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U.S. Commits $2 Billion for Covid-19 Vaccine, Drug Supplies

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The federal government awarded $2 billion to two drugmakers to support development and manufacturing of an experimental drug and a potential vaccine against Covid-19.

Novavax Inc.


NVAX 31.62%

said it would receive $1.6 billion from the federal government to fund clinical studies of its experimental coronavirus vaccine and establish large-scale manufacturing of doses. With the funding, Novavax said it would deliver 100 million doses of its vaccine for use in the U.S., possibly by the end of this year.

Regeneron Pharmaceuticals Inc.


REGN 2.17%

said it has received a $450 million federal contract to manufacture thousands of doses of its experimental Covid-19 treatment that the government will distribute at no cost to the public if the drug is authorized for use by regulators.

Shares of Novavax soared nearly 29% to $102.24 Tuesday morning. Shares of Regeneron rose 3.5% to $648.90.

The new funding shows the federal government is taking steps to try to ensure that more effective tools against the pandemic are ready by fall and winter. But there is no guarantee that the drug and vaccine will work safely in clinical trials.

The exact number of treatment courses covered by the Regeneron contract is uncertain, the company said, in part because clinical trials have yet to show what the most effective dose will be.

As the coronavirus continues to spread around the globe, companies and academic labs are racing to develop a vaccine that would help society get back to normal. But there could also be costs to moving too quickly. WSJ’s Daniela Hernandez explains. Photo illustration: Laura Kammermann

Regeneron is testing its drug, a combination of two antibodies, as both an antiviral treatment for people already infected, and as a method of providing temporary preventive treatment against new infections. The Tarrytown, N.Y., company said Monday it is advancing the drug into later-stage studies.

The contract will cover 70,000 to 300,000 treatment doses as an antiviral treatment. If used preventively, a lower dose of the drug would be needed and the estimated treatment doses would range from 420,000 to 1.3 million, Regeneron said. Initial doses could be ready as soon as late summer, and the total contracted amount of drug should be manufactured in the fall, the company said.

The U.S. government will receive nearly all of its supply until the contracted amount of drug is completed, a Regeneron spokeswoman said. The company will keep a small portion of the drug for clinical trials, she said.

The contract was awarded as part of the government’s Operation Warp Speed initiative and will be funded by divisions of the Department of Health and Human Services and the Department of Defense, Regeneron said.

Regeneron was previously awarded $167.5 million in federal funding to help develop its Covid-19 drug.

Regeneron is working to set up other manufacturing arrangements, potentially with nongovernmental organizations or other pharmaceutical companies, to meet demand for the drug outside of the U.S., if it is authorized for use, the spokeswoman said.

Operation Warp Speed is a federal initiative to accelerate the development and manufacturing of drugs and vaccines for Covid-19. The government also is backing vaccines developed by

Moderna Inc.,

AstraZeneca

PLC and

Johnson & Johnson.

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Novavax, of Gaithersburg, Md., started testing its vaccine, NVX‑CoV2373, in May in a small study in Australia, for which initial results are expected by the end of July. The new federal funding will support a pivotal, “phase 3” study with up to 30,000 participants beginning in the fall, Novavax said.

“We’ve got all the tools to allow us to get the vaccine made in large scale,” Novavax Chief Executive Stanley Erck said in an interview. “We just need data to show it works.” He said the company has seen promising results of its experimental vaccine in animal tests so far.

Novavax’s vaccine contains proteins resembling those found on the surface of the new coronavirus, which are supposed to trigger an immune response to the virus once injected. Novavax manufactures the proteins in insect cells.

Novavax, founded in 1987, has no products on the market. It is developing vaccines against influenza and other viruses.

The company’s efforts have gotten a boost from the Coalition for Epidemic Preparedness Innovations, an Oslo-based nonprofit that has pledged as much as $388 million in funding for Novavax’s coronavirus vaccine.

The CEPI funding is helping the company run clinical trials and begin ramping up production of doses. In return, Novavax has pledged to expand manufacturing outside the U.S. and to participate in a global allocation system for doses. Novavax manufactures portions of its developmental vaccines in the U.S. and Sweden, and recently acquired a manufacturing plant in the Czech Republic.

Write to Peter Loftus at peter.loftus@wsj.com and Joseph Walker at joseph.walker@wsj.com

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