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UPDATE 2-Emergent plans to fix issues that halted vaccine production early as July -U.S. House memo

(Adds Emergent leadership comments from hearing, share price)

May 19 (Reuters) - Emergent BioSolutions Inc told U.S. regulators it aims as soon as July to correct the problems at its manufacturing facility that ruined millions of COVID-19 vaccine doses, according to a private correspondence published by the U.S. House Oversight Committee.

Emergent Executive Chairman Fuad El-Hibri was repeatedly questioned at a Wednesday Congressional hearing about his ties to the Trump administration. An official under former President Donald Trump who oversaw the U.S. government’s vaccine deal with Emergent had previously received consulting fees from the company, the U.S. House memo said.

El-Hibri said it was “simply not true” that his relationship with Trump official Robert Kadlec influenced the U.S. government’s contract award.

The U.S. Food and Drug Administration paused production of Johnson & Johnson vaccines at Emergent’s Baltimore plant in April after an inspection flagged numerous serious quality control and sanitary issues.

The company contaminated millions of vaccine doses during multiple incidents in 2020 and 2021, the memo said.

Emergent shares were down nearly 3% to $56.42 in midday trading, while J&J shares were off less than 1%.

Emergent CEO Robert Kramer said at the hearing that he “can’t specifically comment” on the total number of COVID-19 vaccine doses that were ruined at the Baltimore facility.

However, Kramer said in March that material for 15 million J&J doses was ruined. He also said “a number” of batches of AstraZeneca’s COVID-19 vaccine were ruined in early production ramp ups.

The company expects to complete corrective measures such as retraining its staff and acquiring additional refrigerators by as early as July, according to the correspondence.

It is unclear whether Emergent can begin manufacturing more COVID-19 vaccine before correcting all the issues flagged by U.S. regulators.

‘DESTROYING MILLIONS OF VACCINE DOSES’

Emergent had not previously disclosed a timeline for resuming vaccine production. In a late April investor call, Kramer said he is “hopeful that we can soon return to producing tens of millions of doses per month.”

Staff working for the government’s Operation Warp Speed program in June 2020 flagged “significant” personnel issues at Emergent’s Maryland plant, including that “the staffing plans presented seem inadequate” to produce three products, according to a draft report cited in the memo.

The report said recent audits, including one by the FDA, “highlighted the need for extensive training of personnel.”

The memo also said Emergent executives gave themselves millions of dollars in bonuses in 2020 despite knowing that their facilities were ruining batches of COVID-19 vaccines.

J&J’s vaccine was contaminated with ingredients from AstraZeneca’s shot, which was also being produced at the plant at the time. Production of AstraZeneca’s vaccine was subsequently moved elsewhere and manufacture of J&J’s one-shot vaccine was halted there after the FDA inspection.

“At the same time that the company was destroying millions of vaccine doses... its executives were cashing out,” said U.S. Congresswoman Carolyn Maloney, a Democrat.

Kramer said the U.S. government contracted with Emergent in 2012 to help it prepare for public health emergencies, but failed to provide the financial support needed to boost capacity ahead of the pandemic.

U.S. government funding “persistently fell short of what was needed to reach full operating potential,” Kramer said in his opening remarks to the Congressional committee.

“As a result, at the end of 2019, (the Baltimore plant) had roughly 100 employees,” and was less than a year away from being charged with making millions of COVID-19 shots, the CEO said.

Reporting by Carl O’Donnell; Editing by Jonathan Oatis and Bill Berkrot

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