Emergent BioSolutions Inc. (NYSE:EBS) today announced that the U.S.
Department of Health and Human Services (HHS) is advancing its
anthrax preparedness strategy with multiple contract actions for
the company’s anthrax vaccines.
- Today, Emergent signed a follow-on contract with the Centers
for Disease Control and Prevention (CDC), under Solicitation No.
2016-N-17905, valued at up to $911 million to supply approximately
29.4 million doses of BioThrax® (Anthrax Vaccine Adsorbed) to the
Strategic National Stockpile (SNS) through September 2021. BioThrax
is the only anthrax vaccine licensed by the U.S. Food and Drug
Administration (FDA) and is indicated for both pre-exposure
prophylaxis and post-exposure prophylaxis of anthrax
disease.
- Also today, the Biomedical Advanced Research and Development
Authority (BARDA), a division within the Office of the Assistant
Secretary of Preparedness and Response at HHS, issued a notice of
intent to procure approximately $100 million of BioThrax for
delivery into the SNS within 24 months from the date of contract
award, which the company anticipates will be in the first half of
2017. This contract will be separate from and in addition to the
follow-on procurement contract with CDC.
- On September 30, BARDA awarded Emergent a contract valued at up
to $1.6 billion for the development and procurement of NuThraxTM
(anthrax vaccine adsorbed with CPG 7909 adjuvant), the company’s
next generation anthrax vaccine candidate. The initial procurement
of NuThrax for inclusion in the SNS could be initiated in 2019
following Emergency Use Authorization (EUA) pre-approval by FDA,
which based on the current plan, is anticipated at the end of 2018.
The contract also includes procurement options for the delivery of
an additional 7.5 million to 50 million doses of NuThrax to the
SNS. The company anticipates amending this contract simultaneously
with the execution of the BARDA BioThrax procurement contract,
which will result in a revised total contract value of up to $1.5
billion.
Taken together, the company believes that the CDC and BARDA
contract actions reflect the government’s intention to transition
the stockpile of anthrax vaccines from BioThrax to NuThrax
beginning in 2019.
“Emergent believes these actions reflect the U.S. government’s
continued assessment of anthrax as a high-priority threat and its
firm commitment to protect the nation against bioterrorism,” said
Daniel J. Abdun-Nabi, president and chief executive officer of
Emergent BioSolutions. “We are pleased to be able to make
meaningful contributions to helping the government execute its
strategy to achieve its preparedness goals.”
Deliveries and PricingUnder these contract
actions, the company plans to deliver approximately nine million
doses of BioThrax in each of 2017 and 2018. In 2019, the company
anticipates delivering approximately 10 million doses comprised of
a combination of both BioThrax and NuThrax. BioThrax pricing in
2017 under the CDC follow-on contract is 2% higher than current
levels and is subject to a 3% annual price escalation over the
duration of the contract. Deliveries are scheduled to continue,
subject to availability of funding, through September 2021.
The company expects that the BARDA procurement contract, which
will be separate from and in addition to the follow-on procurement
contract with CDC, will require the company to complete delivery of
all BioThrax doses covered by that contract within 24 months from
the date that the contract is awarded. BioThrax pricing under the
BARDA procurement contract is anticipated to be the same as
BioThrax pricing in 2017 under the CDC follow-on contract.
Financial Outlook(I) 2016
ForecastThe table below presents the company’s guidance on
a combined basis and on a continuing operations basis. The combined
basis reflects the company’s operations including the operations of
the former biosciences business that was spun-off as Aptevo
Therapeutics in August 2016. The continuing operations basis
excludes Aptevo operations.
|
On a Combined Basis |
On a Continuing Operations Basis |
Total Revenue |
$485M to $505M |
$465M to $485M |
BioThrax® Sales |
$220M to $235M |
$220M to $235M |
Net Income |
$35M to $45M |
$50M to $60M |
Adjusted Net Income |
$55M to $65M |
$65M to $75M |
EBITDA |
$90M to $100M |
$120M to $130M |
(II) 2017 ForecastThe company anticipates
providing 2017 financial guidance in early January 2017, as part of
its presentation at the JP Morgan Annual Healthcare Conference. The
2017 guidance will take into account the BioThrax revenues
anticipated under the newly executed follow-on CDC contract and the
expected BioThrax procurement contract with BARDA, as well as the
company’s plan to address its operational and administrative costs
to ensure they are sized and aligned to support the company’s
growth.
