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| 8-K - Emergent BioSolutions Inc. | form8-k.htm |
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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
EMERGENT BIOSOLUTIONS REPORTS FINANCIAL RESULTS FOR FIRST QUARTER 2011
ROCKVILLE, MD, May 5, 2011—Emergent BioSolutions Inc. (NYSE: EBS) announced today its financial results for the first quarter ended March 31, 2011.
For 1Q 2011, total revenues were $18.5 million as compared to $46.8 million in 2010. In addition, for 1Q 2011 the company recorded a net loss of $21.4 million, or $0.61 per basic share, as compared to net income of $2.5 million, or $0.08 per basic share, in 2010.
R. Don Elsey, chief financial officer of Emergent BioSolutions, stated, “While our first quarter revenues were slightly lower than expected, we remain on track to achieve our full year guidance of total revenues of $320 to $340 million and net income of $35 to $45 million.”
1Q 2011 Key Financial Results
Product Sales
For 1Q 2011, product sales were $5.6 million, a decrease of $33.3 million, or 86 percent, from $38.9 million for 1Q 2010. This decrease was primarily due to an 88 percent decrease in the number of doses of BioThrax delivered. During the first quarter, the company redeployed its potency testing capacity from BioThrax release testing to qualification of replacement reference standards and other development testing. This process, which is required to enable continued future release of BioThrax doses, has now been substantially completed. Product sales revenues for 1Q 2011 consisted of BioThrax sales to CDC of $5.0 million and aggregate international and other sales of $0.6 million.
Contracts and Grants Revenues
For 1Q 2011, contracts and grants revenues were $12.9 million, an increase of $5.0 million, or 63 percent, from $7.9 million for 1Q 2010. The increase was primarily due to revenues from the recently awarded contract from BARDA for large-scale manufacturing for BioThrax, collaborations with Abbott and Pfizer, along with increased activity and associated revenue from development contracts with BARDA and NIAID.
Cost of Product Sales
For 1Q 2011, cost of product sales was $1.1 million, a decrease of $6.4 million, or 86 percent, from $7.5 million for 1Q 2010. This decrease was primarily attributable to the 88 percent decrease in the number of BioThrax doses sold.
Research and Development
For 1Q 2011, research and development expenses were $34.8 million, an increase of $14.8 million, or 74 percent, from $19.9 million for 1Q 2010. This increase primarily reflects higher contract service and personnel costs, and includes increased expenses of $13.9 million on product candidates and technology platform development activities associated with the BioSciences segment and increased expenses of $0.9 million on product candidates associated with the BioDefense segment. Net of development contracts and grants reimbursement revenue along with the net loss attributable to noncontrolling interests, research and development expenses were $20.0 million for 1Q 2011.
Selling, General and Administrative
For 1Q 2011, selling, general and administrative expenses were $18.2 million, an increase of $2.0 million, or 12 percent, from $16.2 million for 1Q 2010. This increase is primarily due to increased personnel-related expenses and professional services to support the business. Selling, general and administrative expenses for 1Q 2011 consisted of $14.0 million associated with the BioDefense segment and $4.2 million associated with the BioSciences segment.
Financial Condition and Liquidity
Cash and cash equivalents combined with investments at March 31, 2011 was $143.3 million compared to $171.0 million at December 31, 2010. Additionally, at March 31, 2011, the accounts receivable balance was $12.0 million, which is comprised primarily of unpaid amounts under our NIAID and BARDA development contracts.
2Q 2011 Revenue Forecast
For the second quarter of 2011, the company anticipates total revenues of $80 to $90 million.
2011 Forecast
For full year 2011, the company is reaffirming its financial forecast of total revenues of $320 to $340 million and net income of $35 to $45 million.
2011 total revenue is expected to be driven by, among other things:
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the continuation of deliveries of BioThrax under the current multi-year procurement contract with CDC, which was recently modified to increase the total contracted doses to 17.9 million;
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additional deliveries of BioThrax under a follow-on, multi-year procurement contract with CDC, anticipated to begin in 4Q 2011;
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a significant increase in contracts and grants revenue based primarily on development contracts related to product development programs in the company’s BioDefense segment; and
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collaboration and milestone revenues associated with achievement of clinical development milestones related to the company’s oncology product candidate, which is under an existing co-development agreement with Abbott, and the company’s autoimmune product candidate, which is being developed by Pfizer under a license agreement from the company.
