WASHINGTON -- Days after the government refused to buy its anti-radiation drug, a San Diego pharmaceutical company announced yesterday that it is dropping development of what many considered the most promising treatment for victims of a "dirty bomb" or nuclear attack.

Executives of Hollis-Eden Pharmaceuticals Inc. said Department of Health and Human Services officials effectively demanded this week that the company spend another $40 million to $50 million on final safety and efficacy trials without a commitment to a contract.

Chairman and Chief Executive Officer Richard Hollis said the government's decision undercut a key promise of the nation's BioShield program, which was established to develop new medicines for use if terrorists attack with biological, chemical, radiological or nuclear weapons. That commitment was to provide advance-purchase contracts to offset the heavy costs of the pivotal, final clinical studies, so long as the product wins Food and Drug Administration approval within eight years.

Hollis-Eden's drug, NEUMUNE, has been hailed as a breakthrough in restoring vital, blood-forming bone marrow, the body tissue that is most vulnerable to radiation.

Acute radiation exposure results in rapid declines in infection-fighting white blood cells and in blood platelets, which form clots and prevent unchecked bleeding. The company says its studies have shown a higher survival rate in irradiated monkeys injected with NEUMUNE, because it promoted the growth of white blood cells and platelets.

After nearly a year of deliberations, Health and Human Services officials decided last week to scrap a pending procurement of as many as 100,000 doses of the drug for the government's emergency medical stockpile.

Hollis-Eden officials had said a major factor in the federal rejection was that the drug had to be administered within four hours of radiation exposure to be effective, though the firm contended it could strategically deployed to overcome that limitation.

Hollis said in a statement that department officials had indicated that the compound was promising and met the requirements of the contract solicitation, but that "the amount of data available for NEUMUNE was not sufficient" to warrant a purchase.

The company, which has invested $85 million in the drug to date, said it was unwilling to pay for more research in the absence of an advance-purchase contract and would turn its attention to promising drugs for prostate and breast cancer, diabetes and rheumatoid arthritis.

Robert Marsella, a company senior vice president, said the only possibility for reversing the drug maker's decision was if Congress intervened or the Pentagon decided to buy the drug.