Emergent BioSolutions Reports Financial Results for Second Quarter and First Six Months of 2013

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Emergent BioSolutions Reports Financial Results for Second Quarter and First Six Months of 2013

ROCKVILLE, Md.--(BUSINESS WIRE)-- Emergent BioSolutions Inc. (NYS: EBS) announced today its financial results for the second quarter and six months ended June 30, 2013.

Total revenues for Q2 2013 were $82.4 million as compared to $70.4 million in 2012. Total revenues for the first six months of 2013 were $125.5 million as compared to $120.7 million in 2012.


Net income for Q2 2013 was $10.5 million, or $0.29 per basic share, as compared to $7.6 million, or $0.21 per basic share, in 2012. Net income for the first six months of 2013 was $2.4 million, or $0.07 per basic share, as compared to $0.8 million, or $0.02 per basic share, in 2012.

The company reaffirms its forecast for full year 2013 total revenues of $290 to $310 million, split between product revenues of $235 to $245 million and contracts and grants revenue of $55 to $65 million. The company also reaffirms its forecast for full year net income of $20 to $30 million. For Q3 2013, the company forecasts total revenues of $70 to $80 million.

Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions, stated, "We are very pleased with our performance for the second quarter and year-to-date. We achieved strong financial results and significantly advanced our operational objectives, including closing on the Healthcare Protective Products Division of Bracco Diagnostics, Inc., securing German approval of BioThrax® with a three-dose primary series and triennial boosters, and continuing to progress our biodefense and biosciences development programs. We are well positioned to continue to deliver financial results in accordance with our forecast and to execute on our growth plan."

Q2 2013 and Subsequent Operational Accomplishments

  • Entered into and closed an asset purchase agreement to acquire the Healthcare Protective Products Division (HPPD) of Bracco Diagnostics Inc.;
  • Received Paul-Ehrlich-Institut approval to market BioThrax in Germany with a three-dose primary schedule over 6 months with triennial boosters thereafter;
  • Completed the Phase 3 clinical study evaluating the immunogenicity and safety of a three-dose BioThrax regimen for the post-exposure prophylaxis (PEP) indication;
  • Completed enrollment in the pivotal antibiotic non-interference trial in support of the PEP indication for BioThrax;
  • Expanded the ongoing phase 1b study of otlertuzumab (formerly TRU-016) to include two new cohorts: one cohort with a lower dose of otlertuzumab in front line chronic lymphocytic leukemia (CLL); one to evaluate the combination of otlertuzumab and rituximab in relapsed CLL patients;
  • Announced positive preclinical efficacy and pharmacokinetic data for ES414, a bispecific ADAPTIR™ (Modular Protein Technology) molecule in development for castration-resistant prostate cancer; and
  • Presented preclinical efficacy data on ES210, a bispecific ADAPTIR molecule in development for treating autoimmune diseases.

Financial Results

Product Sales

For Q2 2013, product sales were $65.6 million, an increase of $12.4 million from $53.2 million for Q2 2012, due to a 21% increase in the number of doses of BioThrax delivered along with a modest increase in the average sales price per dose.

For the six month period of 2013, product sales were $96.0 million, an increase of $8.4 million from $87.5 million in the comparable period of 2012, due to a 7% increase in the number of doses of BioThrax delivered along with a modest increase in the average sales price per dose.

Contracts and Grants Revenues

For Q2 2013, contracts and grants revenues were $16.8 million, a decrease of $0.4 million from $17.2 million for Q2 2012. For the six month period of 2013, contracts and grants revenues were $29.6 million, a decrease of $3.6 million from $33.2 million for the comparable period of 2012. The decrease in both periods was primarily due to decreased revenues from the company's collaboration agreements with Abbott and Pfizer that terminated in 2012.

Cost of Product Sales

For Q2 2013, cost of product sales was $16.9 million, an increase of $3.8 million from $13.2 million for Q2 2012. For the six month period of 2013, cost of product sales was $22.6 million, an increase of $1.9 million from $20.7 million for the comparable period of 2012. The increase in both periods was primarily due to an increase in the number of BioThrax doses delivered.

Research and Development

For Q2 2013, gross research and development expenses were $30.3 million, a slight decrease from $30.6 million for Q2 2012. For the six month period of 2013, gross research and development expenses were $61.0 million, an increase of $4.1 million from $56.9 million for the comparable period of 2012. After adjusting for development contracts and grants revenue and the net loss attributable to noncontrolling interests, net research and development expenses for Q2 2013 were $13.3 million, as compared to $11.3 million for Q2 2012. Net research and development expenses for the first six months of 2013 were $30.6 million, as compared to $20.4 million in the comparable period in 2012. For both periods in 2013, the increase in net research and development expense was primarily due to development spending on the company's biosciences programs and platform technologies in an ongoing effort to position them for partnering, as well as depreciation related to the company's Baltimore facility.

Selling, General and Administrative

For Q2 2013, selling, general and administrative expenses were $20.5 million, an increase of $2.6 million from $17.9 million for Q2 2012. For the six month period of 2013, selling, general and administrative expenses were $40.5 million, an increase of $3.1 million from $37.4 million for the comparable period of 2012. The increase in both periods was primarily due to costs related to the restructuring of the company's U.K. operations and, to a lesser extent, costs associated with increased professional services.

Financial Condition and Liquidity

Cash and cash equivalents plus accounts receivable balance, which consists of unpaid amounts due from the US government under our procurement and development contracts, at June 30, 2013 was $210.6 million compared to $193.2 million at March 31, 2013 and $237.7 million at December 31, 2012.

