Shares of Emergent BioSolutions (NYSE: EBS) jumped 19.4% in September, according to data provided by S&P Global Market Intelligence, after the bioterrorism expert was awarded a contract from the U.S. Department of Health and Human Services to buy approximately $2 billion worth of its smallpox vaccine ACAM2000 over the next 10 years.
Management has said for multiple quarters now that it was in talks with the government to set up the follow-on contract, so the announcement certainly wasn't a surprise. But as the months wore on and the previous contract expired, biotech investors seemed to get a little anxious and the company's stock price suffered accordingly.
The contract may have also been larger than investors were expecting. The previous 10-year contract, which Emergent got when it acquired the drug from Sanofi (NASDAQ: SNY) in 2017, was only for $425 million, with about a third of that attributable to license maintenance activities.