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Conference Call and Webcast
Company management will host a conference call at 5:00 pm Eastern on May 5, 2011 to discuss the financial results for the first quarter of 2011, recent business developments, revenue guidance for the second quarter of 2011 and revenue and net income guidance for the full year 2011. The conference call will be accessible by dialing 888/713-4218 or 617/213-4870 (international) and providing passcode 34813468. 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 the passcode 12159691. The replay will be available through May 19, 2011. The webcast will be archived on the company’s website, www.emergentbiosolutions.com, under “Investors”.
About Emergent BioSolutions Inc.
Emergent BioSolutions protects and enhances life by developing and manufacturing vaccines and therapeutics that are supplied to healthcare providers and purchasers for use in preventing and treating disease. Emergent’s marketed and investigational products target infectious diseases, oncology and autoimmune disorders. Additional information may be found at www.emergentbiosolutions.com.
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 strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, including any potential future securities offering, our estimates of preliminary results for 2010, and our expected revenue growth and net earnings for 2011, and any other statements containing the words "believes", "expects", "anticipates", "plans", "estimates" and similar expressions, are forward-looking statements. 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 obtain new BioThrax® sales contracts or modifications to existing contracts; our plans to pursue label expansions and improvements for BioThrax®; our ability to perform under our current development contracts with the U.S. government; our plans to expand our manufacturing facilities and capabilities; the rate and degree of market acceptance of our products and product candidates; the success of preclinical studies and clinical trials of our product candidates and post-approval clinical utility of our products; the potential benefits of our existing collaborations and our ability to selectively enter into additional collaborative arrangements; ongoing and planned development programs, preclinical studies and clinical trials; and other factors identified in the company’s Annual Report on Form 10-K for the year ended December 31, 2010 and subsequent reports filed with the SEC. The company disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
Financial Statements Follow
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Emergent BioSolutions Inc. and Subsidiaries
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Consolidated Balance Sheets
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(in thousands, except share and per share data)
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March 31,
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December 31,
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2011
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2010
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(unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 136,925 | $ | 169,019 | ||||
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Investments
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6,338 | 2,029 | ||||||
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Accounts receivable
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11,976 | 39,326 | ||||||
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Inventories
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22,163 | 12,722 | ||||||
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Deferred tax assets, net
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6,743 | 2,638 | ||||||
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Income tax receivable, net
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23,966 | 8,728 | ||||||
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Restricted cash
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217 | 217 | ||||||
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Prepaid expenses and other current assets
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7,875 | 8,814 | ||||||
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Total current assets
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216,203 | 243,493 | ||||||
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Property, plant and equipment, net
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157,963 | 152,701 | ||||||
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In-process research and development
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51,400 | 51,400 | ||||||
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Goodwill
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5,029 | 5,029 | ||||||
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Assets held for sale
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12,741 | 12,741 | ||||||
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Deferred tax assets, net
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26,812 | 33,757 | ||||||
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Other assets
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1,129 | 1,198 | ||||||
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Total assets
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$ | 471,277 | $ | 500,319 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$ | 24,034 | $ | 25,409 | ||||
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Accrued expenses and other current liabilities
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1,257 | 1,309 | ||||||
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Accrued compensation
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13,687 | 23,975 | ||||||
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Contingent value rights, current portion
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9,113 | - | ||||||
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Long-term indebtedness, current portion
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16,927 | 17,187 | ||||||
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Deferred revenue, current portion
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5,916 | 7,839 | ||||||
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Total current liabilities
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70,934 | 75,719 | ||||||
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Contingent value rights, net of current portion
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6,000 | 14,532 | ||||||
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Long-term indebtedness, net of current portion
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29,657 | 30,239 | ||||||
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Deferred revenue, net of current portion
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3,823 | 4,386 | ||||||
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Other liabilities
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1,940 | 1,882 | ||||||
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Total liabilities
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112,354 | 126,758 | ||||||
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Commitments and contingencies
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- | - | ||||||
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Stockholders’ equity:
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Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
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- | - | ||||||
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Common stock, $0.001 par value; 100,000,000 shares authorized, 35,424,190 and 35,011,423 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
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35 | 35 | ||||||
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Additional paid-in capital
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204,367 | 197,689 | ||||||
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Accumulated other comprehensive loss
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(2,803 | ) | (2,110 | ) | ||||
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Retained earnings
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152,453 | 173,850 | ||||||
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Total Emergent BioSolutions Inc. stockholders’ equity
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354,052 | 369,464 | ||||||
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Noncontrolling interest in subsidiary
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4,871 | 4,097 | ||||||
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Total stockholders’ equity
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358,923 | 373,561 | ||||||
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Total liabilities and stockholders’ equity
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$ | 471,277 | $ | 500,319 | ||||
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Emergent BioSolutions Inc. and Subsidiaries
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Consolidated Statements of Operations
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(in thousands, except per share data)
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Three Months Ended
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March 31,
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2011
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2010
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(Unaudited)
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Revenues:
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Product sales
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$ | 5,597 | $ | 38,853 | ||||
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Contracts and grants
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12,936 | 7,947 | ||||||
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Total revenues
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18,533 | 46,800 | ||||||
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Operating expenses:
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Cost of product sales
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1,068 | 7,508 | ||||||
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Research and development
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34,759 | 19,922 | ||||||
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Selling, general and administrative
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18,212 | 16,192 | ||||||
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Income (loss) from operations
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(35,506 | ) | 3,178 | |||||
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Other income (expense):
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Interest income
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35 | 388 | ||||||
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Interest expense
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- | (5 | ) | |||||
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Other income (expense), net
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(1 | ) | (8 | ) | ||||
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Total other income (expense)
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34 | 375 | ||||||
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Income (loss) before provision for (benefit from) income taxes
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(35,472 | ) | 3,553 | |||||
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Provision for (benefit from) income taxes
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(12,299 | ) | 1,635 | |||||
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Net income (loss)
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(23,173 | ) | 1,918 | |||||
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Net loss attributable to noncontrolling interests
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1,776 | 605 | ||||||
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Net income (loss) attributable to Emergent BioSolutions Inc.
