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Emergent BioSolutions Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 9, 2012 03:37PM
Emergent BioSolutions Inc. (EBS) filed Annual Report for the period ended 2011-12-31.
Highlight of Business Operations:We have derived substantially all of our product sales revenues from BioThrax sales to the U.S. government. We are currently a party to a contract with the Centers for Disease Control and Prevention, or CDC, an operating division of the U.S. Department of Health and Human Services, or HHS, to supply 44.75 million doses of BioThrax for placement into the Strategic National Stockpile, or SNS, over a five year period. We expect for the foreseeable future to continue to derive substantially all of our product sales revenues from our sales of BioThrax to the U.S. government. Our total revenues from BioThrax sales were $202.4 million, $251.4 million and $217.2 million for the years ended December 31, 2011, 2010 and 2009, respectively. We are focused on increasing sales of BioThrax to U.S. government customers, expanding the market for BioThrax to other customers domestically and internationally and pursuing label expansions and improvements for BioThrax.
We also generate revenues from our collaborations in which certain internal and external research and development costs and patent costs are reimbursed in connection with our collaboration agreements. Reimbursed costs under our agreement with Pfizer are recognized as revenue in the period in which the costs are incurred. Under the collaboration agreement with Abbott, which Abbott terminated effective March 20, 2012, Abbott shares development and clinical costs with us equally. Each quarter the parties are required to report the total costs incurred for development. The total spending by each party is then compared to the spending by the other party. In the event that our spending for a given quarter exceeds the spending of Abbott, we record a net receivable in our financial statements for the difference between our spending and 50% of the total spending for the period, and recognize revenue equal to this amount. If Abbott s spending for the quarterly period exceeds our spending, we record a net payable in our financial statements equal to the difference between our spending and 50% of the total spending, and record additional research and development expenses in this amount. As a result, our revenues and research and development expenses for periods that end prior to or include the termination date of the collaboration agreement may fluctuate depending on which party in the collaboration incurred the majority of the development costs in any particular quarterly period.
Under our mortgage loan from PNC Bank for our Frederick facility, we are required to maintain at all times a minimum tangible net worth of not less than $5.0 million. In addition, we are required to maintain at all times a ratio of earnings before interest, taxes, depreciation and amortization to the sum of current obligations under capital leases and principal obligations and interest expenses for borrowed money, in each case due and payable within the following 12 months, of not less than 1.1 to 1.0.
Stocks Discussed: EBS,