Emergent inks $225M cash smallpox deal as Chimerix implodes on reorg, FDA trouble
Emergent BioSolutions has made a name for itself ever since the late 1990s by making drugs that are needed by the US government. Monday, it took that a step further, as it entered a deal with Chimerix to acquire the exclusive rights to Tembexa, a smallpox treatment for all ages that was approved in 2021, with a $225 million cash payment.
The pickup comes just as Chimerix released its Q1 earnings report, in which CEO Mike Sherman said that the company is dropping investment in another program while circling its wagons around the lead drug after hopes for an accelerated approval were damaged by regulators. And that will set up a pivotal trial in advance of any expected approval — news that sent investors running for the hills as its stock $CMRX plunged 60%.
Emergent’s SVP of government business Paul Williams said that the deal for the small molecule drug expands its work in the government’s smallpox preparedness strategy. The deal will come together with an anticipated BARDA contract in the next three to six months following the closing of this deal. The closing of the deal is contingent on securing that contract. Emergent will pay Chimerix a $225 million one-time upfront payment upon closing, and a total of $100 million in milestone payments. The terms also include sales-based royalty payments.
Tembexa, which is an oral antiviral formulated as 100 mg tablets, is indicated to treat smallpox in adults, children and newborns. When the FDA announced the approval, it noted that though the virus that causes smallpox was eradicated in 1980, it is believed that it could be used as a bioweapon in the future.
“The addition of Tembexa to Emergent’s portfolio of medical countermeasures builds upon our core capabilities and leverages our long and successful history partnering with the US government to address dangerous public health threats,” CEO Bob Kramer said. “It exemplifies our thoughtful M&A strategy as part of our 2024 growth plan and positions us better to deliver value for our shareholders.”
The effectiveness of Tembexa had to be studied in animals with viruses that are closely related to the various virus, because the various virus no longer exists.
The pickup is a win for Emergent, right when the company was in need of something positive. At the end of April, the longtime CEO and co-founder of the CDMO died of cancer, less than a month after retiring from his role as chairman of the board of directors.
Then, a report from the US House select subcommittee on the coronavirus crisis reported that the number of Covid-19 vaccine doses tossed due to cross contamination problems at its Baltimore plant was more like 400 million, as opposed to the much smaller amount originally reported. The report also alleged that Emergent executives tried to sweep the problems under the rug, and ignored reports from quality control directors saying that the site wasn’t fit for the task it was about to take on. Emergent has adamantly denied the report’s findings.
“To equate these quality control actions with a ‘discarded dose’ figure displays a lack of understanding regarding the biomanufacturing process,” a statement said.
Emergent has made government contracts its bread and butter ever since it landed a deal with the US for its anthrax vaccine around the time of the Sept. 11, 2001 attacks. That was its only drug then, and shortly after, it revamped its manufacturing sites and ramped up its immunization program. Emergent landed a big $400 million contract with BARDA for its anthrax vaccine again in October 2021. It was awarded a $628 million contract from President Donald Trump’s administration to manufacture Covid-19 vaccines with no competitive bidding back in 2020, which eventually led to the Baltimore mishap.