Emergent BioSolutions Acquires Sanofi's Smallpox Vaccine Unit

Emergent BioSolutions Inc. (NYSE:EBS) announced that it completed the acquisition of FDA-licensed smallpox vaccine’s business of Sanofi (NYSE:SNY) — ACAM2000. The company paid an upfront payment of $97.5 million and $20 million in milestone payments. The deal also includes a potential milestone payment of up to $7.5 million, tied to the achievement of remaining regulatory milestone event.

ACAM2000 includes ACAM2000 the only vaccine licensed by the FDA for active immunization against smallpox disease for people determined to be at high risk of smallpox infection. It also includes a cGMP live viral manufacturing facility and office as well as warehouse space, both in Canton, MA, and a cGMP viral fill/finish facility in Rockville, MD.

Emergent BioSolutions will also assume responsibility for Sanofi’s existing 10-year Centers for Disease Control and Prevention or CDC contract with a remaining value of up to approximately $160 million for deliveries of ACAM2000 to the Strategic National Stockpile. The CDC contract was originally valued at up to $425 million which will expire and be up for renewal or extension in 2018. Pursuant to the acquisition, Emergent BioSolutions’ anticipates completing the tech transfer of an upstream portion of ACAM2000 manufacturing to the Canton facility.

Emergent’s shares have outperformed the industry year to date. The stock has surged 23.3% compared with the industry’s gain of 14.1%.

The acquisition of ACAM2000 is a strategic fit for Emergent BioSolutions which will enable the latter to expand existing smallpox countermeasure offering along with diversify its portfolio and enabling it to contribute to revenues meaningfully in 2018. Further, it will aid in achieving the goal of $1 billion in total revenues by 2020. The company also expects to generate more than 10% of total revenues from international markets from the deal.

Zacks Rank & Stocks to Consider

Emergent carries a Zacks Rank #3 (Hold). Some better-ranked stocks in health care sector include ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) , Biogen Inc. (NASDAQ:BIIB) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ACADIA’s loss per share estimates have narrowed from $2.63 to $2.52 for 2017 and from $1.92 to $1.85 for 2018 in the last 60 days. The company delivered positive earnings surprises in two of the trailing four quarters with an average beat of 7.97%. Share price of the company has climbed 33.6% year to date.

Biogen’s earnings per share estimates have moved up $21.38 to $21.48 for 2017 and from $23.12 to $23.29 for 2018 in the last 60 days. The company pulled off positive earnings surprises in all the trailing four quarters, with an average beat of 6.41%. The share price of the company has increased 15.4% year to date.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>