Sanofi offloads smallpox vaccine business to Emergent BioSolutions in $125M deal

Emergent BioSolutions is set to add the only FDA-approved smallpox vaccine to its portfolio through a $125 million deal with vaccine giant Sanofi Pasteur.

The agreement means Emergent will inherit an existing CDC contract to build the national stockpile. That 10-year, $425 million contract has around $160 million left to be fulfilled before it ends in 2018. Emergent expects to negotiate a multiyear renewal as part of its involvement in the U.S. government’s counter-bioterrorism effort.

Emergent CEO Daniel Abdun-Nabi said in a statement that he expects the deal to contribute meaningful revenue growth to the company next year and help it reach a $1 billion revenue goal by 2020. But that depends on the FDA’s approval of a Canton, Massachusetts-based live viral manufacturing facility.

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While Sanofi is currently transferring the upstream portion of the vaccine’s manufacturing process from Austria to the U.S. site, an FDA license is expected to arrive in about six months, Abdun-Nabi said during a conference call on July 14. Once approved, the new site will represent another production milestone for Emergent since last August, when the FDA approved the company’s large-scale facility based in Lansing, Michigan, for the manufacture of its anthrax vaccine BioThrax.

Under a 10-year agreement, the Gaithersburg, Maryland-based biotech will also use the Canton facility to manufacture Sanofi’s Japanese encephalitis virus vaccine, according to an SEC filing.

The addition of ACAM2000 will expand Emergent’s class-exclusive portfolio of products to five, and the purchase complements the company’s offerings as it already has VIGIV, the only FDA-licensed med for certain complications from smallpox vaccination.

RELATED: Emergent touts new $100M delivery order for BioThrax

The new deal is line with Emergent’s core strategy of building its business around class-exclusive products and providing biodefense preparedness through government contracting. In March, it sealed a $100 million contract from the U.S. government's Biomedical Advanced Research and Development Authority (BARDA) for the delivery of BioThrax to the national stockpile. That deal came on the heels of a $911 million contract with the CDC for the stockpiling of the same vaccine in December and an earlier award of up to $1.6 billion from BARDA for NuThrax, an improved anthrax vaccine candidate projected to enter phase 3 next year.

Emergent will pay Sanofi $97.5 million upfront and up to $27.5 million in milestones; it'll continue to receive technological assistance from Sanofi for some time upon the deal close.

The company is also working on several vaccine candidates for dengue, Zika and Ebola-included pan-filovirus in various stages of development.