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U.S. Authorities Seek Documents From Troubled Covid Vaccine Manufacturer

Troubles continued to mount on Friday for a Maryland vaccine manufacturer as it disclosed publicly for the first time that federal and state law enforcement and regulatory agencies were seeking information from the company.

Emergent BioSolutions, the Maryland manufacturer that ruined 75 million doses of Johnson & Johnson's Covid-19 vaccine, has received records requests related to its pandemic-related work from a host of investigators, regulatory documents filed on Friday show.

Emergent said that it had received "preliminary inquiries and subpoenas to produce documents" from the Justice Department, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the attorneys general of Maryland and New York and committees in both houses of Congress.

The disclosure reflects the growing spotlight on the politically connected company, which received a $628 million federal deal to be the primary domestic manufacturer of the Johnson & Johnson and AstraZeneca vaccines. Production at a company facility in Baltimore was halted for more than three months after a batch of Johnson & Johnson's vaccine was found to be contaminated and a subsequent inspection by regulators uncovered serious quality-control problems.

Emergent is already facing a House committee investigation and multiple shareholder lawsuits related to its manufacturing troubles. In its disclosure, the company provided no further detail on the previously unknown requests, but said it was "producing and has produced documents as required in response and will continue to cooperate with these government inquiries."

Officials with the state and federal agencies either declined to comment or did not respond. A person with knowledge of the matter said that some of the investigative interest stemmed from suspicion of insider trading of Emergent stock, the subject of one of the lawsuits.

A Senate aide confirmed that the committee overseeing health issues was also looking into Emergent's manufacturing troubles, adding to the previously known scrutiny from Capitol Hill.

An Emergent spokesman, Matt Hartwig, said he could not provide detail on the records requests beyond what was in the filing. "All of the inquiries and litigation matters relate to the same subject matter - our capabilities to manufacture Covid-19 vaccine bulk drug substance," he said.

The disclosure comes a day after Emergent announced that the Food and Drug Administration had given the go-ahead to resume manufacturing at the Baltimore site, which had been shuttered since April as the company worked to address deficiencies cited by inspectors.

That decision does not mean the F.D.A. has broadly authorized Johnson & Johnson to distribute doses made by Emergent on an emergency basis. The F.D.A. signed off on previous batches of vaccine made at the Baltimore factory but with a warning that it could not guarantee the company had followed good manufacturing practices. The agency has cleared the equivalent of up to 75 million doses, but tens of millions remain in limbo.

In a conference call with investors on Thursday, Emergent executives announced a $41.5 million hit from being forced to discard doses the F.D.A. had deemed unusable, and said the company had spent another $12.4 million to address manufacturing issues in Baltimore.

The newly disclosed inquiries from federal and state agencies underscore a dramatic reversal of fortune for a company that has spent much of the last two decades effectively cornering the market for biodefense, becoming the government's go-to contractor for products to protect against bioterrorism and infectious disease outbreaks.

For most of the last decade, the government has spent nearly half of the annual budget of the nation's emergency medical reserve, the Strategic National Stockpile, on Emergent's anthrax vaccine alone, crowding out investments in products such as masks that were in short supply during the pandemic, a New York Times investigation found.

When the coronavirus pandemic hit, the government turned to Emergent to produce vaccines and treatments. Thanks to a lucrative deal struck in May 2020, Emergent earned record profits and awarded executives record bonuses.

Out of public view, however, concern about the company's ability to deliver was mounting, as The Times has reported. A series of audits by customers, federal officials and the company's own evaluators found repeated shortcomings in efforts to disinfect and prevent contamination, and a top federal official warned that the company would have to be "monitored closely."

After it was discovered in late March that a batch of the Johnson & Johnson vaccine had been cross-contaminated with material from the AstraZeneca vaccine, federal inspectors descended on the factory, and members of Congress launched an investigation into both the company's Covid-19 manufacturing work and its contracts with the stockpile.

With Emergent's stock price cut in half, shareholders filed lawsuits accusing the company of committing securities fraud by publicly assuring investors that manufacturing in Baltimore was on track even as evidence of significant setbacks accumulated. In a separate suit, a pension fund claimed that some executives and board members had engaged in insider trading by unloading more than $20 million worth of stock over 15 months.

While Emergent's regulatory filing on Friday does not describe the nature of the document requests from the law enforcement agencies, the disclosure follows a description of the shareholder lawsuits in a section of the report titled "Securities Litigation."

The shareholder lawsuits allege a range of misconduct, including deceptive public statements that "artificially inflated" the company's stock price, corporate mismanagement and unjust enrichment. In the regulatory filing, Emergent said that the allegations were false and that the company, its executives and board members "intend to defend the matter vigorously."

[Source: By Chris Hamby, The New York Times, NY, 30Jul21]

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