In deals worth billions, Sanofi SA and Glaxosmithkline plc (GSK) have made new agreements this week to supply the U.S. and U.K. governments with a COVID-19 vaccine. The two companies also are in advanced discussions with the European Union to supply up to 300 million doses of a vaccine.

In the biggest Operation Warp Speed (OWS) deal so far, Sanofi, of Paris, and London’s GSK will receive up to $2.1 billion from the U.S. government to develop and deliver an initial 100 million doses of a recombinant protein-based COVID-19 vaccine. OWS now has awarded COVID-19 contracts totaling more than $8 billion.

The candidate is based on the recombinant protein-based technology used by Sanofi to produce an influenza vaccine combined with GSK’s pandemic adjuvant technology. Sanofi, leading the clinical development and registration, said it expects a phase I/II trial to begin in September and a phase III by year-end.

If the data are positive, the companies can request U.S. regulatory approval in the first half of 2021.

More than half the $2.1 billion supports further development, including the clinical trials. The rest of the money is for manufacturing scale-up and delivery of an initial 100 million doses.

The U.S. government has an option for ordering another 500 million doses. Sanofi and GSK envision potentially producing 1 billion doses annually.

This is the second COVID-19 deal this week the two companies have cut. On July 29, Sanofi and GSK announced they had agreed to supply the U.K. government with up to 60 million doses of a COVID-19 vaccine.

On Friday, July 31, the same day Sanofi and GSK announced their OWS deal, the two also said they are discussing supplying the EU with up to 300 million doses of the vaccine. The companies plan to provide “a significant portion of total worldwide available supply capacity” in 2021 and 2022 to the initiative “Access to COVID‐19 Tools (ACT) Accelerator,” a global collaboration of governments, health organizations, businesses and philanthropies to accelerate development, production and “equitable access to COVID-19 tests, treatments, and vaccines.”

Sanofi-GSK’s effect on Moderna’s vaccine

Moderna Inc. dosed the first of what could be as many as 30,000 healthy volunteers the morning of July 27 as it began its phase III COVID-19 vaccine trial, which is also part of OWS. Those volunteers at increased risk of contracting COVID-19, with a large percentage being elderly or people with co-morbidities – those most at risk for life-threatening COVID-19 infections – will receive placebo or Moderna’s vaccine candidate, mRNA-1273.

SVB Leerink analyst Mani Foroohar wrote Friday morning that Sanofi-GSK’s OWS contract raises questions about the timing of Moderna Inc.’s mRNA pricing and supply.

“A significant portion of the funding is earmarked for clinical trials, manufacturing, scale-up and delivery, implying that the actual dose price could be lower than the previous bar” for the U.S. set by Pfizer Inc.-Biontech SE at $19.50 per dose. For mRNA-1273, Leerink currently models pandemic-level pricing similar to Pfizer-Biontech at $20 per dose and $40 per course. Leerink also, according to Foroohar, sees pricing materially above that level as challenging in the pandemic period.

The tempo of announced supply agreements has been brisk in the U.S. and elsewhere, Foroohar added, with Pfizer-Biontech “recently striking a deal to supply 120 [million] doses for use in Japan for example as debate around initial market share intensifies and a diverse range of companies nip at the heels of mRNA frontrunners” Moderna and Pfizer/Biontech. Investors are increasingly curious, Foroohar said, as to when Moderna will announce an agreement to supply vaccine to the government. Foroohar expects that agreement will be “a key focus” of the firm’s Aug. 5 earnings call.

The Pfizer-Biontech OWS deal

The Pfizer-Biontech SE deal has, as part of OWS, the U.S. government paying $1.95 billion for the first 100 million doses of their jointly developed mRNA-based COVID-19 vaccine, BNT-162, once Pfizer manufactures it and receives the FDA’s approval or emergency use authorization. The two companies agreed to begin delivering 300 million doses of a COVID-19 vaccine in 2021.

On Friday, Pfizer and Biontech announced they would supply Japan with 120 million doses of BNT-162 in the first half of 2021. A week and a half earlier, on July 20, the companies agreed to supply the U.K. government with 30 million doses of BNT-162, subject to clinical success and regulatory approval. Financial details were not disclosed, but terms were based on delivery timing of delivery dosage volumes. The BNT-162 program is based on Biontech’s mRNA technology and supported by Pfizer’s global vaccine development and manufacturing capabilities.

Other COVID grants

On July 7, Novavax Inc. said received $1.6 billion in an OWS grant from the U.S. government’s Biomedical Advanced Research and Development Authority (BARDA) to support development of its vaccine, NVX-CoV2373. Astrazeneca plc received $1.2 billion in May for AXD-1222 and Emergent Biosolutions Inc. received $628 million in June to deploy its capabilities in accelerating the delivery of COVID-19 vaccines.

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