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Emergent BioSolutions, Inc.’s (EBS - Free Report) shares jumped 13.6% after the company announced that it has secured a multi-year contract worth about $1.6 billion with the Biomedical Advanced Research and Development Authority (BARDA), for the advanced development and delivery of the company’s next generation anthrax vaccine candidate, NuThrax (anthrax vaccine adsorbed with CPG 7909 adjuvant, also known as AV7909).

We note that BARDA is a division of the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response.

The contract comprises a five-year base period of performance valued at about $200 million to develop NuThrax for post-exposure prophylaxis of anthrax disease. The contract requires the company to deliver to the Strategic National Stockpile (SNS), initially two million doses subsequent to Emergency Use Authorization pre-approval by the FDA.

In addition, the contract includes procurement options for the delivery of an additional 7.5 million to 50 million doses of the candidate to the SNS, valued from approximately $255 million to up to $1.4 billion, respectively along with options for an additional clinical study and post-marketing commitments valued at $48 million. If both options are exercised in full, the total contract value would increase and total up to $1.6 billion.

Emergent expects that the FDA could approve NuThrax for emergency use as early as 2018, thereby resulting in deliveries to the SNS beginning in 2019. NuThrax with an enhanced product profile is expected to require fewer doses leading to faster immune response.

We note that Emergent has received five grants and contracts funded by BARDA and the National Institute of Allergy and Infectious Diseases worth about $127 million since 2008, for the early stage and advanced development of NuThrax, including development of a dry formulation for the vaccine candidate.


CDC to Procure Remaining Doses of BioThrax

In a separate press release, Emergent also announced that the Centers for Disease Control and Prevention (CDC) has exercised an option to procure all the remaining doses of BioThrax (anthrax vaccine adsorbed) under the procurement contract that was announced on Oct 3, 2011 and expired on Sep 30, 2016. With the exercise of this option, CDC has granted a no-cost extension to facilitate delivery of the remaining doses to be completed by Nov 30, 2016.

We note that BioThrax is the only anthrax vaccine to be approved by the FDA for both pre-exposure prophylaxis and post-exposure prophylaxis of anthrax disease.

Meanwhile, Emergent continues to negotiate with the CDC regarding the Sole Source Notification that was issued in Jun 2016. The notification contains the CDC’s intention to award the company a follow-on contract for the purchase of 29.4 million doses of BioThrax over a period of five years. The company intends to provide further update once the contract is finalized.

Emergent currently carries a Zacks Rank #3 (Hold).

Zacks Rank & Stocks to Consider

Some better-ranked stocks in the health care sector include Anika Therapeutics Inc. (ANIK - Free Report) , Corcept Therapeutics Incorporated (CORT - Free Report) and VIVUS Inc. (VVUS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For 2016, Anika witnessed a 9.5% increase in its earnings estimates over the past 60 days. It has recorded an average positive earnings surprise of 42.19% over the last four trailing quarters. The company’s shares have jumped 25.7% year to date.

Corcept has seen an increase of 25% in its earnings estimates for 2016 in the last 60 days. It has posted a positive earnings surprise of 100% over the last four trailing quarters. The company’s shares have surged 39.5% year to date.

VIVUS has recorded an average positive surprise of 39.88% over the trailing four quarters. Share price of the company gained 6.5% year to date.

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