Pfizer and German biotech company BioNTech announced a $1.95 billion deal with the U.S. government Wednesday to purchase 100 million doses of a coronavirus vaccine with the option to purchase up to 500 million more.
If the companies’ final phase of clinical trials is successful, they are on track to produce 100 million doses of the vaccine by the end of 2020 and up to 1.3 billion by the end of 2021.
The U.S. government said it would be giving the vaccine to Americans for free so that as many people as possible could have access to it.
“Expanding Operation Warp Speed’s diverse portfolio by adding a vaccine from Pfizer and BioNTech increases the odds that we will have a safe, effective vaccine as soon as the end of this year,” Health and Human Services Secretary Alex Azar said in a statement.
Pfizer taking risk
Pfizer CEO Dr. Albert Bourla pointed out that the company decided to begin manufacturing its vaccine now at its own expense when it is still in the testing phase, which is a risk for the company.
If a problem develops in the final phase of the clinical trials or if Pfizer fails to get FDA approval for the vaccine for any reason, it would have to absorb the costs of the manufactured, but now worthless, vaccine doses.
If the vaccine does well in the final clinical trials, however, it will be able to get to market up to six months earlier than if manufacturing wasn’t started during the trial.
Both companies saw stocks rise after the announcement, CNBC reported. Pfizer jumped four percent and BioNTech went up six percent in Wednesday trading.
Only the latest vaccine deal
The U.S. has also made deals with other companies developing vaccines, including $1.6 billion with Novavax, almost half a billion each with Moderna and Johnson and Johnson, and $1.2 billion for Astra Zeneca, CNBC reported.
The companies are in a race to be the first to produce a safe and effective vaccine, which should provide protection against infection by the coronavirus and end the need for any further lockdowns.
The current deal with Pfizer and BioNTech would be the largest so far. It seems that the government would not have to pay anything under the deal if the vaccine flops and doesn’t work out.
A new study showed that hospital deaths from the coronavirus have declined 75% from April to June in the UK, and the U.S. has seen similar trends despite rapidly rising positive test results.