Shake-Up at Covid Vaccine Manufacturer That Tossed Millions of Doses

Emergent BioSolutions’ C.E.O. announced several executive changes but vigorously defended the company, which is on track for record revenues.

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WASHINGTON — Executives of Emergent BioSolutions, the Covid-19 vaccine manufacturer that was forced to discard up to 15 million doses because of possible contamination, reported a shake-up in leadership on Thursday and offered the most fulsome defense yet of the company’s performance.

While announcing the high-level personnel changes and taking responsibility for the ruined doses, executives nonetheless forecast record revenues this year of nearly $2 billion.

Robert Kramer, the chief executive, speaking on a call with investors, said that one senior vice president overseeing manufacturing would depart the company while another executive would go on leave. A third official, Mary Oates, who recently joined Emergent after a long tenure at Pfizer, is now leading the company’s response to a recent federal inspection that found serious flaws at the Baltimore facility that produced the vaccines.

The call on Thursday came at a tumultuous time for Emergent, a once-obscure federal contractor that has built a lucrative business selling biodefense products to the government. Production at the Baltimore plant was suspended this month after the discovery that workers had potentially contaminated millions of doses of the Johnson & Johnson vaccine.

Addressing these setbacks, Mr. Kramer offered a vigorous defense of the company on Thursday.

He took “full responsibility” for the manufacturing problems, acknowledging that the “loss of a batch for a viral contamination is extremely serious, and we treated it as such,” but he also said that Emergent had taken on a “herculean task” in a crisis.

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Robert Kramer, Emergent’s chief executive, defended the company, saying it had taken on a “herculean task” in a crisis.Credit…Joe Andrucyk/Office of Governor Larry Hogan

“We were in a situation this time last year where we readily raised our hand, we stepped forward, we ran at this opportunity and the pandemic in a way that few if any other organizations did,” Mr. Kramer said. “I’m proud of the fact that we have stepped up and stepped into this in an aggressive way.”

He said the company would submit a response to the Food and Drug Administration in coming days and hoped to “get back into production as quickly as possible.”

Despite the manufacturing troubles, Emergent’s chief financial officer, Richard Lindahl, said on the call that the company “delivered strong financial performance” and “significant revenue growth and corresponding profitability” during the first quarter of 2021.

The company revised its financial projections, saying it expected a delay in revenue from Covid-19 vaccines, primarily because of the government-requested halt in production.

But Emergent still expected to bring in up to $875 million from its manufacturing contracts this year, much of that from Covid-19 vaccine deals. That would amount to nearly half of what the company projects as a record-high annual revenue approaching $2 billion.

Last year, Emergent struck deals with the federal government, Johnson & Johnson and AstraZeneca worth up to $1.5 billion, and the company has reported receiving hundreds of millions of dollars under those contracts — even though it has not produced a single dose yet deemed usable by United States regulators.

Even as problems mounted at its facility — documented in a series of confidential audits previously reported by The New York Times — the company’s stock price soared. Throughout 2020, Emergent’s founder and chairman, Fuad El-Hibri, cashed in shares and options worth over $42 million, more than he had redeemed in the previous five years combined, a Times investigation found. Mr. Kramer boasted in February that 2020 was “the strongest year in our 22-year history.”

This month, shareholders sued Emergent, alleging that executives had misled investors by touting the company’s ability to manufacture Covid-19 vaccines at the Baltimore plant. The manufacturing problems in Baltimore go beyond the loss of the Johnson & Johnson doses. The Times reported this month that Emergent also had to discard millions of AstraZeneca doses for fear of possible contamination.

So far, no coronavirus vaccines manufactured by Emergent have been put into the arms of Americans. But the Biden administration recently authorized the release of four million AstraZeneca doses to Mexico and Canada. Officials in both countries said the vaccines were administered there only after testing confirmed their safety, and they assured their citizens that the doses were not affected by quality concerns at Emergent.

Earlier this week, with pressure mounting to address the pandemic — including a humanitarian crisis in India — the Biden administration said it also intended to offer other countries access to up to 60 million doses of the AstraZeneca vaccine manufactured by Emergent in Baltimore. But officials said the doses would not be released until regulators determine they are safe.

The Baltimore plant is one of two federally designated sites that were supposed to be ready to manufacture vaccines or therapeutics in a public health emergency. In June 2020, the Trump administration awarded Emergent a $628 million contract, mostly to reserve space in Baltimore to produce coronavirus vaccines.

In Washington, Emergent is known for its aggressive lobbying and government connections spanning both Democratic and Republican administrations. The company’s board is stocked with former federal officials, and its ranks of lobbyists include former members of Congress.

“We’ve been at this for 22 years as a company,” Mr. Kramer said on Thursday’s call, adding that the firm’s relationships with government agencies, including the Biomedical Advanced Research and Development Agency, known as BARDA, which issued the $628 million contract, “remain intact and strong.”

In June 2020, shortly after the Trump administration awarded the contract to Emergent, a top official from Operation Warp Speed, the government’s fast-track vaccine initiative, warned that the company lacked enough trained staff and had a record of problems with quality control.

A copy of the official’s assessment, obtained by The Times, cited “key risks” in relying on Emergent to handle the production of vaccines developed by both Johnson & Johnson and AstraZeneca at the same plant in Baltimore.

Cross-contamination is a “well-known risk” when making two vaccines using live viruses, Mr. Kramer said on Thursday, but the decision to produce both in Baltimore was the government’s. There were layers of safeguards in place, he said, though Emergent believes that they “did not function as anticipated” and that the AstraZeneca virus probably contaminated the Johnson & Johnson batch.

“It’s easy to go back and second-guess these decisions that were made in the early stages of the pandemic,” he said. “At the time, no one knew how fast we can get into a clinically viable vaccine, and which candidates would be most successful.”

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