The stock price of Emergent Biosolutions (NYSE: EBS) plummeted around 42% in the middle of Friday’s trading. The vaccine manufacturer has reached a mutual agreement with the government to cancel a sizeable vaccine contract.
Canceling a $628M contract can’t be easy – yet the problems over at Emergent simply aren’t worth the risk, leading the government to cancel the anticipated contract and leaving Emergent $180M out of pocket. Sure enough, that was enough to terrify Emergent’s investors, sparking the mid-market sell-off of 42%.
The unfortunate downfall began in March, when the company was blamed for ruining millions of Johnson & Johnson Covid doses after apparent contamination, supporting degrading claims of an unsanitary manufacturing plant. Following the canceled contract, J & J will take over control of vaccine production – leaving investors seeming rather lost.
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Due to contract differences, Emergent will continue to work with J & J at the company’s Baltimore plant – where Emergent has contributed to “over 100 million dose equivalents of Covid vaccine”. The news hits just as Pfizer receive positive results for their new Covid-19 antiviral drug.
Emergent CEO Robert Kramer stated:
“The work we accomplished under the program and related task order contracts with the U.S. government served a critically important purpose…one that our entire organization is immensely proud of.”
Emergent has suffered a critical hit to its shareholders. Losing a contract like this can cause enormous damage to the companies wider strategy, as well as closing the door on possible investment. EBS stock has suffered a daily loss of 41.6% at the time of writing, with price sitting at $30.80.
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