(Bloomberg) -- Covid-vaccine contract manufacturer Emergent BioSolutions Inc. said it expects 2022 sales in a range of $1.4 billion and $1.5 billion, a slowdown from the previous year that is in line with Wall Street expectations.
The Gaithersburg, Maryland-based company also released preliminary results for 2021, saying that sales are expected to be between $1.77 billion and $1.79 billion, narrowing the guidance of $1.7 billion to $1.8 billion that was provided in November.
The contract manufacturer known for making the Johnson & Johnson Covid-19 vaccine, as well as for its subsequent production challenges, provided new guidance in advance of a presentation that it will hold virtually Monday during JPMorgan Chase & Co.’s annual health-care conference.
Emergent said its 2022 forecast was affected by the end of a years-long U.S. biodefense and pandemic preparedness program. The company reached an agreement with the U.S. government in November to end its participation in the Obama-era Centers for Innovation in Advanced Development and Manufacturing, which set aside manufacturing capacity to tackle public health threats.
Emergent shares have slipped 7.3% since the Nov. 4 announcement.
Still, Emergent’s full-year revenue forecast met Wall Street expectations. The average analyst sales estimate for 2022 was $1.44 billion, according to data compiled by Bloomberg.
“The management team is very much looking forward to 2022, as we’ve restructured the way we run our business,” Chief Executive Officer Robert G. Kramer Sr. said in an interview. “I see significant opportunity for both organic growth, and looking strategically for M&A transactions that are really geared toward building upon or creating leadership positions in niche segments of the public health threat market.”
Reflecting on 2021
At the outset of the pandemic, Emergent was the only U.S. manufacturer tasked with making the main ingredient in the Johnson & Johnson and AstraZeneca Plc Covid-19 vaccines -- giving it a critical role in the nationwide immunization campaign.
That position was jeopardized after staff at Emergent’s Baltimore facility accidentally contaminated a batch of the J&J vaccine with components of AstraZeneca’s shot. The error led the U.S. Food and Drug Administration to start an inspection. In April, the U.S. regulator demanded that Emergent halt production of the vaccines.
The FDA later greenlit Emergent to resume production of the J&J vaccine in July, and has since inspected and cleared 11 batches of the J&J shot and eight batches of the AstraZeneca vaccine that had been kept from distribution by the earlier halt. Altogether, more than 120 million doses of coronavirus vaccines have been released from the Baltimore facility for use.
But the production setbacks ultimately led the U.S. government and Emergent to agree to terminate their years-long biodefense partnership, leaving about $180 million on the table. Emergent attributed part of the lower 2022 sales guidance to the loss of that program.
End of an Era
Launched in 2012, the Centers for Innovation program included Emergent, Texas A&M, and Novartis AG.
Novartis left the network years ago, so only Emergent and Texas A&M remained when the novel coronavirus reached U.S. soil. J&J approached Emergent to make use of its capacity, and the U.S. soon followed suit, tasking the facility with making the AstraZeneca vaccine.
After the contamination, the Biden administration asked Emergent to stop producing the AstraZeneca vaccine. Kramer said Emergent has since benefited from a “singular focus” on J&J and “no longer having to be distracted by Astra.”
The contamination was a symptom of broader issue, Kramer said: The program didn’t prepare Emergent for the “greenlight/go button” when the pandemic hit.
“Sometimes there’s a bit of thinking that if you have the manufacturing muscle, that’s good enough,” Kramer said. “But it’s critically important to exercise that muscle.”
Throughout the previous decade, Kramer said, he had hoped Emergent would get task orders from to develop medicines for Ebola, Zika or other emerging diseases. That way there would be ways to test manufacturing processes, buy equipment, and hire and train staff.
“As well-intended as the concept was, it really wasn’t being put into practice,” Kramer said of the CIADM program.
Looking Forward
Though U.S. and Emergent ultimately agreed to end their years-long CIADM partnership, the company will continue to fulfill government orders for other vaccines and therapeutics and will work with health agencies to develop medical countermeasures, Kramer said. Those government orders will continue to drive revenue, he said.
Emergent, which employs 2,500 people, continues to focus on making and selling its portfolio of products that range from vaccines for anthrax, smallpox and typhoid to opioid-overdose treatment Narcan. It’s also working to build products that will ward off other niche public health threats, such as a universal flu shot and vaccines for Chikungunya virus and Lassa Virus.
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