Investigation of Emergent BioSolutions Inc.
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Emergent BioSolutions Inc. (EBS) Misled Investors Regarding its Business Operations
In response to the COVID-19 pandemic, Emergent signed deals with Johnson & Johnson and AstraZeneca worth a combined $875 million to provide contract development and manufacturing organization services to produce the companies’ COVID-19 vaccine candidates. Emergent also received $628 million from the U.S. government as part of Operation Warp Speed. Following the deals, Emergent’s President and CEO stated that the Company was “uniquely prepared to answer the call for [the] Covid-19 pandemic” because of its “proven manufacturing capabilities in place.” Thereafter, company executives repeatedly assured investors of Emergent’s ability and capacity to mass manufacture COVID-19 vaccines at its Baltimore manufacturing site. The announced deals sent the Company’s stock price soaring – peaking at over $134 per share on August 13, 2020.
In reality, the Company was not equipped to manufacture the vaccine given the myriad issues at its Baltimore facility. On March 31, 2021, media reports revealed that employees at Emergent’s Baltimore manufacturing facility “mixed up” ingredients for the Johnston & Johnson and AstraZeneca vaccines, contaminating up to 15 million doses of the Johnson & Johnson vaccine. It was further revealed that this was not an isolated incident and part of a history of manufacturing issues at the Company’s plant, including problems with mold, poor disinfection of some plant equipment leading to growth of bacteria, the repeated approval or raw materials that had not been fully tested, and poor employee training.
In response to these revelations, the Biden administration placed Johnson & Johnson in charge of Emergent’s Baltimore plant and prohibited it from producing the AstraZeneca vaccine. To date, not a single dose of COVID-19 vaccine produced at this site has been released by the FDA for distribution.
On this news, Emergent’s stock has declined significantly, trading at $92.91 at close on March 31, 2021, but trading at just $61.85 today.