. Bill Gates, the founder of the Microsoft Corporation, bought a 10 percent stake, making him the company's largest shareholder.

G. Steven Burrill, director of the high-technology group at Ernst & Young, said the Icos deal should be regarded as an aberration, with the big names involved and Paine Webber's history of biotech offerings. Biotech companies will more likely find funds in corporate partnerships, he said.

Nevertheless, Affymax Technologies N.V., a start-up company developing a novel way to screen compounds for use as drugs, raised $25 million in a private placement without using an investment banker at all. Again, the founder's history sold the deal: Affymax was founded by Alejandro Zaffaroni, the founder of Syntex Research U.S.A. and of the Alza Corporation.

"The thing that really made it go is contacts with people that Alex has worked with over the years," said Ken Nussbacher, Affymax's vice president for business and legal affairs, noting that six current or former chief executives of pharmaceuticals companies purchased shares. Affymax is preparing a second offering of the same size.

All of these deals are Regulation D offerings, which under S.E.C. regulations can be sold only to qualified investors, those with more than $200,000 in annual income for at least two years, or $1 million in net worth, not including real estate appreciation. "It is obviously a speculative investment," Mr. Nussbacher said. "You don't want to be selling to widows and orphans."

While President Clinton promotes a goal of developing an AIDS vaccine in 10 years, a company led by Seattle biotechnology entrepreneur [Dr. Robert Charles Nowinski (born 1945)] is raising tens of millions of dollars to finance immediate, large-scale testing of just such a potential vaccine.

Nowinski and stockbroker George Steiner of Prudential Securities' Seattle office are recruiting private investors for [VaxGen, Incorporated], which plans final clinical trials in 7,500 American volunteers and another 3,000 in Thailand.

The South San Francisco, Calif.-based company already has raised at least $18 million and hoped to reach $36.75 million, according to papers filed in March with the state Securities Division. Steiner said last week that VaxGen is "very close" to completing its money hunt, but he declined further comment.

Some experts are skeptical of the VaxGen effort, however, saying that the company's so-called gp120 vaccine has been superseded by newer approaches more likely to protect against AIDS.

The National Institutes of Health decided in 1994 not to fund phase-three clinical trials of VaxGen's vaccine, which was developed by biotech powerhouse Genentech Inc.

Genentech itself, after putting $50 million and eight years into its AIDS vaccine, cut its financial exposure in December 1995 by spinning off the research-and-development program as VaxGen. Genentech is contributing to VaxGen 300,000 units of the vaccine but only $2 million in cash.

VaxGen executives, who did not return phone calls, reckon that even a partial preventative to AIDS would be welcome.

The company's private placement prospectus, obtained from a potential investor, says the Food and Drug Administration might even approve a vaccine that protects 30 percent of recipients against AIDS.

Such a vaccine could be given to health-care professionals, law-enforcement personnel and others who face on-the-job exposure to HIV, the document says.

Clinton's declaration this month of a 10-year push to find an AIDS vaccine received a lukewarm reception, in part because it provided no new funding. And AIDS researcher [Dr. Robert Charles Gallo (born 1937)], a co-discoverer of the HIV virus, told reporters the vaccine might indefinitely elude medicine's grasp: "It is possible that we may never develop a vaccine for HIV."

Nowinski himself is controversial in the biotechnology industry. He founded [Genetic Systems Corporation], Icos Corp. and PathoGenesis Corp., all in the Seattle area, and private investors in those companies' large start-up financings generally have profited.

But his launch-'em-and-leave-'em approach has drawn criticism that Nowinski is more interested in starting companies than shepherding them through to success.

Gp120 vaccines have advanced the furthest in human testing. But the shortcomings uncovered in those tests have led many researchers to conclude gp120 alone won't conquer AIDS.

"I hope that gp120 is at least partially effective -- it could be. However, I think we're better off to spend our money to develop vaccines that produce a broader immunity," said [ Dr. Nancy Logan Haigwood (born 1951)], a virologist now at Seattle Biomedical Research Institute, who previously worked at Chiron Inc. developing that company's version of a gp120 vaccine.

Although gp120 does cause a significant immune response, she said, "we already know from safety trials that it's not completely efficacious, because (some) people who have been vaccinated with the Genentech product and the very similar Chiron product during safety trials became infected."

For many researchers, said Haigwood, "Life has definitely moved beyond the subunit gp120."

AIDSVAX, the vaccine championed by Nowinski's company, is termed a subunit gp120 vaccine because it uses a portion of the virus's glycoprotein coat with a molecular weight of 120,000.