(III) 2020 Financial GoalsThe company
anticipates updating its 2016-2020 Growth Plan financial goals
later in 2017.
Conference Call and Webcast InformationCompany
management will host a conference call at 5:30 pm (Eastern Time)
today, December 8, 2016, to discuss this announcement. This
conference call can be accessed live by telephone or through
Emergent’s website: Live Teleconference Information: Dial in
number: (855) 766-6521 International dial in: (262) 912-6157
Passcode: 36049167 Webcast Information: Live webcast feed can be
accessed using this link:
http://edge.media-server.com/m/p/suuod2ad. A replay of the call can
be accessed on Emergent’s website www.emergentbiosolutions.com
under “Investors.”
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME
AND EBITDA ALL RELATED TO CONTINUING OPERATIONSThis press
release contains two financial measures (Adjusted Net
Income, and EBITDA) that are considered “non-GAAP”
financial measures under applicable Securities and Exchange
Commission rules and regulations. These non-GAAP financial measures
should be considered supplemental to and not a substitute for
financial information prepared in accordance with generally
accepted accounting principles. The company’s definition of these
non-GAAP measures may differ from similarly titled measures used by
others. Adjusted Net Income adjusts for specified items that can be
highly variable or difficult to predict, or reflect the non-cash
impact of charges resulting from purchase accounting. EBITDA
reflects net income excluding the impact of depreciation,
amortization, interest expense and provision for income taxes. The
company views these non-GAAP financial measures as a means to
facilitate management’s financial and operational decision-making,
including evaluation of the company’s historical operating results
and comparison to competitors’ operating results. These non-GAAP
financial measures reflect an additional way of viewing aspects of
the company’s operations that, when viewed with GAAP results may
provide a more complete understanding of factors and trends
affecting the company’s business.
The determination of the amounts that are excluded from these
non-GAAP financial measures is a matter of management judgment and
depends upon, among other factors, the nature of the underlying
expense or income amounts. Because non-GAAP financial measures
exclude the effect of items that will increase or decrease the
company’s reported results of operations, management strongly
encourages investors to review the company’s consolidated financial
statements and publicly-filed reports in their entirety.
About Emergent BioSolutionsEmergent
BioSolutions is a global specialty biopharmaceutical company
dedicated to one simple mission—to protect and enhance
life. We develop, manufacture, and deliver a portfolio of
medical countermeasures for biological and chemical threats as well
as emerging infectious diseases. Through our work, we envision
protecting and enhancing 50 million lives with our products by
2025. Additional information about the company may be found at
www.emergentbiosolutions.com. Follow us @emergentbiosolu.
Safe Harbor StatementThis 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, without
limitation, our financial guidance and any statements containing
the words “believes,” “expects,” “anticipates,” “intends,” “plans,”
“targets,” “forecasts,” “estimates” and similar expressions in
conjunction with, among other things, obtaining a BioThrax
procurement contract from BARDA under the notice of intent,
discussions of the company’s outlook, financial performance or
financial condition, growth strategy, product development, product
sales, government development or procurement contracts or awards,
government appropriations, manufacturing capabilities, Emergency
Use Authorization or other regulatory approvals and plans to
increase our operational efficiencies and cost structure 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 our ability to obtain
a BioThrax procurement contract from BARDA under the notice of
intent; availability of funding and the exercise of options under
our BioThrax contract with CDC and our NuThrax contract with BARDA,
appropriations for procurement of BioThrax and NuThrax; our ability
to secure EUA pre-authorization approval and licensure of NuThrax
by FDA within the anticipated timeframe, if at all; our ability to
achieve our planned operational efficiencies and targeted levels of
cost savings; availability of funding for our U.S. government
grants and contracts; whether the operational, marketing and
strategic benefits of the spin-off of our biosciences business can
be achieved; our ability to identify and acquire or in-license
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, if at all; our ability to expand our manufacturing
facilities and capabilities; our ability and the ability of our
contractors and suppliers to maintain compliance with cGMP and
other regulatory obligations; the results of regulatory
inspections; the outcome of the class action lawsuit filed against
us and possible other future material legal proceedings; our
ability to meet operating and financial restrictions placed on us
and our subsidiaries that are contained in our senior credit
facility; 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 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
240-631-3280
BurrowsR@ebsi.com
Media Contact:
Tracey Schmitt Lintott
Senior Vice President, Global Public Affairs
240-631-3281
SchmittT@ebsi.com
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