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June 7, 2022

Emergent sends notice to Janssen over Covid-19 vaccine contract

The notice says that Janssen intends to not purchase the minimum quantity of product mentioned in the initial agreement.

Emergent BioSolutions has sent a notice of material breach of the previously signed Covid-19 vaccine manufacturing agreement, to Janssen Pharmaceuticals, Inc, one of the Janssen Pharmaceutical Companies of Johnson & Johnson.

In July 2020, the company signed a five-year agreement to provide contract development and manufacturing (CDMO) services to produce drug substance for Johnson & Johnson’s investigational SARS-CoV-2 vaccine, Ad26.COV2-S.

In a filing with the Securities and Exchange Commission (SEC), Emergent stated that Janssen did not provide the requisite forecasts of the required quantity of product to be purchased by the latter under the agreement.

Emergent added saying that Janssen intends to not purchase the minimum quantity of product mentioned in the 2020 agreement, instead it proposes to wind down the contract without fulfilling the minimum requirements.

Reuters reported Johnson & Johnson as saying in a statement: “We have sufficient capacity across our global Covid-19 vaccine manufacturing network, and we continue to meet our contractual obligations to supply our vaccine.”

As per the terms of the agreement, Janssen has 30 days to comply with the agreement before Emergent has the right to terminate it.

Emergent said that the contract was valued at approximately $480m for the first two years.

If the contract is now terminated, Janssen is expected to pay around $125m to $420m to Emergent.

The SEC notice reads: “Termination of the Agreement will not affect the obligation of either party to make any payments for which it is liable prior to or upon such termination, including payment by Janssen for certain raw materials purchased pursuant to the Agreement prior to its termination, and payment by Janssen for all services related to the required minimum quantity.”

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