Emergent BioSolutions Inc. (EBS) has signed a $174 million deal to provide contract development and manufacturing for AstraZeneca’s (AZN) COVID-19 vaccine candidate, AZD1222.
As part of the agreement, Emergent will start this year to produce drug substance at large scale for commercial supply. The contract valid until 2021, follows a $87 million contract in June, which Emergent signed for the development of AstraZeneca’s vaccine candidate. Together the agreements bring AstraZeneca’s commitment to a total of $261 million.
AstraZeneca, which is developing AZD1222 together with Oxford University, has in recent weeks signed supply chain agreements for the capacity to produce 2 billion doses of its vaccine candidate. The British drugmaker has inked supply deals with the U.S. and European Union countries.
“Emergent is driven by our desire to advance solutions that will make an impact on this pandemic,” said Emergent CEO Robert G. Kramer. “Sharing a passion for science, we are encouraged by AstraZeneca’s investigational COVID-19 vaccine and look forward to supporting its continued progress.”
Manufacturing activities under the latest agreement will be performed at Emergent’s Baltimore Bayview facility. The facility is designed for rapid manufacturing of large quantities of vaccines and treatments during public health emergencies. It has the capacity to produce tens to hundreds of millions of doses of vaccine on an annual basis, based upon the platform technology being used.
AstraZeneca’s AZD1222 is one of several vaccine candidates supported by Operation Warp Speed (OWS), the U.S. government program to accelerate the development, manufacturing, and distribution of COVID-19 vaccines available for Americans by Jan. 2021.
Emergent said that it will provide an update to its 2020 financial outlook incorporating expectations related to this agreement when it reports its second-quarter financial results on July 30.
Shares in Emergent rose 5.5% to $94.78 at the close on Monday taking this year’s advance to an impressive 76%.
Chardan Capital analyst Keay Nakae last month reiterated a Buy rating on the stock with a $86 price target.
“We believe that the company has established itself as a preferred supplier of biodefense vaccines and other products to the U.S. government under multiyear sales contracts,” Nakae wrote in a note to investors. “The company’s ability to land several new manufacturing contracts since the beginning of this year is just another example of one of Emergent’s key strengths, its longstanding relationships with the relevant government agencies.”
The rest of the Street resonates with Nakae’s bullish outlook. The Strong Buy analyst consensus boasts 4 Buy ratings versus 1 Hold rating. Meanwhile, the $90.60 average analyst price target implies 4.4% downside potential for the shares in the next 12 months. (See EBS stock analysis on TipRanks).
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