Trump admin funds plasma company based in owner's condo

When Trump ministration gave a well-connected Republican dor seed money to test a possible COVID-19-fighting blood plasma techlogy, it ted company’s “manufacturing facilities” in Charleston, South Carolina.

Plasma Techlogies LLC is indeed based in stately waterfront city. But re are manufacturing facilities. Inste, company exists within luxury condo of its majority owner, Eugene Zurlo.

Zurlo's company may be in line for as much as $65 million in taxpayer dollars; eugh to start building an actual production plant, according to internal government records and or documents obtained by Associated Press.

story of how a tiny business that exists only on paper has mand to snare attention from highest reaches of U.S. military and government is emblematic of Trump ministration’s frenetic response to coronavirus pandemic.

It's also ar in a series of contracts awarded to people with close political ties to key officials despite concerns voiced by government scientists. Among ors: an ill-conceived $21 million study of Pepcid as a COVID rapy and more than a half billion dollars to ApiJect Systems America , a startup with an unapproved medicine injection techlogy and factory to manufacture devices.

In dition, a government whistleblower claimed that a $1.6 billion vaccine contract to vavax Inc. was me over objections of scientific staff.

At center of se deals is Dr. Robert Klec, a senior Trump appointee at Department of Health and Human Services who backed Pepcid, vavax and ApiJect projects. Records obtained by AP also describe Klec as a key supporter of Zurlo’s company.

In one government email obtained by AP, an official said Klec, whose job as assistant secretary for preparedness and response is to help guide nation through public health emergencies, was “all in” on Plasma Techlogies.

This was case despite misgivings from scientists he oversees. One of m said company would be just ar “mouth to feed” that would distract from or important work on pandemic. An HHS spokesperson said Klec “does t have a role in technical review of proposals r in negotiating contracts.”

Klec has come under pressure from White House to act with more urgency and t be bound by lower-level officials whom Trump has castigated as “deep state” and accused of politically motivated delays in fielding COVID-19 vaccines and remedies. This pressure has led to investments in numerous untested companies.

AP reached out to more than a dozen blood plasma industry leers and medical experts. Few h heard of Zurlo’s company or its techlogy, and would t comment.

Zurlo, company’s founder and a former pharmaceutical industry executive, told AP in an email that renewed interest in his company is being driven by COVID and or diseases.

“It is increasingly clear that collection of equate supplies of plasma is t possible; answer being option of new process techlogy that fully utilizes scarce plasma currently available,” he said.

But wher Zurlo’s techlogy, which claims to increase amount of disease-fighting plasma harvested from human blood, will be an improvement over or methods is still anyone’s guess.

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A FORMER SENATOR ON BOARD

Top government officials began to take tice of Plasma Techlogies after Rick Santorum, a former Republican senator from Pennsylvania and two-time presidential candidate, became part-owner, according to records and AP interviews.

After Congress supplied hundreds of billions of dollars to combat pandemic, Santorum stepped up his sales pitch for company’s method of turning human plasma into a rapeutic product — a process company has described as a game changer. In mid-August, federal government awarded Plasma Techlogies a $750,000 grant to demonstrate that it could deliver on its promises.

Santorum, who’s held elective office since 2007, remains influential among social conservatives, a key part of President Donald Trump’s political base. Santorum has extolled president’s handling of pandemic on national television in his job as a CNN commentator, arguing that nation’s response would have been worse under a Democratic ministration.

Trump "didn’t botch it,” Santorum said recently in response to charges that president h done a poor job leing country through COVID-19. “I mean you guys keep blaming Trump. This is a local decision.”

HHS would t comment when asked wher Santorum’s public backing of president led to a company he has a financial stake in getting a government contract.

Zurlo has deep ties to Republican Party. He has contributed thousands of dollars to Santorum’s campaigns and to or GOP campaigns and political action committees. He entertained Santorum and his family at mansion Zurlo used to own on Kiawah Island, an exclusive golf resort in South Carolina. y would play golf during day and enjoy evenings overlooking Atlantic, according to Michel “Mitch” LaPlante, a former business associate of Zurlo’s who attended several dinners with Santorum and Zurlo.

business relationship between Zurlo and LaPlante turned ugly after those days of hobbbing on Kiawah. A real estate deal y h invested in toger fell into foreclosure, leing to a suit seeking more than $700 million by ir mortg lender. Each man sued or for fraud and severed ir business ties acrimoniously.

Zurlo founded Plasma Techlogies in 2003, according to articles of organization and or records filed with South Carolina’s secretary of state. company’s most recently listed dress is Zurlo’s condominium in Charleston’s French Quarter.

company has or presence in South Carolina — or any or state — even though a U.S. government spokeswoman told AP that Plasma Techlogies has “manufacturing facilities” in Charleston.

