J&J Strikes Covid-19 Vaccine Manufacturing Deal With Aspen

Johnson & Johnson has struck a preliminary agreement with Aspen Pharmacare Holdings to manufacture its Covid-19 vaccine candidate Ad26.COV2-S at a factory in South Africa, which has a capacity to produce more than 300 million doses a year.

The agreement is still subject to the successful completion of relevant technology transfer and finalisation of commercial manufacturing terms. As part of the deal, Aspen Pharmacare will perform formulation, filling and secondary packaging for the supply of J&J’s (JNJ) vaccine.

Ad26.COV2-S is currently undergoing clinical trials after they were briefly halted last month following a serious illness in a study participant. On Oct. 23, J&J announced that it is preparing to resume the Phase 3 US trial of its Covid-19 vaccine candidate, after “no evidence” was found that the vaccine caused the illness.

“We have invested globally in our sterile capability and are determined to play a role in the manufacture of vaccines,” said Aspen CEO Stephen Saad. “We have been selected as a vaccine partner by Johnson & Johnson and this project will receive priority focus.”

Saad added that Aspen has been a global supplier for antiretrovirals for the treatment of HIV/AIDS, multi-drug-resistant-TB products and Covid-19-related treatments such as anaesthetics and dexamethasone.

Shares of JNJ are down 6% year-to-date, and the stock scores a bullish Strong Buy Street consensus. That’s with 4 back-to-back Buy ratings over the last three months. Meanwhile the average analyst price target of $169 indicates 23% upside potential lies ahead.

On Oct. 14, Cantor Fitzgerald analyst Louise Chen raised the stock’s price target to $180 (31% upside potential) from $168 and maintained a Buy rating, saying that J&J’s recent Q3 EPS and sales beat, reflect solid performance and positive trends across its diversified business model.

Commenting on last month’s Covid-19 vaccine trial pause, Chen said that although it was creating some noise, it did not change her investment thesis on the company. (See JNJ stock analysis on TipRanks)

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