Emergent BioSolutions tanks as Johnson & Johnson vaccine batch found defective

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Johnson & Johnson

Some bad news hit Johnson & Johnson (NYSE: JNJ) on Thursday. It turned out that the Food and Drug Administration (FDA) found that one batch of its COVID-19 vaccine was defective. Over 15 million doses were found to be of poor quality, although all 15 million were still in the company’s possession and weren’t distributed to the public, thankfully. While Johnson & Johnson dipped a bit on the news, the bigger loser was JNJ’s dedicated vaccine manufacturer, Emergent BioSolutions (NYSE: EBS), whose stock tanked following the announcement.

While Johnson & Johnson did the actual R&D for its vaccine, Emergent BioSolutions is the manufacturer that helped scale up production for the treatment once it was approved. As it turned out, quality controls at the plant responsible for this particular batch were embarrassingly disappointing. Human error led to an accidental mixing of vaccines in the facility, making more than 15 million doses worthless.

According to a report on the situation, employees weren’t properly trained on various safety protocols, including proper testing techniques for the batches. This particular factory turned out to be the same location pointed out by the FDA back in 2020 for having a series of worrying manufacturing lapses as well, so it’s not surprising that this happened after all.

This quality control process identified one batch of drug substance that did not meet quality standards at Emergent Biosolutions, a site not yet authorized to manufacture drug substance for our COVID-19 vaccine. This batch was never advanced to the filling and finishing stages of our manufacturing process,” read an official press release from Johnson & Johnson. “The issue was identified and addressed with Emergent and shared with the United States Food & Drug Administration (FDA).”

While 15 million doses were affected by this news, Johnson & Johnson said that it still has enough ingredients elsewhere to meet its manufacturing supply targets for the U.S. government. The pharmaceutical giant expects to deliver another 24 million doses in April, with 100 million doses being its target for the first half of 2021. In the month of March, the company produced around 20 million vaccines, not including these 15 million that were discarded.

Shares of Johnson & Johnson were down around 0.9% in response to the news, which makes sense given this setback wasn’t its fault. Instead, Emergent BioSolutions is down around 13.4% as traders accurately realized that this situation was the manufacturers’ fault. Strangely enough, shares of Emergent have been steadily falling over the past three months, declining from their early-February high of $120 to its current price of around $80 per share. In contrast, Johnson & Johnson’s stock has stayed relatively the same since the start of 2021.

 

Emergent BioSolutions Company Profile

Emergent BioSolutions offers public health products to government and healthcare providers. The company has four main units: vaccines, which produces specialty vaccines for public health threats; devices, such as nasal sprays, skin lotions, and injections; therapeutics, which includes antibody-based treatments; and contract development and manufacturing, which brings treatments to market through collaboration with the pharmaceutical and biotechnology industries and the United States government. Most revenue comes from U.S. government purchases of vaccine, device, and therapeutic products. – Warrior Trading News

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