Emergent BioSolutions Inc. (EBS) filed Quarterly Report for the period ended 2009-09-30.
EMERGENT BIOSULUTIONS INC. is a leading biopharmaceutical company dedicated to one simple mission - to protect life. EBS develops manufactures and commercializes vaccines and therapeutics that assist the body's immune system to prevent or treat disease. Their products target infectious diseases and other medical conditions that have resulted in significant unmet or underserved public health needs. Their marketed product BioThrax? (Anthrax Vaccine Adsorbed) is the only vaccine approved by the U.S. Food and Drug Administration for the prevention of anthrax infection. Emergent Biosolutions Inc. has a market cap of $472.6 million; its shares were traded at around $15.52 with a P/E ratio of 12.1 and P/S ratio of 2.7.
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doses is $400 million in the aggregate. In June 2009, we received FDA approval of our supplement to our biologics license application, or BLA, to extend the expiry dating of BioThrax from three years to four years. As a result of this approval, HHS agreed to increase the price per dose under the agreement for the final 13.25 million doses sold, up to a total of approximately $34 million. In conjunction with this approval, we billed HHS approximately $32 million for doses delivered through June 30, 2009 and billed the remaining $2 million of increased price per dose on doses delivered in the third quarter of 2009. Under this agreement, we provided all shipping services related to delivery of doses into the SNS over the term of the agreement, for which HHS has paid us approximately $2 million. We invoiced HHS for each delivery upon acceptance of BioThrax doses delivered into the SNS. In July 2009, we completed delivery of the doses under this agreement. The agreement also provided for HHS to pay us up to $11.5 million in milestone payments in connection with us advancing a program to obtain a post-exposure prophylaxis indication for BioThrax. These funds are payable upon achievement of specific program milestones. In October 2007, we achieved the initial milestone and received payment from HHS of $8.8 million.
On September 30, 2008, we entered into an agreement with HHS to supply up to 14.5 million doses of BioThrax to HHS for placement into the SNS. The term of the agreement is from September 30, 2008 through September 30, 2011. Delivery of doses under the agreement commenced in September 2009 and continues through September 2011. Funds for the procurement of the first 5.7 million doses of BioThrax have been committed. Procurement of the remaining 8.8 million doses will be funded through the annual appropriations process for the SNS. Four-year expiry dated product will be invoiced at a higher price than three-year expiry dated product. The total purchase price for the 14.5 million doses will be up to approximately $400 million, assuming the delivery of four-year expiry dated product. Through September 30, 2009, we have delivered approximately 1.0 million doses under this agreement. We have agreed to provide all shipping services related to delivery of doses into the SNS over the term of the agreement, for which HHS has agreed to pay us approximately $1.9 million. We invoice HHS under the agreement upon acceptance of each delivery of BioThrax doses to the SNS.
Product sales revenues decreased by $16.5 million, or 30%, to $39.0 million for the three months ended September 30, 2009 from $55.5 million for the three months ended September 30, 2008. This decrease in product sales revenues was primarily due to a 31% decrease in the number of doses of BioThrax delivered. Product sales revenues for the three months ended September 30, 2009 consisted of BioThrax sales to HHS of $38.9 million and aggregate international and other sales of $117,000. Product sales revenues for the three months ended September 30, 2008 consisted of BioThrax sales to HHS of $55.5 million.
Contracts and grants revenues increased by $3.1 million, or 281%, to $4.3 million for the three months ended September 30, 2009 from $1.1 million for the three months ended September 30, 2008. Contracts and grants revenues for the three months ended September 30, 2009 consisted of $4.1 million in development contract and grant revenue from NIAID and BARDA and $211,000 from Sanofi Pasteur. Contracts and grants revenues for the three months ended September 30, 2008 consisted of $467,000 from the Sanofi Pasteur collaboration and $654,000 from NIAID and other governmental agencies.
Cost of product sales decreased by $1.8 million, or 17%, to $8.7 million for the three months ended September 30, 2009 from $10.5 million for the three months ended September 30, 2008. This decrease was attributable to a 31% decrease in doses of BioThrax delivered, partially offset by an increase in average cost per dose sold associated with reduced production yield in the period during which the doses sold were produced.
Research and development expenses increased by $2.1 million, or 13%, to $18.8 million for the three months ended September 30, 2009 from $16.6 million for the three months ended September 30, 2008. This increase reflects higher contract service costs, and includes increased expenses of $4.4 million on product candidates that are categorized in our biodefense segment, decreased expenses of $3.4 million on product candidates categorized in our commercial segment, and increased expenses of $1.2 million in other research and development, which are in support of technology platforms and central research and development activities.
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