According to the VaxGen prospectus being circulated in Seattle, the vaccine has been tested in chimpanzees, where it prevented infection from direct intravenous injection of HIV.

In addition, safety tests on 1,093 human volunteers showed no serious side effects, and almost all of them developed high levels of antibody against HIV. Such antibodies have been shown in laboratory tests -- outside the body -- to neutralize HIV, the prospectus states.

But the prospectus also acknowledges that among a high-risk group of 102 vaccine recipients, six did become HIV-infected during the three-year monitoring period.

The document blames that "breakthrough" effect on the existence of different strains of HIV, and says the clinical trials will include mixtures of vaccine variants aimed at different HIV mutations.

[Dr. Nancy Logan Haigwood (born 1951)] said the gp120 vaccine's immune effect in chimpanzees has little predictive value. Both the [Chiron Corporation] and Genentech products did protect chimpanzees, but "we already know that it doesn't" work in humans to the same degree, she Haigwood.

One setback to the gp120 vaccine came in December when University of North Carolina researchers halted a test of Genentech's gp120 vaccine in patients already infected with HIV. They stopped halfway through the intended three-year trial after finding the vaccine didn't slow the disease's progress.

However, that failure as a therapeutic vaccine doesn't necessarily reflect on gp120's usefulness as a preventative.

Observers raise another issue as well. Antibodies attack the form of the HIV virus that appears outside the cell, but another type of immune response, called CTL, apparently is needed to attack HIV once it burrows inside normal human cells to begin replicating.

"Both modes of transmission must be addressed for a vaccine to be effective," said a recent status report on HIV vaccines by Drs. Matt Meldorf and [Dr. Lawrence A. Corey (born 1947)], both affiliated with the federally funded AIDS Vaccine Evaluation Unit run by the University of Washington and the [Fred Hutchinson Cancer Research Center].

Various trials of gp120 vaccines "have rarely elicited" that second type of response, according to the report.

Alternative approaches to creating immunity to HIV are in the early stages of testing. "There are some products that do appear to provide a broader immune response, and a more robust response," said Haigwood.

The AIDS Vaccine Evaluation Unit's recent report listed 13 candidate HIV vaccines, among them four gp120 vaccines.

Among the more promising prospects, according to the report, are those that pack a double punch, combining a subunit vaccine like gp120 with a vaccine based on HIV viral DNA spliced into another virus.

If gp120 turns out to produce some partial immunity in humans, it could be part of some future package of several vaccines, said Haigwood. "That I would support," she said.

Virologist [Dr. Donald Pinkston Francis (born 1942)], who successfully battled Ebola in the Sudan and smallpox in India, is now taking on the trickiest assignment of his career: an international test of an AIDS vaccine.

Dr. Francis plans to announce Wednesday that his company, VaxGen Inc., has won permission from the Food and Drug Administration to launch the nation's first large-scale test of a vaccine for AIDS prevention. The Phase III trial will include 5,000 volunteers in the U.S. and 2,500 in Thailand and take at least three years to complete.

"This is a watershed event in the AIDS crisis," says Seth Berkley, president of the nonprofit International AIDS Vaccine Initiative.

False Hope?

An effective AIDS vaccine would train the human immune system to ward off infection by creating antibodies. But Dr. Francis's vaccine could turn out to be another false hope in the fight against AIDS, which afflicts 30 million people around the world. Some respected researchers have already dismissed [Dr. Donald Pinkston Francis (born 1942)]'s vaccine -- called Aidsvax -- as ineffective. What is more, a growing body of research indicates that protective immunity against HIV, the elusive, unpredictable virus that causes AIDS, can't be won by a traditional vaccine alone.

In giving a green light to the trial of any vaccine, the FDA doesn't endorse the experimental approach or express an opinion on the likelihood of its success. Its chief criteria include safety and indications of biological activity from prior testing. Interim results from VaxGen's Phase I and II trials, in which some volunteers received placebos, showed that measurable antibodies were induced in more than 90% of those who received the vaccine, the company says.

Wednesday's announcement, confirmed by the FDA, will mark the latest milestone in a long and visible quest by [Dr. Donald Pinkston Francis (born 1942)]. He was among the first to warn of the epidemic in the early 1980s, while working for the Centers for Disease Control, and was lionized in "And the Band Played On," the Randy Shilts book about the epidemic's early days. (Matthew Modine played Dr. Francis in the film version.)

