British drugmaker AstraZeneca PLC AZN has pledged that it will not profit from its under-development COVID-19 vaccine until the pandemic is over. According to the Financial Times, that timeline may be a lot shorter than most people anticipated.
What Happened: The United Kingdom-based pharmaceutical company, which is developing one of the leading COVID-19 vaccine candidates in partnership with Oxford University, has the right to declare an end to the pandemic as soon as July 2021, clearing the way for it to start collecting profits.
According to FT, this term is part of an agreement AstraZeneca signed with the Brazilian manufacturer Fiocruz for the coronavirus vaccine.
The pandemic period will only be extended beyond July next year if "AstraZeneca acting in good faith considers that the SARS-COV-2 pandemic is not over," the agreement reportedly says.
Why It Matters: The U.K. company has committed to providing doses of its COVID-19 vaccines at a cost basis until the pandemic ends. It has signed manufacturing agreements with organizations across the globe.
AstraZeneca also has supply agreements with governments of multiple countries, including the U.S., but the details of such deals remain confidential, FT noted.
The company's COVID-19 vaccine prospects received a jolt when clinical trials had to be halted following adverse symptoms being observed in some of the participants early last month. The clinical trials remain paused in the U.S. and analysts suggest it has lost the race, perhaps in favor of COVID-19 vaccine candidates being developed by companies like Pfizer Inc. PFE and Moderna Inc. MRNA.
Benzinga's Take: According to data from Johns Hopkins University, the number of daily new COVID-19 cases is mostly keeping an upward trend, with overall 36 million reported infections. The chances of the curve flattening by July seem dim based on expert estimates, and any vaccine —even when approved— will take a significant amount of time to roll out.
Nevertheless, even as per the agreement reported by FT, it can't be said that AstraZeneca actually intends to exercise its right to declare the end to the pandemic in July and start seeking profits.
Price Action: AstraZeneca shares traded 0.2% higher at $53.53 in the after-hours session Thursday.
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