What happened

Shares of BioNTech (BNTX -2.07%) rose sharply on Wednesday, following news of a major COVID-19 vaccine deal with the U.S. government.

As of 2:05 p.m. EDT, BioNTech's stock was up 10% after rising as much as 14% earlier in the day.

So what

BioNTech and its partner Pfizer (PFE 0.66%) reached an agreement with the U.S. Department of Health and Human Services (HHS) and the Department of Defense. Under the terms of the deal, BioNTech and Pfizer will supply 100 million doses of their experimental COVID-19 vaccine, BNT162, should it prove both safe and effective, and obtain approval or Emergency Use Authorization from the Food and Drug Administration (FDA). In return, they'll be paid $1.95 billion. 

A person wearing a business suit is pointing to an upwardly sloping digital stock chart.

A $2 billion supply deal with the U.S. government helped to drive BioNTech's stock higher on Wednesday. Image source: Getty Images.

The deal also gives the U. S. government the right to acquire another 500 million doses. Notably, Americans would receive the vaccine for free as part of Operation Warp Speed, a national program to accelerate the development and distribution of COVID-19 vaccines and treatments. 

"Expanding Operation Warp Speed's diverse portfolio by adding a vaccine from Pfizer and BioNTech increases the odds that we will have a safe, effective vaccine as soon as the end of this year," HHS Secretary Alex Azar said in a press release.

Now what 

Pfizer and BioNTech plan to start a Phase 2b/3 safety and efficacy trial in the coming days and potentially seek regulatory review for Emergency Use Authorization as soon as October. Early results for BNT162 have been promising; the vaccine candidate appears to be capable of producing neutralizing antibodies -- which could help to defend against coronavirus infections -- in participants at or above the levels seen in people who have recovered from COVID-19. And importantly, no serious adverse events were reported by study participants.

Thanks in part to these positive early-stage results, other nations have also shown interest in the potential vaccine. "We are also in advanced discussions with multiple other government bodies and we hope to announce additional supply agreements soon," BioNTech CEO Ugur Sahin said. "Our goal remains to bring a safe and effective COVID-19 vaccine to many people around the world, as quickly as we can."