The clock is ticking over in Europe and pharmaceutical giants GlaxoSmithKline (NYSE:GSK) and Sanofi (NYSE:SNY) are working to be on time. With deadlines approaching, the duo just signed a vaccine supply deal with the European Union. GSK stock and Sanofi stock are both rallying Friday as a result.
It has long been interesting to investors that GlaxoSmithKline and Sanofi are working together. Both command respect in the pharma space, but they chose to fight the pandemic together. Now, the future is looking brighter as they race ahead with their vaccine candidate.
On Friday the two companies announced they had reached a deal with the European Union. The EU will front the costs for large-scale manufacturing, and then the duo will deliver up to 300 million doses. Importantly, this announcement comes as the deadline to join a vaccine purchase program from the World Health Organization looms. Friday is also the last day for countries to join the COVAX program from the WHO.
GlaxoSmithKline and Sanofi will immediately benefit from the manufacturing help. Countries including Italy, Belgium, Germany and France will help produce the vaccine. Globally, the pair plan to produce 1 billion doses a year starting in 2021. Investors should note that Glaxo and Sanofi have already signed a $2.1 billion agreement that will see them deliver up to 600 million doses to the U.S.
And manufacturing deals are only one part of the equation. As part of the news on Friday, the two companies shared they were still progressing with trials. They should launch Phase 3 trials by the end of 2020 and be ready to seek regulatory approval at the start of 2021.
GSK and Sanofi Stock Pop After Inking Deal
But why does this all matter?
The why has been especially important this week as vaccine maker after vaccine maker releases an update. GlaxoSmithKline and Sanofi are still important players in the race despite being behind the first wave of companies which includes AstraZeneca (NYSE:AZN) and Pfizer (NYSE:PFE). Together they have a strong reputation and manufacturing capability, and they have the resources to pursue other coronavirus-fighting endeavors.
For instance, Sanofi is also pursuing a vaccine candidate with Translate Bio (NASDAQ:TBIO) and GlaxoSmithKline is developing a test kit with Mammoth Biosciences that uses the CRISPR gene-editing technique.
Investors want to see a bit of muscle in the vaccine race, and they simply just want an effective vaccine. GlaxoSmithKline and Sanofi seem confident they can deliver, inking large supply deals even before launching Phase 3 trials. They may not be as prone to upside pops as Inovio Pharmaceuticals (NASDAQ:INO) or iBio (NYSEMKT:IBIO), but the French and British drugmakers are still solidly in the competition. Don’t forget that.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.