“Fairy tale,” LaPlante said when asked if Plasma Techlogies operates any commercial in South Carolina’s most populous city.

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OUTSIDE, LOOKING IN

Granting tens of millions of dollars to Plasma Techlogies would track with Trump’s support for treating COVID-19 patients with convalescent plasma. Plasma, yellowish liquid part of blood, harbors various antibodies, soldiers of body’s immune response that can target specific intruders such as viruses. Studies are underway to see if plasma taken from people who have recently recovered from COVID-19 can help those newly diagsed fight infection.

Zurlo has spent years trying to break into a sector of pharmaceutical industry that manufactures rapies using antibodies called immuglobulins, which are taken from healthy people to treat immune disorders. But routine immuglobulin treatments are only one part of field.

During pandemic, many plasma companies are focusing on “hyperimmune globulin,” a rapy that pools and purifies plasma from recovered COVID-19 patients. result is a powerful “potential global treatment for people at risk for serious complications from COVID-19,” according to CoVIg-19 Plasma Alliance, an industry group that includes world’s largest plasma companies. Hyperimmune globulin produced by several companies is being tested in new COVID-19 patients.

process for making se plasma-based rapies is called fractionation, and Plasma Techlogies markets its approach as a “disruptive and transformative” techlogy that makes for a more potent product, according to records. A document prepared by Plasma Techlogies in late May that outlines company’s business strategy is focused on how much better its method is than a World War II-era process named for its developer, Edwin Cohn.

Dr. Jeff Henderson, an infectious disease specialist at Washington University School of Medicine in St. Louis, said it is very likely that many companies have alrey developed improvements over deces-old “Cohn” method. y just don’t discuss m publicly because y are tre secrets.

“re may be 50 techlogies in use that are an improvement over Cohn fractionation,” Henderson said.

But Santorum described plasma fractionation industry as more interested in keeping shareholders happy than opting new techlogies that would require expensive modifications to ir manufacturing lines.

“You’ve got companies that are doing really well and don’t want to change anything,” Santorum said in an interview with AP.

“We’re little guy trying to fight City Hall.”

Plasma Techlogies seemed to be on its way in 2014. company h licensed its system to Dallas-based Access Pharmaceuticals, according to financial records filed with Securities and Exchange Commission.

One filing described Zurlo as a trailblazer whose techlogy would “fundamentally change ecomics of plasma fractionation.” Under terms of licensing agreement, Plasma Techlogies was to be paid $1 million in cash with an ditional $4 million in cash or stock to come.

But three years later, agreement ended abruptly, according to SEC records.

w named Abeona rapeutics, company was grappling with crushing deficits — $346 million in June 2017. It’s unclear wher any of that red ink was due to deal with Plasma Techlogies. But by end of 2017, “ agreement was terminated and techlogy was returned” to Zurlo’s company, according to an Abeona SEC filing.

A spokesman for Abeona rapeutics declined to comment on licensing agreement with Plasma Techlogies.

Santorum blamed deal’s demise on onerous regulatory hurdles imposed by Food and Drug ministration to ensure patient safety.

“y basically killed product,” he said.

Santorum rejected any suggestion that Zurlo’s invation is unproven, even though his company has never me an FDA-approved product. Plasma Techlogies, he declared, is on verge of transforming industry, and for a fraction of cost to develop a coronavirus vaccine.

“I’m just telling you, it’s gonna happen,” Santorum said.

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A LINE IN

Zurlo brought Santorum aboard after agreement with Abeona fell through. “We’ve got an FDA problem. Can you help me?” Santorum recalled Zurlo telling him.

Zurlo’s close relationship to Santorum offered a direct line into FDA. former senator h built a connection with Dr. Peter Marks, a senior FDA official, according to documents obtained by AP.

In September 2019, Marks introduced Santorum at an FDA workshop held to explore development of rapies for a rare disease. Santorum told group about his youngest child, who was born with a life-threatening condition kwn as Trisomy 18, according to a transcript. Immuglobulin treatments h saved her life, he told audience.

Santorum’s personal story about his child’s illness was intertwined with a promotion of Plasma Techlogies. Santorum said Zurlo, whom he called “a good friend,” h invented a groundbreaking techlogy for better plasma-based rapies to help his child and ors.

Santorum credited Marks, director of FDA’s Center for Biologics Evaluation and Research, for pledging to remove barriers that have kept Plasma Techlogies on outside, looking in. “All I’m saying is, we have an opportunity because of Dr. Marks and what he has laid forward,” Santorum said at workshop.

former senator told AP it would have been a “crime” if he hn’t used his influence to get Plasma Techlogies recognized.

“Shame on me if I hn’t,” he said.

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A SMALL SHAREHOLDER

In mid-April, a few weeks after Trump declared coronavirus pandemic a national emergency, Santorum described Marks as an enthusiastic backer of Plasma Techlogies, according to an email routed to multiple officials in Biomedical vanced Research and Development Authority, or BARDA, an HHS office Klec oversees.

