Emergent BioSolutions Inc. EBS announced that it has expanded a five-year agreement to provide contract development and manufacturing (CDMO) services to pharma giant Johnson & Johnson JNJ for supporting the large-scale drug substance manufacturing of the latter’s investigational COVID-19 vaccine candidate, Ad26.COV2-S. The deal is valued at around $480 million for the first two years.
Last month, J&J accelerated the timeline for initiating a phase I/II human clinical study on its vaccine candidate for COVID-19 to the second half of July rather than September as was announced earlier. Management stated that it is holding talks with the National Institutes of Allergy and Infectious Diseases to begin pivotal phase III studies on the candidate sooner than planned if data from the phase I/II study is positive.
J&J remains committed to invest more than $1 billion in partnership with BARDA to co-fund vaccine research, development and clinical testing.
Per this latest agreement, beginning 2021, Emergent will provide CDMO services to produce drug substance on a large scale for commercially manufacturing the vaccine for the first two years. For the remaining three years effective 2023, the company will provide a flexible capacity deployment model to support annual dose requirements.
Emergent’s financial outlook for 2020 will include expectations from this agreement and other relevant information will be provided when the company reports second-quarter 2020 earnings results.
This long-term large-scale manufacturing agreement with Johnson & Johnson is an extension of the deal announced by Emergent in April 2020.
In April, Emergent announced an agreement that it will deploy its CDMO services for backing the manufacturing of Johnson & Johnson’s lead vaccine candidate against COVID-19. The agreement was valued at around $135 million.
Shares of Emergent were up 2% following the announcement of the deal on Monday. In fact, the stock has rallied 59% so far this year compared with the industry’s increase of 10.3%.
We note that to address the COVID-19 pandemic, Emergent inked several CDMO deals to provide manufacturing services for various companies to help them produce their respective experimental vaccine candidates against COVID-19.
In June 2020, Emergent announced that it will provide CDMO services to another pharma giant AstraZeneca AZN for aiding the manufacturing process of the latter’s COVID-19 vaccine candidate AZD1222, which it is developing in partnership with the Oxford University. The agreement is valued at around $87 million.
The candidate is currently being evaluated in a phase II/III study, which the Oxford University initiated recently.
Similarly, Emergent reached a manufacturing agreement with small biotech Vaxart to produce the clinical material for the latter’s experimental oral vaccine candidate to fight COVID-19.
Emergent also has a collaboration contract with Novavax, Inc. NVAX to assist the latter’s development of a vaccine candidate against COVID-19. The company will use its CDMO services to advance Novavax’s COVID-19 vaccine candidate, which is currently being evaluated in a phase I/II study.
Emergent currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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