The specialty pharmaceutical manufacturer that operates the troubled Baltimore facility where millions of Johnson & Johnson vaccines went to waste this year announced the end of its involvement Thursday in a federal program that prepares for and responds to infectious diseases and other threats to public health.
Gaithersburg-based Emergent BioSolutions discussed its withdrawal from the federal government’s Centers for Innovation in Advanced Development and Manufacturing program Thursday afternoon during a virtual earnings call with investors.
The program, created under President Barack Obama’s tenure, is run through the U.S. Department of Health and Human Services, which committed to building new facilities, training more staff and providing surge capacity and advance manufacturing of biopharmaceutical products and therapeutics for “emerging infectious disease, pandemic influenza, and currently known or unknown threats.”
In a Thursday statement, Emergent spokesman Matt Hartwig said the company and the federal government “mutually agreed to Emergent’s proposal to end its involvement” in the program, known as CIADM.
The program “fell short of what was needed to maintain capability in case such a threat arose,” according to Emergent officials, citing execution problems and a lack of operational investments made by “all administrations.”
Ending the partnership amounts to a revenue loss of about $180 million for Emergent, the company said. It expects to mostly offset that lost revenue with gains in other areas such as Narcan nasal spray and anthrax vaccines.
Emergent’s shares fell more than 12% in after-hours trading after the earnings call to $45.89. Shares reached a peak earlier this year of more than $125 each before problems at the Baltimore plant surfaced.
“We are proud of the work our employees have done over the past nine years to honor our commitments, and especially proud of the work we did through the program to address Zika, Ebola, and most recently COVID-19 across several of our manufacturing facilities,” Emergent CEO Robert Kramer said during the earnings call. “We have also acknowledged the challenges we faced scaling up production of two novel, viral-vector COVID-19 vaccines in the same facility and addressed them with our fellow innovators as well as the [U.S. Food and Drug Administration] and other health regulators.”
Kramer, in a guest commentary piece authored for The Baltimore Sun, said the company would continue to supply the federal government with other “needed medical countermeasures” and fulfill its obligations in other government projects and programs. But he took aim at the government for its failure to expand the facility’s capacity in time for the coronavirus pandemic.
“The government maintained that they would provide us with the necessary drug development work to build and maintain those capabilities,” Kramer wrote. “That didn’t happen.”
He also said the company and the federal government knew in advance the risks that could befall a pharmaceutical plant tasked with producing more than one vaccine at a time.
During the earnings call, Kramer said that even though the COVID-19 task order “didn’t work out,” the public and the government “benefited significantly” from Emergent’s work, which delivered millions of vaccine doses.
The facility’s problems surfaced this spring after the FDA asked it to pause vaccine production following a cross-contamination event that rendered millions of Johnson & Johnson coronavirus vaccine doses unusable. The plant, located near Johns Hopkins Bayview Medical Center and built using millions of dollars of federal investment, also received hundreds of millions in federal dollars to boost production of COVID-19 therapies and vaccines.
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Federal regulators documented a series of quality control and mismanagement problems at the Bayview facility, including inadequate waste handling, poor facility maintenance and upkeep and insufficient personnel training.
Emergent now faces a shareholder lawsuit and a congressional investigation into its performance during the pandemic. It maintains that only one batch of vaccine, containing about 15 million doses, was found to be contaminated, while millions more made around the same time were safe to use but not authorized because of their proximity to the faulty ones.
In all, eight batches of Johnson & Johnson vaccine and three batches AstraZeneca vaccine made in the plant have been authorized for use, according to the company, representing some 100 million doses altogether, Hartwig said in September.
Officials from the federal health and human services department did not respond late Thursday to a request for comment. Requests for comment from the FDA were forwarded to health and human services.
Production of the Johnson & Johnson vaccine, one of Emergent’s commercial contracts that it negotiated outside of the federal government, will continue, while its production of the AstraZeneca vaccine — which is not authorized for use in the U.S. — will formally come to a close as a result of the company’s withdrawal from the federal program.
The company was authorized to resume production of the Johnson & Johnson vaccine this summer, but the plant still lacks full federal authorization from the FDA to distribute those doses. Hartwig said the company does not have an estimate for when regulators would fully authorize the plant.
AstraZeneca production has been moved out from the Bayview plant, and government officials never filled the reserved space they had claimed as part of its deal with Emergent.