Conference Call and Webcast

Company management will host a conference call at 5:00 pm Eastern on Monday, August 5, 2013 to discuss these financial results. The conference call will be accessible by dialing 888.713.4217 or 617.213.4869 (international) and providing passcode 80425830. A webcast of the conference call will be accessible from the company's website at www.emergentbiosolutions.com, under "Investors." A replay of the conference call will be accessible, approximately two hours following the conclusion of the call, by dialing 888.286.8010 or 617.801.6888 and using passcode 43500766. The replay will be available through August 12, 2013. The webcast will be archived on the company's website, www.emergentbiosolutions.com, under "Investors."

About Emergent BioSolutions Inc.

Emergent BioSolutions is a specialty pharmaceutical company seeking to protect and enhance life by offering specialized products to healthcare providers and governments to address medical needs and emerging health threats. Additional information about the company may be found at www.emergentbiosolutions.com.

Follow us on twitter: @emergentbiosolu

Safe Harbor Statement

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including statements regarding our financial guidance, and any other statements containing the words "believes", "expects", "anticipates", "intends", "plans", "estimates" and similar expressions, are forward-looking statements. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.

There are a number of important factors that could cause the company's actual results to differ materially from those indicated by such forward-looking statements, including appropriations for BioThrax® procurement; our ability to successfully integrate the HPPD business and realize the benefits of the transaction; our ability to obtain new BioThrax sales contracts or modifications to existing contracts; our plans to pursue label expansions and improvements for BioThrax; availability of funding for our U.S. government grants and contracts; our ability to obtain regulatory approval for large-scale manufacturing of BioThrax in Building 55; our ability to identify and acquire companies, products or late-stage product candidates that satisfy our selection criteria; whether anticipated synergies and benefits from an acquisition or in-license are realized within expected time periods or at all; our ability to enter into selective collaboration arrangements; our ability to expand our manufacturing facilities and capabilities; the rate and degree of market acceptance and clinical utility of our products; the success of our ongoing and planned development programs; the timing of and our ability to obtain and maintain regulatory approvals for our products and product candidates; and our commercialization, marketing and manufacturing capabilities and strategy. The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement. Investors should consider this cautionary statement, as well as the risk factors identified in our periodic reports filed with the SEC, when evaluating our forward-looking statements.

Financial Statements Follow

    
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
 
 
June 30,December 31,
2013  2012
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$156,243$141,666
Accounts receivable54,36996,043
Inventories18,58215,161
Deferred tax assets, net1,2641,264
Income tax receivable, net6,502-
Prepaid expenses and other current assets 11,199    9,213 
Total current assets 248,159    263,347 
 
Property, plant and equipment, net248,504241,764
In-process research and development41,80041,800
Goodwill5,5025,502
Deferred tax assets, net11,08711,087
Other assets 562    730 
 
Total assets$555,614   $564,230 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$25,711$31,297
Accrued expenses and other current liabilities1,0671,603
Accrued compensation15,48122,726
Long-term indebtedness, current portion4,4704,470
Deferred revenue 2,049    1,811 
Total current liabilities48,77861,907
 
Long-term indebtedness, net of current portion56,06958,304
Other liabilities 1,685    1,891 
Total liabilities106,532122,102
 
Commitments and contingencies
 
Stockholders' equity:
Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively--
Common stock, $0.001 par value; 100,000,000 shares authorized, 36,589,921 shares issued and 36,186,763 shares outstanding at June 30, 2013; 36,272,550 shares issued and 35,869,392 shares outstanding at December 31, 20123636
Treasury stock, at cost, 403,158 common shares at June 30, 2013 and December 31, 2012(5,906)(5,906)
Additional paid-in capital236,099230,964
Accumulated other comprehensive loss(3,513)(4,129)
Retained earnings 222,814    220,393 
Total Emergent BioSolutions Inc. stockholders' equity 449,530    441,358 
Noncontrolling interest in subsidiaries (448)   770 
Total stockholders' equity 449,082    442,128 
Total liabilities and stockholders' equity$555,614   $564,230 
 
 
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share data)
 
    
Three Months Ended June 30,
2013  2012
(Unaudited)
Revenues:
Product sales$65,596$53,161
Contracts and grants 16,840    17,218
Total revenues82,43670,379
 
Operating expense:
Cost of product sales16,94513,186
Research and development30,27830,645
Selling, general and administrative 20,501    17,895
Income from operations14,7128,653
 
Other income (expense):
Interest income1029
Interest expense(3)-
Other income (expense), net 18    907
Total other income (expense)25936
 
Income before provision for income taxes14,7379,589
Provision for income taxes 4,381    4,043
Net income 10,356    5,546
Net loss attributable to noncontrolling interest 128    2,086
Net income attributable to Emergent BioSolutions Inc.$10,484   $7,632
 
Income per share - basic$0.29$0.21
Income per share - diluted$0.29$0.21
 
Weighted-average number of shares - basic36,144,06336,182,826
Weighted-average number of shares - diluted36,527,01436,556,697
 
 
Emergent BioSolutions Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share data)
 
    
Six Months Ended June 30,
2013  2012
(Unaudited)
Revenues:
Product sales$95,955$87,518
Contracts and grants 29,581    33,172 
Total revenues125,536120,690
 
Operating expense:
Cost of product sales22,64320,697
Research and development61,00256,891
Selling, general and administrative40,52937,387
Impairment of in-process research and development -    9,600 
Income (loss) from operations1,362(3,885)
 
Other income (expense):
Interest income3354
Interest expense(14)(6)
Other income (expense), net 35    1,761 
Total other income (expense)541,809
 
Income (loss) before provision for (benefit from) income taxes1,416(2,076)
Provision for (benefit from) income taxes (135)   403 
Net income (loss) 1,551    (2,479)
Net loss attributable to noncontrolling interest 871    3,279 
Net income attributable to Emergent BioSolutions Inc.$2,422   $800 
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