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J&J (JNJ) Gets FDA Nod for 10M COVID Vaccines, Discards Many

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J&J (JNJ - Free Report) announced that the FDA authorized two batches of vaccine drug substance manufactured at Emergent BioSolutions’ (EBS - Free Report) , Baltimore facility to be used for emergency use, while it discarded several other batches. Some batches are still under review. J&J has a manufacturing agreement with Emergent BioSolutions for its single-shot COVID-19 vaccine.

We remind investors that millions of doses of J&J’s vaccine were ruined at the Baltimore facility in March due to mixing up of ingredients of J&J’s and AstraZeneca’s (AZN - Free Report) vaccines. In April, the FDA started an investigation and found several faults at the facility. The facility has been temporarily shut since the start of the FDA investigation.

The FDA’s decision relates to batches of vaccine drug substance manufactured at the facility during the time of mishap. Reportedly, the batches discarded by the FDA amount to almost 60 million doses of the vaccine.

Meanwhile, the authorities in European Union and Canada decided not to roll out batches of J&J’s COVID-19 vaccine doses with active substance manufactured during the period of mishap at the Baltimore facility, as a precautionary move.

The loss of millions of doses of COVID-19 vaccine may lead to failure of J&J in meeting its delivery target in some countries, including Europe. Moreover, the FDA is not ready to authorize Emergent BioSolutions’s Baltimore facility as manufacturing facility for J&J’s vaccine. These may lead to further delay in production of new vaccine doses.

Shares of J&J were down almost 1.3% on Jun 11, following these news. However, the company’s shares have gained 4.8% so far this year compared with the industry’s increase of 8.7%.

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Meanwhile, authorization of two batches, which are likely to comprise nearly 10 million doses, of J&J’s COVID-19 vaccine manufactured at the Baltimore facility will allow the company to use them in the United States or exported to other countries. Moreover, the FDA extended the expiry period for J&J’s vaccine that are refrigerated and stored at 2-8 degrees Celsius from three months to four-and-a-half months.

However, safety concern related to rare blood clots following inoculation of the vaccine and slowing demand for vaccinations in the United States have hurt prospects of J&J’s vaccine. Coupled with loss of millions of doses, the company will likely incur significant loss during 2021 related to COVID-19 vaccine.

Moreover, mRNA-based vaccines of Pfizer (PFE - Free Report) and Moderna continues to gain ground in the COVID-19 vaccine field as they expand the reach with authorization for emergency/temporary/conditional use in newer countries. While Moderna expects revenues of approximately $19 billion, Pfizer will likely achieve $25 billion in COVID-19 vaccine sales in 2021.

Zacks Rank

J&J currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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