He subsequently went to work for Genentech Inc., where he helped develop an AIDS vaccine called gp120. Four years ago, after small-scale trials of gp120, the federal government denied funding for an expanded trial. There were doubts about the vaccine's effectiveness and fears that volunteers would become infected. Genentech, which had spent $50 million on gp120, shelved it. In 1996, Genentech spun off the gp120 group as VaxGen, retaining a 25% interest in the new company.

Elsewhere, vaccine development was slowing as attention shifted to successes in treating HIV with protease-inhibitor "cocktail" therapies. VaxGen pressed on, creating a new double-barreled version of gp120 -- Aidsvax -- aimed at two of the most common strains of the virus found in the U.S., rather than one. To proceed, VaxGen raised $27.5 million from private investors and recruited clinics around the country to treat volunteers.

Phase III trials are expected to begin in the U.S. this month and in Thailand by the end of the year. Phase I and II trials of Aidsvax are continuing.

Casting Doubts

[Dr. Donald Pinkston Francis (born 1942)]'s doubters include [Dr. David Baltimore (born 1938)], a Nobel Prize winner who heads a government advisory committee on AIDS vaccines and is president of the California Institute of Technology. "I personally believe people should be able to try what they want to try, but it's a very, very long shot to expect anything that's measurable," Dr. Baltimore says. He cites recent research, including Dr. Francis's Phase II trials of Aidsvax's predecessor in the early 1990s, indicating that antibodies induced by traditional protein vaccines -- such as Aidsvax -- are unlikely to protect against HIV.

Worse, Dr. Baltimore adds, the trial could "seriously dent the reservoir" of people willing to participate in future trials of AIDS vaccines that might be more promising than Aidsvax.

[Dr. John Philip Moore (born 1957)], an HIV researcher at the [Aaron Diamond AIDS Research Center] in New York, has studied the same research as Dr. Baltimore and is also skeptical. Like Dr. Baltimore, Dr. Moore believes that Aidsvax's effectiveness will be so low it will be hard to measure, invalidating its use. "It's going to achieve no practical benefit to the population," he says.

Researchers who believe that a traditional vaccine can't protect against AIDS by itself think it may also be necessary to boost the white blood cells known as killer T-cells for an all-out attack on HIV-infected cells. This combination approach is being tested by a unit of France's Rhone-Poulenc SA and [Chiron Corporation] but it won't be ready for the large-scale, final stage of clinical trials -- Phase III -- for at least another year.

A few other AIDS vaccines are currently in Phase I trials. But major drug makers aren't active in that field partly because the basic interaction between HIV and the immune system is still poorly understood. One exception: Merck & Co., which is in early stage development of a vaccine containing HIV genes instead of the whole virus.

'Theoretical Babbling'

Dr. Francis, a trim 57-year-old with unruly shocks of graying brown hair, shrugs off what he brands the "theoretical babbling" of his scientific critics. If the Phase III trials show his vaccine is even 50% effective, it could still drastically cut the advance of AIDS, he says. He recalls that Jonas Salk's 70%-effective polio vaccine spared hundreds of thousands of children before a superior vaccine, made by Albert Sabin, was available seven years later.

"I applaud debate but not if it impedes progress. We've reached the limit of basic research, and now it's time to move forward," Dr. Francis says.

There is evidence that the second generation of Dr. Francis's vaccine is improved. The original version induced antibodies for only the most common strain of virus found in the U.S., providing questionable benefit for patients with up to six other known strains world-wide. Patients in the vaccine's earlier trials who became infected had one of these less common strains, Dr. Francis says.

The new "bivalent" version for U.S. patients offers broader coverage, says Dr. Francis. The vaccine to be used in Thailand was developed from two strains prevalent in that country. So far, more than 200 people have been injected with either of the bivalent forms of Aidsvax, including Dr. Francis himself.

Anthony Fauci, head of the National Institute for Allergy and Infectious Diseases and the man most responsible for killing Dr. Francis's vaccine four years ago, has reviewed data from Dr. Francis describing the bivalent design and calls it "interesting." Dr. Fauci says he doesn't regret the 1994 decision but thinks this trial could prove worthwhile. "If they have the resources to do it, there's a possibility that something can be learned," he says.

For Dr. Francis, who has little business experience, a nerve-racking question was whether he could attract sufficient capital to revive his vaccine. In early 1997, he and Robert Nowinski, VaxGen's co-founder and chairman, took their story on the road. Dr. Nowinski plumbed his contacts in the Seattle area, where he had previously founded three biotechnology companies. In less than five months, several hundred investors provided the necessary funds.

SHARES of VaxGen, a small biotechnology company that has developed an experimental AIDS vaccine, have soared recently, despite skepticism among researchers and many investors about the company's main product.

