Shares of Akorn Inc. climbed to an all-time high Tuesday as the pharmaceutical company signed a deal to distribute a tetanus diphtheria vaccine.
Before the markets opened, Buffalo Grove, Ill.-based Akorn said the three-year deal with Massachusetts Biologic Laboratories would be worth more than $150 million in revenue, adding 10 cents to 11 cents per year to its earnings per share. The contract begins on Sept. 1.
Massachusetts Biologic will distribute the vaccine for free in its home state, and Akorn will have exclusive marketing and distribution rights in the U.S. and Puerto Rico. Akorn said there are about 15 million tetanus diphtheria vaccines per year. It will market a multiple-dose vaccine at first, and hopes to introduce a single-dose vaccine early next year.
Friedman Billings Ramsey analyst Robert Uhl upped his price target to $8.50 from $7.50, and raised his earnings estimates to account for revenue from the "exciting" move.
"We believe that the distribution agreement with Massachusetts Biologic Laboratories could broaden over time to include other biologic products," he said. "Over time, the company could build a significant market presence in the category, which may increase its attractiveness to a strategic buyer, in our view."
Shares rose 63 cents, or 10.6 percent, to $6.60 in afternoon trading on the Nasdaq Stock Market. The stock peaked at $6.79, and trading was five times heavier than normal.
