J&J Says It Plans to End Covid-19 Vaccine Supply Deal With Emergent BioSolutions

J&J provided a formal notice of termination and breach to Emergent on Monday, J&J said.

The contract disclosure Monday came after Emergent BioSolutions said in a securities filing that it had sent a notice of material breach of the agreement to J&J.

Emergent, of Gaithersburg, Md., said J&J failed to provide requisite forecasts of the required quantity of vaccines to be purchased, and that J&J doesn’t plan to purchase the minimum quantity of product detailed in the initial 2020 agreement.

Emergent also said J&J intends to wind down the contract without fulfilling its minimum requirements.

J&J has 30 days to comply with the contract before Emergent has the right to terminate the agreement, Emergent said. The contract manufacturer said J&J would owe between $125 million and $420 million if the contract were now terminated.

In response, J&J said Emergent’s securities filing “is false and misleading both with respect to the contrived breach allegation against Johnson & Johnson and in its failure to disclose our prior notice that Johnson & Johnson would terminate the supply agreement.”

An Emergent spokesman said the company disagrees with J&J’s characterization of events.

J&J, of New Brunswick, N.J., sells one of three Covid-19 vaccines authorized in the U.S., though health authorities recently limited the use of J&J’s vaccine because of concerns about the risk of a rare but serious blood-clotting condition.

The company said it has sufficient capacity from other manufacturing plants, and the company continues to meet its contractual obligations to supply the vaccine.

Emergent was to help J&J meet demand for the vaccine. Emergent said it had agreed under its contract with J&J to provide Covid-19 vaccine development and manufacturing services for up to five years. It said the contract was valued at about $480 million in the first two contract years.

The contract manufacturer experienced contamination problems at its plant in Baltimore, which resulted in the destruction of key ingredients that would have amounted to roughly 400 million doses of Covid-19 vaccines from J&J and

AstraZeneca

PLC, according to a recent congressional committee report.

The manufacturing problems initially limited the supply of J&J’s vaccine after U.S. regulators authorized its use in early 2021. AstraZeneca’s vaccine hasn’t been authorized for use in the U.S.

In April, J&J said it was withdrawing its prior forecast of sales of its Covid-19 vaccine for 2022, citing a global surplus of doses and uncertain demand.

Write to Peter Loftus at [email protected] and Will Feuer at [email protected]

J&J provided a formal notice of termination and breach to Emergent on Monday, J&J said.

The contract disclosure Monday came after Emergent BioSolutions said in a securities filing that it had sent a notice of material breach of the agreement to J&J.

Emergent, of Gaithersburg, Md., said J&J failed to provide requisite forecasts of the required quantity of vaccines to be purchased, and that J&J doesn’t plan to purchase the minimum quantity of product detailed in the initial 2020 agreement.

Emergent also said J&J intends to wind down the contract without fulfilling its minimum requirements.

J&J has 30 days to comply with the contract before Emergent has the right to terminate the agreement, Emergent said. The contract manufacturer said J&J would owe between $125 million and $420 million if the contract were now terminated.

In response, J&J said Emergent’s securities filing “is false and misleading both with respect to the contrived breach allegation against Johnson & Johnson and in its failure to disclose our prior notice that Johnson & Johnson would terminate the supply agreement.”

An Emergent spokesman said the company disagrees with J&J’s characterization of events.

J&J, of New Brunswick, N.J., sells one of three Covid-19 vaccines authorized in the U.S., though health authorities recently limited the use of J&J’s vaccine because of concerns about the risk of a rare but serious blood-clotting condition.

The company said it has sufficient capacity from other manufacturing plants, and the company continues to meet its contractual obligations to supply the vaccine.

Emergent was to help J&J meet demand for the vaccine. Emergent said it had agreed under its contract with J&J to provide Covid-19 vaccine development and manufacturing services for up to five years. It said the contract was valued at about $480 million in the first two contract years.

The contract manufacturer experienced contamination problems at its plant in Baltimore, which resulted in the destruction of key ingredients that would have amounted to roughly 400 million doses of Covid-19 vaccines from J&J and

AstraZeneca

PLC, according to a recent congressional committee report.

The manufacturing problems initially limited the supply of J&J’s vaccine after U.S. regulators authorized its use in early 2021. AstraZeneca’s vaccine hasn’t been authorized for use in the U.S.

In April, J&J said it was withdrawing its prior forecast of sales of its Covid-19 vaccine for 2022, citing a global surplus of doses and uncertain demand.

Write to Peter Loftus at [email protected] and Will Feuer at [email protected]