U.S. invests in advanced flu vaccine method

* HHS awards up to $150 million to Protein Sciences Corp

* Company uses insect bacteria to make vaccines

By Julie Steenhuysen

CHICAGO, June 23 (Reuters) - The U.S. government is investing in a new technique for making flu vaccines that it hopes will help the nation respond quickly to outbreaks such as the H1N1 swine flu virus.

Health and Human Services Secretary Kathleen Sebelius said on Tuesday her department had awarded a $35 million contract to privately held Protein Sciences Corp Inc of Meriden, Connecticut, to use its new gene-based techniques to develop a vaccine and test it in clinical trials.

If testing goes well, the contract could be expanded over five years for a total of nearly $150 million.

"The technology has advanced in recent years to a point that we believe it could help meet a surge in demand for U.S.-based vaccine for seasonal and pandemic flu," Sebelius said in a statement.

"We want to use the technology to help our nation respond to emerging infectious diseases."

The United States has set aside $1 billion for a vaccine to combat the H1N1 strain that has caused a global pandemic.