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$ | (21,397 | ) | $ | 2,523 | |||
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Earnings per share - basic
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$ | (0.61 | ) | $ | 0.08 | |||
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Earnings per share - diluted
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$ | (0.61 | ) | $ | 0.08 | |||
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Weighted-average number of shares - basic
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35,179 | 30,880 | ||||||
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Weighted-average number of shares - diluted
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35,179 | 31,433 | ||||||
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Emergent BioSolutions Inc. and Subsidiaries
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Consolidated Statements of Cash Flows
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(in thousands)
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Three Months Ended
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March 31,
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2011
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2010
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(Unaudited)
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Cash flows from operating activities:
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Net income (loss)
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$ | (23,173 | ) | $ | 1,918 | |||
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Adjustments to reconcile to net cash provided by (used in) operating activities:
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Stock-based compensation expense
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2,441 | 1,522 | ||||||
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Depreciation and amortization
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2,235 | 1,296 | ||||||
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Deferred income taxes
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2,879 | 819 | ||||||
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Non-cash development expenses from joint ventures
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2,550 | 17 | ||||||
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(Gain) Loss on disposal of property and equipment
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13 | (34 | ) | |||||
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Provision for impairment of long-lived assets
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- | 548 | ||||||
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Provision for fair value of contingent value rights
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581 | - | ||||||
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Excess tax benefits from stock-based compensation
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(39 | ) | (376 | ) | ||||
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Changes in operating assets and liabilities:
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Accounts receivable
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27,350 | 21,467 | ||||||
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Inventories
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(9,441 | ) | (3,560 | ) | ||||
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Income taxes
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(15,238 | ) | (2,459 | ) | ||||
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Prepaid expenses and other assets
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1,008 | 576 | ||||||
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Accounts payable
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(453 | ) | 1,115 | |||||
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Accrued expenses and other liabilities
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6 | 146 | ||||||
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Accrued compensation
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(10,288 | ) | (5,580 | ) | ||||
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Deferred revenue
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(2,486 | ) | (14 | ) | ||||
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Net cash provided by (used in) operating activities
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(22,055 | ) | 17,401 | |||||
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Cash flows from investing activities:
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Purchases of property, plant and equipment
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(8,432 | ) | (5,030 | ) | ||||
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Purchase of investments
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(4,309 | ) | - | |||||
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Net cash used in investing activities
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(12,741 | ) | (5,030 | ) | ||||
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Cash flows from financing activities:
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Proceeds from borrowings on line of credit
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- | 15,000 | ||||||
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Issuance of common stock subject to exercise of stock options
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4,198 | 1,253 | ||||||
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Principal payments on long-term indebtedness and line of credit
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(842 | ) | (15,755 | ) | ||||
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Excess tax benefits from stock-based compensation
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39 | 376 | ||||||
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Net cash provided by financing activities
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3,395 | 874 | ||||||
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Effect of exchange rate changes on cash and cash equivalents
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(693 | ) | 215 | |||||
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Net increase (decrease) in cash and cash equivalents
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(32,094 | ) | 13,460 | |||||
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Cash and cash equivalents at beginning of period
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169,019 | 102,924 | ||||||
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Cash and cash equivalents at end of period
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$ | 136,925 | $ | 116,384 | ||||