Market Overview

Emergent BioSolutions Reports Financial Results for Third Quarter and Nine Months Ended September 30, 2019

Share:

Q3 2019 performance above guidance

Full year 2019 financial forecast reaffirmed

GAITHERSBURG, Md., Nov. 06, 2019 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE:EBS) reported financial results for the third quarter and nine months ended September 30, 2019.

FINANCIAL HIGHLIGHTS (unaudited)

(in millions) Q3 2019 Q3 2018
Total Revenues $311.8 $173.6
Pre-tax Income $58.9 $21.5
Net Income $43.2 $20.9
Adjusted Net Income (1) $63.3 $28.4
EBITDA (1) $96.3 $33.7
Adjusted EBITDA (1) $106.4 $39.1


(in millions) 9 Months 2019 9 Months 2018
Total Revenues $745.7 $511.7
Pre-tax Income $5.9 $78.0
Net Income $7.6 $66.2
Adjusted Net Income (1) $67.0 $83.3
EBITDA (1) $116.3 $115.5
Adjusted EBITDA (1) $145.4 $124.6

Q3 2019 AND RECENT BUSINESS ACCOMPLISHMENTS

Procurement

  • Announced the contract award by the Office of the Assistant Secretary for Preparedness and Response (ASPR) in the U.S. Department of Health and Human Services (HHS) valued at approximately $2 billion over 10 years for the continued supply of ACAM2000®, (Smallpox (Vaccinia) Vaccine, Live) into the U.S. Strategic National Stockpile (SNS) in support of smallpox preparedness.

  • Announced the exercise by the Biomedical Advanced Research and Development Authority (BARDA) of the first contract option, valued at $261 million, to procure doses of the next generation anthrax vaccine candidate AV7909 (anthrax vaccine adsorbed with adjuvant) for delivery into the SNS over 12 months.
     
  • Awarded a contract by the ASPR in HHS valued at up to $490 million over 10 years ($90 million agreed to now and the remaining $400 million to be negotiated and finalized over the next 6 months) for the continued supply of BAT® [Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G) - (Equine)] into the SNS in support of botulism preparedness and response capability.

Product Development

  • Granted PRIority MEdicines, or PRIME, designation by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for the company's chikungunya virus (CHIKV) virus-like particle (VLP) vaccine candidate, CHIKV VLP.
     
  • Awarded a research grant by the National Institute on Drug Abuse (NIDA), a component of the National Institutes of Health (NIH), in HHS, valued at approximately $6.3 million over two years, for the continued development of AP007, the company's sustained-release nalmefene formulation for the treatment of opioid use disorder (OUD).
     
  • Awarded approximately $20 million to develop and manufacture an auto-injector containing diazepam (5 mg/mL) to treat nerve agent-induced seizures. Emergent's device is being designed for intramuscular buddy-administration for use in military environments and for civilian emergencies.

2019 FINANCIAL PERFORMANCE (unaudited)

(I) Quarter Ended September 30, 2019 (Q3)

Revenues

Total Revenues

For Q3 2019, total revenues were $311.8 million, an increase of 80% over 2018. Total revenues reflect the contribution of recently acquired products as well as increased contracts and grants revenue.

Product Sales

For Q3 2019, product sales were $256.2 million, an increase of $122.9 million or 92% as compared to 2018. The increase primarily reflects sales of both NARCAN® (naloxone HCl) Nasal Spray, which was acquired in October 2018, and increased sales of ACAM2000®, (Smallpox (Vaccinia) Vaccine, Live), offset by decreased sales of Anthrax vaccines (BioThrax® (Anthrax Vaccine Adsorbed) and AV7909) and other product sales.

(in millions) Three Months Ended September 30,
 2019    2018   % Change
Product Sales            
NARCAN Nasal Spray $75.0       NM
ACAM2000 $112.1   $38.4   NM
Anthrax vaccines $40.3   $45.9   (12 )%
Other $28.8   $49.0   (41 )%
Total Product Sales $256.2   $133.3   92 %

Contract Manufacturing

For Q3 2019, revenue from the Company's contract manufacturing operations was $20.0 million, a decrease of $2.1 million or 10% as compared to 2018. The decrease primarily reflects contracted service work in Q3 2018 that did not recur in Q3 2019.

Contracts and Grants

For Q3 2019, revenue from the Company's development-based contracts and grants was $35.6 million, an increase of $17.4 million as compared to 2018. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs, most notably AV7909.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For Q3 2019, cost of product sales and contract manufacturing was $108.0 million, an increase of $38.7 million or 56% as compared to 2018. The increase is attributable to the increase in product sales.

Research and Development (Gross and Net)

For Q3 2019, gross R&D expenses were $53.4 million, an increase of $16.4 million or 44% as compared to 2018. The increase primarily reflects costs associated with incremental development programs from the recent acquisitions of PaxVax and Adapt Pharma in October 2018, as well as timing of manufacturing development activities related to the AV7909 program.

