AstraZeneca's COVID-19 vaccine production partner Emergent not likely to suffer if trial hold sticks: analysts

Emergent BioSolutions
Emergent BioSolutions still has a major COVID-19 vaccine deal with Johnson & Johnson in the works. (Emergent)

AstraZeneca was humming right along with its partnered COVID-19 vaccine with the University of Oxford before a sudden trial hold threw its plans into disarray. So what does that uncertainty mean for AstraZeneca's expectant manufacturing partners on the shot? For at least one, it could be no issue at all. 

Despite a major commitment from AstraZeneca to help produce bulk drug substance for the University of Oxford's adenovirus-based COVID-19 shot, Maryland's Emergent BioSolutions isn't likely to feel a financial pinch if the British drugmaker's candidate doesn't make it across the finish line, Cantor analysts wrote in a note to investors Wednesday. 

On the heels of AstraZeneca's troubling phase 3 trial hold, Emergent's share price dropped 5% in early Wednesday trading to $100.22 as investors appeared to show concern that AstraZeneca's setback would hit the CDMO's bottom line. 

But according to Cantor, Emergent wouldn't likely come out worse for wear if AstraZeneca's candidate flops, as the partners' contract includes protections for Emergent that will see it rake in most of the $174 million owed to it in year one of the deal. 

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Part of that deal, signed in July, is an $87 million portion for tech transfer and preparation that is underway, Cantor said. That money has already come Emergent's way, and further contract protections will see Emergent made whole on most of the rest, analysts argued.

In fact, investors appeared to agree on that rosy outlook almost immediately, with Emergent's share price rebounding over the course of the day Wednesday to $106.36 at 12:30 p.m. ET. 

The only unknowns in the event of AstraZeneca's failure would be the second and third years of the proposed contract, which could be waived, according to Cantor. However, given Emergent's close relationship with the Department of Health and Human Services' Biomedical Advanced Research and Development Authority (BARDA), another vaccine maker could easily step into AstraZeneca's place to continue driving revenues for Emergent. 

Moreover, that alternate partner could secure an even longer-term CDMO contract with Emergent at its Baltimore Bayview facility, largely taking the manufacturer's risk off the table. 

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