VaxGen announced ''encouraging'' findings on May 29, suggesting that its AIDSvax vaccine stimulated an immune response to more strains of H.I.V. than was initially expected. The stock price of the company, based in Brisbane, Calif., jumped 26 percent that day, to roughly $23 a share. It is now trading at $24.95, still below a high of $36.87 last October.

VaxGen's vaccine is the first in the United States to begin large-scale tests, known as Phase 3 studies, involving people in high-risk groups, gay men and drug users. ''In reality, there's only one way to find out whether a vaccine works, and that's to test it,'' said [Dr. Donald Pinkston Francis (born 1942)], VaxGen's president.

Researchers are at odds over whether VaxGen's approach, using a protein from the coating of H.I.V. to stimulate antibodies, is the most effective way to stop AIDS.

''I think there is a feeling in the community that vaccines of this type are not capable of generating an appropriate immune response, that while a vaccine may be able to block the virus, there's skepticism about its chances of catching it once it gets into cells,'' said Dr. Dino Dina, who was president of [Chiron Corporation] when it and Genentech ran H.I.V. vaccine trials using a similar approach in the mid-1990's.

Other vaccines are being developed; some are in early stages of testing. Merck has begun pilot studies of a vaccine that takes a different approach. GlaxoSmithKline is testing a vaccine in a laboratory setting and expects to begin its own pilot studies later this year. Dr. Dina's new company, Dynavax, is collaborating with Aventis on an H.I.V.-AIDS vaccine, as is VaxGen, which would offer AIDSvax as a booster for the Aventis treatment.

Largely bypassed by institutional investors and ignored by analysts, VaxGen shares have become a favorite of short-sellers, investors who profit from the declining value of a stock. They are betting that the clinical trials will fail.

''This is not the type of company I typically recommend, but there is a huge first-mover advantage in developing vaccines,'' said Sharon Seiler, a securities analyst at Punk, Ziegel & Company, which helped VaxGen go public when it was spun off from Genentech in 1995.

VaxGen's announcement on May 29 came shortly after the company sold $20 million in convertible stock to the Halifax Fund.

Critics questioned the timing of the two events, saying the announcement of the test results was intended to increase the stock price. But VaxGen executives said they were not related. ''It was important information,'' Dr. Francis said.

Interim results of the Phase 3 tests are scheduled to be released in November. The trials are required before the Food and Drug Administration reviews the drug for possible approval.

But the future of VaxGen is uncertain, many investors said, and Wall Street has showed unusual caution.

''The issue of AIDS vaccines is an area where there's been a lot of controversy and disappointment," Ms. Seiler said. VaxGen's vaccine, she said, is based on a cloned version of a sugar protein called glycoprotein 120, which fell out of favor after failed tests in the mid-1990's.

The history of problems is fueling short-sellers, who have amassed a position of nearly one million VaxGen shares.

''What Vaxgen is doing is really old technology,'' said Jim McCamant, the editor at large of the Medical Tech Stock Letter. ''There are other companies doing new-generation things. I think we'll end up with a vaccine that works but that will take at least five years. It won't be a protein envelope, though maybe it could be used as a booster.''

THE stock was also hurt by the resignation in December of Robert Nowinski, VaxGen's chief executive and, along with Dr. Francis, a founder of the company. Mr. Nowinski, 55, said he was leaving for health reasons. Dr. Francis is serving as interim chief executive until a successor is found.

VaxGen is continuing two separate three-year trials -- one in North America and Europe, the other in Thailand -- involving almost 8,000 people. The final analysis is expected in November 2002.

While many fund managers have avoided the stock, Paul Sonz, manager of Paul Sonz Partners, a hedge fund, was an early investor and is sticking with it.

''There are one million shares held short that may have to be covered before November, and a lot of smart people who have looked at the science have put money behind this,'' Mr. Sonz said. ''For all of these reasons, the risk-reward picture here is compelling.''

At one time, he was a high-flying CEO whose companies promised help for cancer patients. He had a Picasso hanging in his Edmonds home and owned one of Seattle’s swankiest art galleries.

The day before Thanksgiving, Robert Nowinski was arrested on federal charges of failing to pay child support. Once among the most important players in the Seattle biotech world, Nowinski has allegedly become, in the parlance of child-welfare workers, a “deadbeat dad.”

Federal prosecutors say he fell nearly $125,000 behind on his child-support payments, and have charged him in a two-count criminal complaint.

Nowinski says he’s broke.

If Nowinski’s fall appears abrupt, his rise to the top was just as dramatic.

