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Specialty pharmaceutical company, Emergent BioSolutions (EBS - Analyst Report), recently signed a license agreement to gain an exclusive manufacturing right to VaxInnate Corporation’s pandemic influenza vaccine candidate in the U.S. Financial terms of the deal were not disclosed.

The company is optimistic about this latest endeavor with the above mentioned candidate, which is a recombinant vaccine with the potential to be produced in short time at high yields and with minimum cost. In this regard, Emergent stated that the license has allowed the company to fulfill the requirement to acquire a pandemic influenza vaccine candidate under its contract with the Biomedical Advanced Research and Development Authority (BARDA). Notably, VaxInnate will continue developing its pandemic influenza vaccine candidate under its current BARDA contract.

Earlier in 2010, Emergent had entered into a five-year contract with BARDA to finalize the development and obtain the regulatory approval for large-scale manufacturing of the BioThrax vaccine. In June 2012, the company received a contract from BARDA to establish a Center to facilitate the advanced development of chemical, biological, radiological and nuclear medical counter measures, to develop the domestic pandemic influenza vaccine manufacturing surge capacity, and to provide the workforce development training programs to address the U.S. government's preparedness priorities and needs.

 The contract consists of an 8-year base period of performance with a funding of approximately $160 million. Under the contract, Emergent’s obligations include securing a pandemic influenza vaccine candidate and obtaining access to all necessary intellectual property rights for the process development and manufacturing, expanding current facilities to support production of a pandemic influenza vaccine and additional counter measures, and obtaining facility licensure to manufacture a pandemic influenza vaccine at its Baltimore facility.

Thus, Emergent is hopeful about this recent agreement with VaxInnate, which according to the company is a step forward to satisfy its commitment to BARDA. Apart from BARDA, the company also received contracts and grant funding from the National Institute of Allergy and Infectious Diseases (NIAID) for several development programs. However, the company faces a fiercely competitive market in the area of biodefense and commercial vaccines from major peers like Pfizer Inc. (PFE - Analyst Report) and Novartis AG (NVS - Analyst Report).

The stock retains a Zacks #3 Rank (Hold) in the short term. Over the long term we are ‘neutral’ on Emergent.

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