Shares of Oxford Biomedica (LON: OXB) have been trading in a volatile manner in the past two days after its partner AstraZeneca said it had to pause COVID-19 vaccine trial testing.
Fundamental analysis: AZN eliminated from a race?A major drugmaker AstraZeneca, and Oxford University, reported that their coronavirus vaccine trial has been paused, raising concerns among investors over how the halt might affect the supply deal between the two companies.
The trial was put on hold after a British participant experienced a suspected adverse reaction. AstraZeneca said they paused testing on a voluntary basis and will work with the authorities to make a decision when the trials will continue.
A few days ago, Oxford Biomedica said that it had struck an 18-month supply agreement with AstraZeneca for broad commercial manufacture of its coronavirus vaccine candidate.
According to the agreement, the drugmaker will pay a capacity reservation fee to Oxford Biomedica of £15m. AstraZeneca will also receive revenue in excess of £35m plus materials expenses for the production of numerous large-scale batches of the vaccine by the end of 2021, subject to the adequate increase of production capacity and continuation of the vaccine programme.
While analysts didn’t raise concerns about the news, analysts at the brokerage company Liberum warned about the risk of trial failure.
“From an Oxford Biomedica perspective they recently signed a deal with Astra to supply batches of this vaccine for trials and potential commercial sale. Importantly the deal has a £15m upfront payment that is guaranteed irrespective of the trial outcome”.
“Clearly it would be better for OXB if this vaccine is successful and becomes a mainstream commercial product, but the nature of the deal with Astra provides a level of income even if this trial fails.”
Technical analysis: Shares recoverShares of Oxford Biomedica managed to erase nearly all losses yesterday despite the price action trading as much as 13% lower at one point in the morning. Shares closed 3.26% in the red before almost replicating the same route today.
OXB stock daily chart (TradingView) Oxford Biomedica stock price gapped lower at the open before racing higher to trade in the green again. The price action managed to stay above the 100-DMA (the blue line) at GBX789, which is critical for the buyers.
SummaryOxford Biomedica shares gapped lower yesterday after its coronavirus vaccine trial, implemented together with AstraZeneca, has been put on hold as one of the participants had an adverse reaction to the vaccine.
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