EX-99 2 exhibit99.htm

Exhibit 99




 

EMERGENT BIOSOLUTIONS REPORTS FINANCIAL RESULTS FOR SECOND QUARTER AND FIRST SIX MONTHS OF 2013

ROCKVILLE, MD, August 5, 2013—Emergent BioSolutions Inc. (NYSE: 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 expenses 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.
###

Investor Contact:
Robert G. Burrows
Vice President, Investor Relations
301-795-1877
BurrowsR@ebsi.com

Media Contact:
Tracey Schmitt
Vice President, Corporate Communications
301-795-1800
SchmittT@ebsi.com



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 receivable
   
54,369
     
96,043
 
Inventories
   
18,582
     
15,161
 
Deferred tax assets, net
   
1,264
     
1,264
 
Income tax receivable, net
   
6,502
     
-
 
Prepaid expenses and other current assets
   
11,199
     
9,213
 
Total current assets
   
248,159
     
263,347
 
 
               
Property, plant and equipment, net
   
248,504
     
241,764
 
In-process research and development
   
41,800
     
41,800
 
Goodwill
   
5,502
     
5,502
 
Deferred tax assets, net
   
11,087
     
11,087
 
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 liabilities
   
1,067
     
1,603
 
Accrued compensation
   
15,481
     
22,726
 
Long-term indebtedness, current portion
   
4,470
     
4,470
 
Deferred revenue
   
2,049
     
1,811
 
Total current liabilities
   
48,778
     
61,907
 
 
               
Long-term indebtedness, net of current portion
   
56,069
     
58,304
 
Other liabilities
   
1,685
     
1,891
 
Total liabilities
   
106,532
     
122,102
 
 
               
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, 2012
   
36
     
36
 
Treasury stock, at cost, 403,158 common shares at June 30, 2013 and December 31, 2012
   
(5,906
)
   
(5,906
)
Additional paid-in capital
   
236,099
     
230,964
 
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 revenues
   
82,436
     
70,379
 
 
               
Operating expense:
               
Cost of product sales
   
16,945
     
13,186
 
Research and development
   
30,278
     
30,645
 
Selling, general and administrative
   
20,501
     
17,895
 
Income from operations
   
14,712
     
8,653
 
 
               
Other income (expense):
               
Interest income
   
10
     
29
 
Interest expense
   
(3
)
   
-
 
Other income (expense), net
   
18
     
907
 
Total other income (expense)
   
25
     
936
 
 
               
Income before provision for income taxes
   
14,737
     
9,589
 
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 - basic
   
36,144,063
     
36,182,826
 
Weighted-average number of shares - diluted
   
36,527,014
     
36,556,697
 






 

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 revenues
   
125,536
     
120,690
 
 
               
Operating expense:
               
Cost of product sales
   
22,643
     
20,697
 
Research and development
   
61,002
     
56,891
 
Selling, general and administrative
   
40,529
     
37,387
 
Impairment of in-process research and development
   
-
     
9,600
 
Income (loss) from operations
   
1,362
     
(3,885
)
 
               
Other income (expense):
               
Interest income
   
33
     
54
 
Interest expense
   
(14
)
   
(6
)
Other income (expense), net
   
35
     
1,761
 
Total other income (expense)
   
54
     
1,809
 
 
               
Income (loss) before provision for (benefit from) income taxes
   
1,416
     
(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
 
 
               
Income per share - basic
 
$
0.07
   
$
0.02
 
Income per share - diluted
 
$
0.07
   
$
0.02
 
 
               
Weighted-average number of shares - basic
   
36,056,297
     
36,114,400
 
Weighted-average number of shares - diluted
   
36,247,773
     
36,301,335
 






 

Emergent BioSolutions Inc. and Subsidiaries
 
Consolidated Statements of Cash Flows
 
(in thousands)
 
 
 
   
 
 
 
Six Months Ended June 30,
 
 
 
2013
   
2012
 
Cash flows from operating activities:
 
(Unaudited)
 
 
 
   
 
Net income (loss)
 
$
1,551
   
$
(2,479
)
Adjustments to reconcile to net cash provided by (used in) operating activities:
               
Stock-based compensation expense
   
5,718
     
5,425
 
Depreciation and amortization
   
8,372
     
4,909
 
Current and deferred income taxes
   
(135
)
   
4,080
 
Non-cash development expenses from joint venture
   
(347
)
   
3,632
 
Change in fair value of contingent value rights
   
-
     
(3,005
)
Impairment of in-process research and development
   
-
     
9,600
 
Excess tax benefits from stock-based compensation
   
(1,757
)
   
(1,307
)
Other
   
(10
)
   
(55
)
Changes in operating assets and liabilities:
               
Accounts receivable
   
41,674
     
27,338
 
Inventories
   
(3,421
)
   
(1,347
)
Income taxes
   
(7,999
)
   
(2,163
)
Prepaid expenses and other assets
   
(1,734
)
   
888
 
Accounts payable
   
(6,199
)
   
(7,068
)
Accrued expenses and other liabilities
   
(619
)
   
488
 
Accrued compensation
   
(7,130
)
   
(6,900
)
Deferred revenue
   
238
     
142
 
Net cash provided by operating activities
   
28,202
     
32,178
 
Cash flows from investing activities:
               
Purchases of property, plant and equipment
   
(14,123
)
   
(30,921
)
Proceeds from sale of assets
   
-
     
11,765
 
Proceeds from maturity of investments
   
-
     
1,966
 
Net cash used in investing activities
   
(14,123
)
   
(17,190
)
Cash flows from financing activities:
               
Proceeds from borrowings on long-term indebtedness
   
-
     
11,413
 
Issuance of common stock subject to employee equity plans
   
933
     
401
 
Excess tax benefits from stock-based compensation
   
1,757
     
1,307
 
Principal payments on long-term indebtedness
   
(2,235
)
   
(8,670
)
Contingent value right payment
   
-
     
(1,748
)
Restricted cash
   
-
     
220
 
Net cash provided by financing activities
   
455
     
2,923
 
 
               
Effect of exchange rate changes on cash and cash equivalents
   
43
     
31
 
 
               
Net increase (decrease) in cash and cash equivalents
   
14,577
     
17,942
 
Cash and cash equivalents at beginning of period
   
141,666
     
143,901
 
Cash and cash equivalents at end of period
 
$
156,243
   
$
161,843