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Why Emergent BioSciences Stock Is Falling Today

By Keith Speights – Oct 13, 2020 at 12:31PM

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Blame it on Johnson & Johnson's pause of a late-stage study of its coronavirus vaccine candidate.

What happened

Shares of Emergent BioSolutions (EBS 4.50%) were falling 10.3% as of 11:45 a.m. EDT on Tuesday. The drop came after Johnson & Johnson announced that it had paused its late-stage study of coronavirus vaccine candidate JNJ-78436735 because of an unexplained illness with one participant. In July, Emergent BioSolutions signed a five-year deal with J&J to manufacture its lead COVID-19 vaccine candidate.

So what

Today's sell-off of Emergent BioSolutions could very well be an overreaction. There's a good chance that Johnson & Johnson's pause of its late-stage study will only be temporary, with no effect on Emergent's manufacturing of JNJ-78436735.

Vaccine bottles

Image source: Getty Images.

Adverse reactions in clinical studies aren't out of the ordinary. So far, there haven't been enough details released to know what to make of the issue that caused J&J to pause its phase 3 study.

Sure, it's possible that the investigation of the unexplained illness with one participant in J&J's clinical trial of its coronavirus vaccine candidate could lead to bigger worries about JNJ-78436735. If that happened, Emergent's manufacturing contract would potentially be jeopardized. However, it's way too early to assume that the situation will deteriorate in such a negative way for both companies.

Now what

Emergent BioSolutions' shares could remain volatile until more information is available about the potential safety issue in J&J's late-stage study of JNJ-78436735. However, the healthcare stock could also enjoy a big rebound if the study resumes quickly. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Emergent BioSolutions. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Emergent BioSolutions Stock Quote
Emergent BioSolutions
EBS
$12.30 (4.50%) $0.53
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$178.00 (1.08%) $1.91

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