It was clear from his arrival in Seattle in 1975, as a brash young scientist at the Fred Hutchison Cancer Research Center, that he had a rare combination of skills: the mind of a scientist but the instincts of a businessman.

“He was able to articulate the dream and get people to put money into it,” said Bruce Montgomery, CEO of Corus Pharma, who used to work at one of Nowinski’s companies.

After just a few years, he helped found a new biotech company, a field that was in its infancy.

In all, he founded four publicly traded biotech companies over the course of about a decade: [Genetic Systems Corporation], which worked to develop antibodies for use in cancer treatment, Icos, PathoGenesis and [VaxGen, Incorporated]. He also helped found another biotech company, Primal.

Bill Gates put millions into Nowinski’s dream, as did Paul Allen. Even outside investors, who at that time shunned the unproven field of biotech, were won over by Nowinski’s vision.

“If you took the 15 largest biotechnology companies of the 1980s, we founded three of them,” he bragged to a Seattle Times reporter in 1990.

In each case, however, he got out rather quickly — often winding up with millions. [Genetic Systems Corporation], for example, was bought by Bristol-Myers Squibb, making Nowinski’s stock options worth $10 million.

Nowinski’s knack for coming out on top earned him the nickname “No-lose-ski.”

In the mid-1990s, Nowinski dove into the art world, renting a 5,000-square-foot space in Pioneer Square, doing an elegant remodel and installing a high-tech interactive “virtual gallery” so clients could project big-screen images of available artworks.

The opening show at Meyerson & Nowinski was called “Picasso and Friends.” His partner was Ronnie Meyerson, a New York art dealer.

Nowinski spoke enthusiastically to reporters about his plans to bring the work of internationally acclaimed artists to Seattle and his expectations for becoming a nationally recognized gallery. Less than three years later, the gallery closed, leaving many Seattle-area artists without representation.

Around the time of his art adventure, Nowinski’s marriage was dissolving. In 1996, Connie Nowinski filed for divorce. The pair had a prenuptial agreement in which Connie was to get 70 percent of communal property and Robert was to get all of the property he brought into the marriage, court documents say.

Under the terms of the settlement, Robert was to pay Connie $9,200 per month for two years. He also agreed to give her $2.25 million broken into several lump-sum payments. Meanwhile, Robert kept various investments; stock accounts in his name; their fine-art collection, which included a Picasso worth nearly $1 million; and other items.

Within four years, Connie filed suit, claiming he had hidden certain assets from her during the divorce. A judge determined he owed her 180,000 shares of VaxGen stock.

In 2003, Nowinski was hit with another lawsuit. This one claimed he had raided a trust fund he had set up for his three children, ages 15, 14 and 11. He admitted in a deposition to “borrowing” from the fund, which contained $500,000 worth of biotech stock, and selling it, court documents state.

“At no time since taking this ‘loan’ have the funds ever been repaid, although Mr. Nowinski testified that he has been in possession of funds in excess of several million dollars in the intervening period,” a guardian appointed to safeguard the children’s financial interests wrote in a report to the court.

A judgment of $1.2 million was entered against him in connection with the trust-fund case. He told the guardian that before the divorce, he had “$20 million” and “now I have nothing.”

Nowinski, who is on pretrial release, couldn’t be reached to comment for this story. His defense lawyer in New York declined to comment.

About the time of Connie Nowinski’s lawsuit, Robert Nowinski left Washington abruptly without telling the family, essentially disappearing for several months, the guardian’s report said. It turned out he had moved to New York and subsequently filed for bankruptcy. As part of the bankruptcy, his fine-art collection — which included works by Picasso and Matisse, among other noted artists — was liquidated.

This fall, Nowinski told The Seattle Times he had been trying to broker a billion-dollar deal with a local biotech company on behalf of some major investors. He said he had designs on taking over the company as well.

The old Nowinski, the media-savvy deal-maker, appeared to be back.

But in October, he was accused of failing to make his $5,300-a-month child-support payments. According to the charging documents, Nowinski stopped paying in 2003, about the time his ex-wife remarried.

By August 2005, he was nearly $125,000 in arrears. And yet “From (Connie Nowinski’s) observations, he never seems to have a lack of money,” the investigating agent, Michael Nichols, wrote.

Jeff Sullivan, chief of the criminal division of the U.S. Attorney’s Office, said federal prosecutors here file only about a half-dozen child-support cases a year, and then only when there’s a good chance of collecting.

He noted that while Nowinski could face jail time if convicted, their foremost concern is getting the delinquent child support.