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Emergent's Vaccine Portfolio Aids Growth Amid Competition

Zacks Equity Research

On Aug 27, we issued an updated research report on Emergent BioSolutions Inc. EBS.

Emergent’s newly acquired product Narcan (naloxone HCl) nasal spray has been performing well and made a significant contribution to the company’s top line during the first half of 2019. Narcan was added to Emergent’s portfolio following the acquisition of the privately held Adapt Pharma in October 2018.

Also, last October, Emergent acquired the specialty vaccine company PaxVax, which added two marketed vaccines, namely Vivotif (Typhoid Vaccine Live Oral Ty21a) and Vaxchora (Cholera Vaccine, Live, Oral) to its portfolio.

The buyouts of PaxVax and Adapt Pharma expanded Emergent’s presence in the public health threats market.

Shares of Emergent have plunged 31.6% so far this year, wider than the industry’s decrease of 2.3%.

Notably, Emergent’s key Biodefense product BioThrax is marketed for the general use in both pre-exposure prophylaxis and post-exposure prophylaxis of anthrax disease. The U.S. government is the primary purchaser of the Biodefense products.

The company is also developing a next-generation anthrax vaccine candidate AV7909 for post-exposure prophylaxis of anthrax disease in a phase III study. Emergent plans to begin the delivery of AV7909 in the third quarter of 2019, which is now expected to be the main revenue driver in the future quarters.

The development and delivery of AV7909 is being funded by Biomedical Advanced Research and Development Authority (BARDA). Emergent has a multi-year contract worth about $1.6 billion with the BARDA for advanced development and delivery of AV7909. It secured the contract in 2016.

This apart, Emergent markets smallpox vaccine ACAM2000 and anthrax monoclonal antibody raxibacumab, both of which were acquired in the fourth quarter of 2017 from Sanofi SNY and GlaxoSmithKline GSK, respectively.

Emergent’s vaccine portfolio is progressing well as several early-mid stage studies are currently underway to address various ailments. The company is conducting a phase I study to evaluate the safety and immunogenicity of VLA1601 (Zika virus vaccine) in partnership with Valneva. Emergent also completed enrollment in the phase II study on flu IGIV therapeutic for treating severe illness caused by influenza A infection in hospitalized patients with data expected in the first half of 2020.

Moreover, in April 2019, the company announced positive interim results from the phase II study on its chikungunya vaccine candidate CHIKV-VLP. The study evaluated the safety and immunogenicity of the candidate across a series of dosing regimens.

We remind investors that Emergent derives majority of its revenues from the sales of its BioThrax vaccine. However, BioThrax is seeing a slowdown in sales of late as fewer doses are getting shipped to the U.S. stockpile. As a result, the product’s sales figure has plunged heavily during the first half of 2019. Any further hiccup in the vaccine’s production and shipment could severely hamper the company’s future growth prospects. Moreover, a stiff rivalry from several companies with respect to Biodefense products is also a persistent headwind.

Emergent Biosolutions Inc. Price and Consensus

Emergent Biosolutions Inc. Price and Consensus

Emergent Biosolutions Inc. price-consensus-chart | Emergent Biosolutions Inc. Quote

Zacks Rank

Emergent currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Trevena, Inc. TRVN, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Trevena’s loss per share estimates have been narrowed 27% for 2019 and 19.5% for 2020 over the past 60 days. The stock has soared 91.9% year to date.

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