U.S. to pay Pfizer $1.95 billion to produce millions of doses of COVID-19 vaccine

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The agreement allows the U.S. government to acquire an additional 500 million doses, the Department of Health and Human Services and the Department of Defense said.

Pfizer will deliver the doses if the product receives Emergency Use Authorization or licensure from the U.S. Food and Drug Administration, after completing demonstration of safety and efficacy in a large Phase 3 clinical trial.

A vaccine is seen as crucial to tackle the pandemic and governments across the globe have signed deals with drugmakers to secure dosages of their vaccine candidates.

Pfizer and BioNTech are among a handful of companies that are racing to develop a safe and effective vaccine for COVID-19, caused by the new coronavirus. Their vaccine candidate has shown promise in early-stage small studies in humans.

Pfizer’s shares rose 4%, while BioNTech’s U.S.-listed shares were up about 6% before the bell.