Calling himself a “small shareholder” in Plasma Techlogies, Santorum wrote, “Dr. Marks said I should communicate to you that he is ‘excited about this process and looks forward to working with us to get our process opted by industry.’”

FDA declined a request to interview Marks and also declined to answer questions about wher he’s been helping Plasma Techlogies secure a commercial foothold.

“Dr. Marks’ enthusiastic nature should t be mistaken for support for any specific product or techlogy," FDA spokeswoman Stephanie Caccomo said.

Federal ethics rules ban government employees from giving preferential treatment to any private organization or individual, according to Scott Amey, general counsel at nprofit Project on Government Oversight.

“Public trust in government decisions and a level playing field is essential to good government, so this situation deserves a look,” Amey said.

Santorum confirmed that he communicated directly with Klec, whom he described as “very supportive” of Plasma Techlogies.

But Santorum’s initial pitch at HHS failed to gain traction among ncy’s scientists, who didn’t see Zurlo’s techlogy as worthy of millions in emergency pandemic funding, according to emails and Rick Bright, former BARDA director. y were focused on COVID-19 vaccines and treatments that could be delivered quickly, and saw Plasma Techlogies project as a longer-term effort.

“y were t excited,” recalled Bright, a vaccine expert who’s been sharply critical of Klec’s tenure at HHS. “y did t jump all over this and say, ‘We’ve got to get this going right away.’”

Bright filed a whistleblower complaint in May that alleges Trump ministration failed to prepare for onslaught of coronavirus.

With HHS scientists unconvinced, Plasma Techlogies submitted a proposal dated May 28 to Defense Department, which also is heavily engd in government’s COVID-19 response.

detailed proposal, obtained by AP, sought $51.6 million to build a plasma fractionation facility in Atlanta or Raleigh, rth Carolina.

With a military audience in mind, proposal emphasizes national security implications of coronavirus pandemic, stressing need to churn out sufficient doses of antibody-rich hyperimmune globulin “to bolster force health protection for members of our military who are at especially high risk of infection, or whose performance is critical to national security and safety.” proposal ds se plasma-derived proteins can be used as a treatment for viral infections until a vaccine is available.

pitch fell flat. At first.

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AR MOUTH TO FEED

In a June 12 email to HHS scientists, Army Lt. Col. Kara Schmid wrote that price tag for Plasma Techlogies was too high, even for Pentagon, and that key parts of company’s proposal were too vague.

“I’m just unclear if it has $50M worth of value,” Schmid wrote, ding she was “lukewarm at this point.”

Brian Tse, a BARDA health scientist, told Schmid that his office h passed on Plasma Techlogies. With production facility, Zurlo’s company intended to get COVID-19 patient plasma from blood donation centers that were alrey under heavy stress because of pandemic.

“I believe that ding one ditional ‘mouth to feed’ to same source is more likely to induce delays to projects alrey underway than it is to solve problems,” Tse wrote.

Despite doubts, Klec didn’t lose interest in Plasma Techlogies, according to emails. “Dr. Klec has specifically asked us to take a closer look,” an early July mess re.

Over rest of July, messs among his staff expressed misgivings about Zurlo’s techlogy, yet company remained in play.

Several days later, an HHS contracting officer rejected idea that Plasma Techlogies might partner with one of plasma companies that government was alrey working with.

“ connection is t viable from a contractual standpoint,” officer wrote in a July 16 email.

Still, a week later, Plasma Techlogies h a champion at Pentagon.

Santorum said he was contacted by Steven Morani, deputy assistant secretary of defense for materiel reiness. Defense Department officials were drawn to idea of a U.S.-owned and operated fractionation facility, according to Santorum.

It’s t clear what changed, but messs from late July show Morani and or defense officials h conferred and would support Plasma Techlogies project. An initial $750,000 in emergency coronavirus spending would be used to prove concept, a move backed by HHS, with as much as $65 million in government money to come later to build a commercial facility and to purchase plasma and or materials, according to emails. That’s more even than Plasma Techlogies requested.

messs don’t say where that money would come from or why ditional $13.4 million is required.

Morani referred AP’s emailed questions about company and contract to a Defense Department spokeswoman, Jessica Maxwell, who declined to discuss future funding for Plasma Techlogies.

“ $750,000 is currently total amount of government funding planned for effort,” Maxwell said.

Santorum, who criticized a reporter for writing what he termed a “political hit piece,” said Zurlo intends to donate any profits Plasma Techlogies generates to charities that support mission of Catholic Church.

But Santorum h different plans for any returns on his investment.

“I have me such claims as a far of seven who has three weddings this year,” he said. “If any money were to come, I would welcome that money to help pay my bills.”