Emergent BioSolutions Inc. Reports Operating Results (10-Q)

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May 06, 2010
Emergent BioSolutions Inc. (EBS, Financial) filed Quarterly Report for the period ended 2010-03-31.

Emergent Biosolutions Inc. has a market cap of $470 million; its shares were traded at around $15.23 with a P/E ratio of 14.4 and P/S ratio of 2. EBS is in the portfolios of Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Manning & Napier Advisors, Inc.

Highlight of Business Operations:

Product sales revenues decreased by $22.8 million, or 37%, to $38.9 million for the three months ended March 31, 2010 from $61.7 million for the three months ended March 31, 2009. This decrease in product sales revenues was primarily due to a 47% decrease in the number of doses of BioThrax delivered, related to the timing of scheduled deliveries under our contract with HHS, partially offset by an 18% increase in the sales price per dose. 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. Product sales revenues for the three months ended March 31, 2009 consisted of BioThrax sales to HHS of $61.6 million and aggregate international and other sales of $54,000.

Contracts and grants revenues increased by $5.1 million, or 180%, to $7.9 million for the three months ended March 31, 2010 from $2.8 million for the three months ended March 31, 2009. 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. Contracts and grants revenues for the three months ended March 31, 2009 consisted of $2.8 million in development contract and grant revenue from NIAID and BARDA.

Research and development expenses increased by $4.0 million, or 25%, to $19.9 million for the three months ended March 31, 2010 from $15.9 million for the three months ended March 31, 2009. This increase reflects higher contract service costs, and includes increased expenses of $5.3 million on product candidates that are categorized in the biodefense segment, decreased expenses of $2.3 million on product candidates categorized in the commercial segment, and increased expenses of $1.0 million in other research and development, which are in support of technology platforms and central research and development activities.

Selling, general and administrative expenses increased by $217,000, or 1%, to $16.2 million for the three months ended March 31, 2010 from $16.0 million for the three months ended March 31, 2009. This increase includes a $548,000 impairment charge associated with our Frederick, Maryland facilities and increased personnel costs, partially offset by a $1.4 million charge during the period ended March 31, 2009 associated with acquisitions that were in progress but not completed as of December 31, 2008. The majority of the expense is attributable to the biodefense segment, in which selling, general and administrative expenses increased by $791,000, or 7%, to $12.2 million for the three months ended March 31, 2010 from $11.4 million for the three months ended March 31, 2009. Selling, general and administrative expenses related to our commercial segment decreased by $574,000, or 13%, to $4.0 million for the three months ended March 31, 2010 from $4.6 million for the three months ended March 31, 2009.

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.

Net cash provided by financing activities of $188,000 for the three months ended March 31, 2009 resulted primarily from $15.0 million in proceeds from borrowings under our revolving line of credit with Fifth Third Bank, $651,000 in proceeds from stock option exercises and $196,000 related to excess tax benefits from the exercise of stock options, partially offset by $15.7 million in principal payments on long-term indebtedness, including $15.0 million in payments on our revolving line of credit with Fifth Third Bank.

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