Emergent BioSolutions (NYSE: EBS) continues toward its goal of having $1 billion in revenue in 2020 with a solid third-quarter performance that exceeded its own guidance of revenue in the range of $115 million to $130 million.
Emergent BioSolutions results: The raw numbers
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What happened with Emergent BioSolutions this quarter?
- Much of the revenue beat came from increased shipments of its anthrax vaccine BioThrax to the strategic national stockpile. The $100 million contract with BARDA called for deliveries of up to 24 months, but it's completed that contract and now continues working on the five-year $911 million BioThrax contract with the CDC. Despite the higher than expected sales of BioThrax, revenue from the product was actually down 11% year over year due to timing of the shipments to the stockpile.
- That timing issue benefited its botulism antitoxin, or BAT, which boosted sales in the "other" products category as did RSDL, Emergent's skin decontamination and neutralization product, which is sold to the Department of Defense (DOD).
- Revenue from contract manufacturing increased 29% year over year while revenue from contracts and grants fell 48% as the company completed multiple U.S. government contracts and reduced research and development activities for programs funded by partners.
- Emergent continues to add additional product contracts, including the development of a multi-drug auto-injector for nerve agent antidotes for the DOD, a cyanide poisoning antidote for BARDA, Trobigard nerve agent antidote auto-injector for the U.S. Department of State, and a follow-on contract for RSDL with the DOD.
- The company is also adding revenue through acquisitions. In October, Emergent closed its acquisitions of two products: Sanofi's (NYSE: SNY) ACAM2000 smallpox business and GlaxoSmithKline's (NYSE: GSK) raxibacumab, an antibody for the treatment of anthrax. Both come with existing government contracts that the company will now fill and hopefully renew for another term.
What management had to say
Emergent's CFO Robert Kramer laid out the criteria for additional acquisitions:
With the accelerated shipments to the stockpile and the addition of new products, Emergent increased its 2017 revenue guidance to a range of $540 million to $560 million, up from $500 million to $530 million. Guidance for adjusted net income was also increased from a range of $70 million to $80 million to a new range of $85 million to $95 million.
In addition to executing on the aforementioned contracts and selling the new products, Emergent needs to keep its pipeline rolling along, including its next-generation anthrax vaccine NuThrax that is on track to start a phase 3 trial next year. Emergent can actually start shipping NuThrax to the stockpile as soon as it gets Emergency Use Authorization designation from the FDA, which it plans to apply for next year. There's also the potential to expand sales of BioThrax to other governments with plans to file for approval in five EU countries and Canada this year.
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