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Emergent BioSolutions Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2011 10:18AM

Emergent BioSolutions Inc. (EBS) filed Quarterly Report for the period ended 2011-03-31. Emergent Biosolutions Inc. has a market cap of $808 million; its shares were traded at around $23 with a P/E ratio of 14.7 and P/S ratio of 2.8. Emergent Biosolutions Inc. had an annual average earning growth of 10.4% over the past 5 years.



Highlight of Business Operations:

Product sales revenues decreased by $33.3 million, or 86%, to $5.6 million for the three months ended March 31, 2011 from $38.9 million for the three months ended March 31, 2010. This decrease in product sales revenues was primarily due to an 88% decrease in the number of doses of BioThrax delivered. This decrease in doses delivered was due primarily to the annual shutdown of our manufacturing facility in late 2010, the use of production lots in the qualification of a second fill-finish contract manufacturer, as part of our risk mitigation strategy, and the redeployment of our potency testing capacity from BioThrax release testing to qualification of replacement reference standards and other development testing during the first quarter of 2011. Product sales revenues for the three months ended March 31, 2011 consisted of BioThrax sales to HHS of $5.0 million and aggregate international and other sales of $565,000. Product sales revenues for the three months ended March 31, 2010 consisted of BioThrax sales to HHS of $38.8 million and aggregate international and other sales of $37,000.

Contracts and grants revenues increased by $5.0 million, or 63%, to $12.9 million for the three months ended March 31, 2011 from $7.9 million for the three months ended March 31, 2010. The increase in contracts and grants revenue was primarily due to revenues from our recently awarded contract from BARDA for large-scale manufacturing for BioThrax and our collaborations with Abbott and Pfizer, along with increased activity and associated revenue from our development contracts with NIAID and BARDA for NuThrax, PreviThrax, and our double mutant recombinant protective antigen anthrax vaccine. Contracts and grants revenues for the three months ended March 31, 2011 consisted of $9.9 million in development contract and grant revenue from NIAID and BARDA and $3.0 million from Abbott and Pfizer. Contracts and grants revenues for the three months ended March 31, 2010 consisted of $7.2 million in development contract and grant revenue from NIAID and BARDA and $750,000 from a milestone payment related to the 2008 sale of technology rights and related materials and documentation pertaining to our Pertussis technology.

Research and development expenses increased by $14.8 million, or 74%, to $34.8 million for the three months ended March 31, 2011 from $19.9 million for the three months ended March 31, 2010. This increase primarily reflects higher contract service and personnel-related costs, and includes increased expenses of $896,000 for product candidates that are categorized in the biodefense segment, increased expenses of $13.9 million for product candidates and technology platform development activities categorized in the biosciences segment, and increased expenses of $41,000 in other research and development, which are in support of central research and development activities. For the three months ended March 31, 2011 and 2010, we incurred research and development expenses net of development contract and grant reimbursements along with the net loss attributable to noncontrolling interests of $20.0 million and $12.1 million, respectively.

Selling, general and administrative expenses increased by $2.0 million, or 12%, to $18.2 million for the three months ended March 31, 2011 from $16.2 million for the three months ended March 31, 2010. This increase is primarily due to increased personnel-related expenses and professional services to support the business. The majority of the expense is attributable to the biodefense segment, in which selling, general and administrative expenses increased by $1.8 million, or 15%, to $14.0 million for the three months ended March 31, 2011 from $12.2 million for the three months ended March 31, 2010. Selling, general and administrative expenses related to our biosciences segment increased by $161,000, or 4%, to $4.2 million for the three months ended March 31, 2011 from $4.0 million for the three months ended March 31, 2010.

Net cash used in operating activities of $22.7 million for the three months ended March 31, 2011 was principally due to our net loss attributable to Emergent BioSolutions Inc. of $21.4 million, a $9.4 million increase in inventory related to the timing of BioThrax shipments, a net decrease in income taxes of $12.4 million related to timing differences, a decrease in accrued compensation of $10.3 million primarily due to the payment of the 2010 bonuses, partially offset by a decrease in accounts receivable of $27.4 million due to the timing of collection of amounts billed primarily to HHS, and non-cash charges of $2.4 million for stock-based compensation, $2.2 million for depreciation and amortization, and $2.6 million for development expenses primarily from our joint venture with the University of Oxford.

Net cash provided by financing activities of $874,000 for the three months ended March 31, 2010 resulted primarily from $15.0 million in proceeds from borrowings under our revolving line of credit with Fifth Third Bank, $1.3 million in proceeds from stock option exercises and $376,000 related to excess tax benefits from the exercise of stock options, partially offset by $15.8 million in principal payments on indebtedness, including $15.0 million in payments on our revolving line of credit with Fifth Third Bank.

Read the The complete Report



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