A worker prepares a dose of the Johnson & Johnson vaccine in Puerto Rico last month.
Ricardo Arduengo/AFP via Getty ImagesJohnson & Johnson said Saturday that it would take “full responsibility” for future manufacturing of its Covid-19 vaccine at the Emergent BioSolutions facility that was reported last week to have ruined 15 million doses.
AstraZeneca (ticker: AZN), meanwhile, said it would move production of its own Covid-19 vaccine out of the facility. “The company will work with the US Government to identify an alternative location for domestic drug substance production of AZD1222,” AstraZeneca said in a statement.
The error took place when workers at the facility confused components of AstraZeneca ’s vaccine with components of Johnson & Johnson’s (JNJ), according to the New York Times.
Johnson & Johnson shares were up 0.4% in premarket trading Monday, after falling 0.9% on Thursday. Markets were closed Friday. AstraZeneca’s American depositary receipt was down 0.4% in premarket trading, after falling 0.4% on Thursday.
It is Emergent BioSolutions (EBS), however, that has taken the biggest hit. The stock fell 13.4% on Thursday, and was down another 0.8% on Monday.
The company, which has a number of different businesses, has become a major contract manufacturer during the pandemic. In a note on Thursday, Cowen analyst Boris Peaker wrote that the company’s contract manufacturing business, which historically was responsible for revenues of $30 to $100 million, grew to $450 million during 2020. But he wrote that the vaccine mix-up could imperil that business.
“EBS’s [contract development and manufacturing organization ]business does not have a long and established track record upon which to draw to overcome this type of negative press,” Peaker wrote. “Regardless of whether this event has financial implications for current contracts, we expect it may create a headwind to further CDMO revenue as the CDMO business becomes more competitive over time.”
In a separate note on Thursday, J.P. Morgan analyst Jessica Fye wrote that the news “could have a reputational effect on EBS’s ability to win other CDMO business, which we see as key to performance beyond 2021.”
In a press release on Sunday, the company noted that it still owned the Baltimore factory. It also said that it had received an additional $23 million from the U.S. Department of Health and Human Services to expand manufacturing of the Johnson & Johnson vaccine within the facility, and said it “expects to align with the U.S. government and AstraZeneca on a mutually agreed ramp down of manufacturing for AstraZeneca’s COVID-19 vaccine bulk drug substance.” It had no immediate comment on the analysts’ notes.
Johnson & Johnson said Saturday in its press release that it will send more staff to work at the Emergent facility, and that it “is adding dedicated leaders for operations and quality.”
Bloomberg reported that the Biden administration had been involved in the rearrangement at the Emergent facility.
Johnson & Johnson said that it still plans to deliver nearly 100 million doses of its vaccine to the U.S. government by the end of May.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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