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Emergent BioSolutions to pay $270M for vaccine maker

The company announced Thursday that it is spending $270 million cash to acquire PaxVax, a specialty vaccine manufacturer that sells Vivotif and Vaxchora, FDA-approved vaccines that protect against typhoid and cholera, respectively. The merger is expected to close by the end of 2018.

Before the acquisition PaxVax was majority-owned by Cerberus Capital Management, a private equity fund that is heavily engaged in the defense contracting space through its ownership of companies like DynCorp, a Virginia-based security and logistics firm.

The acquisition also gives Emergent the rights to a handful of not-yet-developed vaccines. They include one being developed for U.S. military personnel by the Defense Department that targets adenovirus, which can cause acute respiratory disease, and a vaccine candidate that targets a mosquito-transmitted virus called chikungunya. The deal also gives Emergent its first research and development facility in Europe, thanks to PaxVax’s substantial presence in Switzerland. Emergent said it will add about 250 employees to its ranks through the merger.

Emergent Chief Operating Officer Robert Kramer described the PaxVax acquisition as a “dual-market” strategy that will give it revenue stability and growth potential. PaxVax’s cholera and typhoid vaccines already have government customers that provide a stable stream of revenue from year to year. The adenovirus and chikungunya vaccines offer a mix of risk and reward: They could provide a financial windfall for Emergent if they are approved for use by the Food and Drug Administration, or they could disappoint investors if they are found to be ineffective.

“For us it’s consistent with the types of transactions we’ve done in the past,” Kramer said. “These are revenue-generating products in the public-health space that further our mission in protecting human life, but also provide a portfolio of advanced pipeline products to fuel future growth of the business.”

A publicly traded company, Emergent has set the aggressive target of reaching $1 billion in annual revenue by 2020 (it made about $220 million last quarter), a goal it has pursued through a patchwork of acquisitions.

In 2015, it spun off several of its drug candidates into a separate publicly traded company, separating the firm’s biodefense work from its riskier commercial biosciences work. Last year it made a series of rapid-fire acquisitions, acquiring a smallpox vaccine from pharma giant Sanofi for $97.5 million, as well as an anthrax antibody from GlaxoSmithKline for $96 million. The acquisition announced Thursday is expected to add annual revenue of $70 million to $90 million.

The goal is to build a stockpile of vaccines that might head off a global pandemic — and draw a healthy profit along the way, the company said.

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