For Q3 2019, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $17.8 million, a decrease of $1.0 million or 5% as compared to 2018. The decrease primarily reflects a reduction in raxibacumab technology transfer costs, partially offset by increases related to the development of the CHIKVVLP vaccine and various programs related to opioid overdose response. The Q3 2019 net R&D expense was 6% of adjusted revenue (total revenue less contracts & grants) compared to 12% of adjusted revenue in Q3 2018.

(in millions) Three Months Ended September 30,
 2019
  2018   % Change
Research and Development Expenses $53.4   $37.0   44 %
Adjustments:              
Less Contracts and Grants Revenue $35.6   $18.2   96 %
Net Research and Development Expenses $17.8   $18.8   (5 )%
Adjusted Revenue
(Total Revenue less Contracts and Grants Revenue)
$276.2   $155.4   78 %
Net R&D as % of Adjusted Revenue (Net R&D Margin)   6%   12%   NA

Selling, General and Administrative

For Q3 2019, selling, general and administrative expenses were $65.0 million, an increase of $22.9 million or 54% as compared to 2018. The increase primarily reflects the addition of the operations and integration costs associated with the PaxVax and Adapt Pharma acquisitions.

Amortization of Intangible Assets

For Q3 2019, amortization of intangible assets was $14.7 million versus $3.9 million as compared to 2018. The increase entirely reflects higher non-cash intangible asset amortization costs associated with the PaxVax and Adapt Pharma acquisitions.

Income Taxes

For Q3 2019, the income taxes expense in the amount of $15.7 million includes the impact of permanent items.

Net Income & Adjusted Net Income

For Q3 2019, the Company recorded net income of $43.2 million, or $0.83 per diluted share, versus net income of $20.9 million, or $0.41 per diluted share, in 2018.

For Q3 2019, the Company recorded adjusted net income of $63.3 million, or $1.21 per diluted share, versus adjusted net income of $28.4 million, or $0.55 per diluted share, in 2018. (1)

EBITDA & Adjusted EBITDA

For Q3 2019, the Company recorded EBITDA of $96.3 million versus $33.7 million in 2018. (1)

For Q3 2019, the Company recorded adjusted EBITDA of $106.4 million versus $39.1 million in 2018. (1)

(II) Nine months ended September 30, 2019 (unaudited)

Revenues

Total Revenues

For the nine months ended September 30, 2019, total revenues were $745.7 million, an increase of 46% over 2018. Total revenues reflect the contribution of recently acquired products as well as increased contracts and grants revenue.

Product Sales

For the nine months ended September 30, 2019, product sales were $592.7 million, an increase of $203.6 million or 52% as compared to 2018. The increase primarily reflects sales of NARCAN® Nasal Spray, which was acquired in October 2018, and ACAM2000®, offset by decreased sales of Anthrax vaccines (BioThrax® and AV7909).

(in millions) Nine Months Ended September 30,
 2019   2018   % Change
Product Sales            
NARCAN Nasal Spray $213.5     NM
ACAM2000 $164.1   $116.7   41 %
Anthrax vaccines $79.9   $143.7   (44 )%
Other $135.2   $128.7   5 %
Total Product Sales $592.7   $389.1   52 %

Contract Manufacturing

For the nine months ended September 30, 2019, revenue from the Company's contract manufacturing operations was $54.6 million, a decrease of $17.4 million or 24% as compared to 2018. The decrease primarily reflects contracted service work in the nine months of 2018 that did not recur in the nine months of 2019.

Contracts and Grants

For the nine months ended September 30, 2019, revenue from the Company's development-based contracts and grants was $98.4 million, an increase of $47.8 million or 94% as compared to 2018. The increase primarily reflects increased R&D activities related to certain ongoing funded development programs, most notably AV7909.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For the nine months ended September 30, 2019, cost of product sales and contract manufacturing was $300.7 million, an increase of $91.9 million or 44% as compared to 2018. The increase is attributable to the increase in product sales.

Research and Development (Gross and Net)

For the nine months ended September 30, 2019, gross R&D expenses were $163.4 million, an increase of $72.6 million compared to 2018. The increase primarily reflects costs associated with incremental development programs from the recent acquisitions of PaxVax and Adapt Pharma in October 2018, as well as timing of manufacturing development activities related to the AV7909 program.

For the nine months ended September 30, 2019, net R&D expense, which reflects investments made in development programs that are not currently funded in whole or in part by third-party partners and is calculated as gross research and development expenses minus contracts and grants revenue, was $65.0 million, an increase of $24.8 million or 62% as compared to 2018. The increase primarily reflects investments in the development of the CHIKV-VLP vaccine and various programs related to opioid overdose response. The nine months of 2019 net R&D expense was 10% of adjusted revenue (total revenue less contracts & grants) compared to 9% of adjusted revenue in the nine months of 2018.

(in millions)   Nine Months Ended September 30,
  2019     2018   % Change
Research and Development Expenses   $163.4     $90.8   80 %
Adjustments:                
Less Contracts and Grants Revenue   $98.4     $50.6   94 %
Net Research and Development Expenses   $65.0     $40.2   62 %
Adjusted Revenue
(Total Revenue less Contracts and Grants Revenue)
View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com