Kodak triples on loan to make COVID-19 drug ingredients
Eastman Kodak Co. shares more than tripled Tuesday on plans to secure a $765 million government loan to help produce ingredients used in key generic medicines to fight the coronavirus.
The development bank loan is the first of its kind under the Defense Production Act in collaboration with the U.S. Department of Defense. It’s intended to speed production of drugs in short supply and those considered critical to treat COVID-19, which may include hydroxychloroquine, the controversial antimalarial drug touted by President Donald Trump.
The money could provide a lifeline to Kodak, the storied photography giant whose business and shares were devastated by the switch to filmless cameras. Once a stalwart of American industry with a market capitalization above $30 billion, the company declared bankruptcy in 2012, forcing it into a series of attempted reinventions including forays into printers, film for movies and, briefly, cryptocurrencies.
Now, the 132-year-old company will be reorienting part of its factory structure to produce drug ingredients, including at sites in Rochester, New York, and St. Paul, Minnesota, under a new Kodak Pharmaceuticals arm. The company was founded in upstate New York. Once a thriving industrial center the region has become a “rust belt” that has been struggling for decades as key blue chip companies have moved their operations and jobs overseas.
Kodak shares jumped as much as 350% to $11.80 each as of 12:30 p.m. in New York. The stock hasn’t traded above $5 in more than two years.
“Americans are dangerously dependent on foreign supply chains for their essential medicines,” White House adviser Peter Navarro said in a statement. The U.S. manufactures about 10% of components going to the national generic drug supply.
The ingredients in hydroxychloroquine are among those being targeted, according to a Dow Jones report. The antimalarial medicine has been touted by President Trump as a treatment for the virus responsible for the pandemic, although scientists like the national virus expert Anthony Fauci have said it is not effective against COVID-19.
Kodak executives and government officials will be on hand later on Tuesday to sign a letter of intent for the loan. The stock had fallen 44% this year before Tuesday’s trading and had a market value of about $115 million. Kodak ended the first quarter with a cash balance of $209 million.