Kodak Surges 1,900% in 2 Days after Securing a $765 Million Government Loan to Make Drug Ingredients
Pharmaceuticals Division Geared toward Producing Essential Drug Components Currently in 'Chronic National Shortage'
Shares in Kodak more than tripled on Tuesday, then jumped as much as 570% to at least a seven-year high on Wednesday. The group's market capitalization ballooned more than 20-fold to about $2.2 billion at one point.
President Trump described the Kodak agreement as "one of the most important deals in the history of US pharmaceutical industries" in a press briefing on Tuesday.
The US International Development Finance Corporation will lend the cash to Kodak under the Defense Production Act, which requires companies to accept and prioritize government contracts for national security and other reasons.
Kodak plans to use the loan to launch a Kodak Pharmaceuticals division. The unit will make essential drug components that are in "chronic national shortage" as defined by the Food and Drug Administration.
Pharmaceutical ingredients could eventually account for 30% to 40% of Kodak's business, CEO Jim Continenza told The Wall Street Journal.
Kodak dominated the photographic-film market and boasted a market cap of nearly $30 billion in 1997.
However, it filed for bankruptcy in 2012 after the digital camera rendered many of its products obsolete — even though it invented the digital camera, according to the New York Times.
Kodak's revenues fell 6% to $1.2 billion in 2019, widening its pre-tax loss to $60 million.