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Actionable news in EBS: EMERGENT BIOSOLUTIONS Inc,

Emergent Biosolutions Reports Third Quarter And Nine Months 2015 Financial Results

The following excerpt is from the company's SEC filing.

—Emergent BioSolutions Inc. (NYSE: EBS) reported financial results for the quarter and nine months ended September 30, 2015.

FINANCIAL HIGHLIGHTS

Total revenues: Q3 2015 of $164.9 million, +20% Y/Y; nine months 2015 of $354.7 million, +17% Y/Y;

GAAP net income: Q3 2015 of $36.9 million, or $0.79 per diluted share, +69% Y/Y; nine months 2015 of $29.5 million, or $0.69 per diluted share;

Adjusted net income: Q3 2015 of $39.8 million, or $0.83 per diluted share, +59% Y/Y; nine months 2015 of $38.0 million, or $0.81 per diluted share, +95% Y/Y;
< br>EBITDA: Q3 2015 of $61.8 million, or $1.29 per diluted share, +54% Y/Y; nine months 2015 of $71.5 million, or $1.52 per diluted share, +83% Y/Y; and

Adjusted EBITDA: Q3 2015 of $63.2 million, or $1.32 per diluted share, +50% Y/Y; nine months 2015 of $75.6 million, or $1.61 per diluted share, +56% Y/Y.

2015 BUSINESS ACCOMPLISHMENTS

Announced plan to implement tax-free spin-off of Aptevo Therapeutics (the Company's Biosciences business) into a separate publicly traded company, targeted for mid-2016;

Successfully launched Emergard, the Company's military-grade auto-injector device for chemical threats in Ex-US markets;

Received FDA approval and launched IXINITY

, a recombinant factor IX treatment for Hemophilia B;

Received FDA approval of Anthrasil™, an immune globulin for the treatment for inhalational anthrax;

Awarded $20M in multiple contracts with BARDA to manufacture Ebola monoclonal antibodies under the Center for Innovation in Advanced Development and Manufacturing program;

Received a $44M CDC contract to further supply the strategic national stockpile with the Company's Vaccinia Immune Globulin product; and

Continued steady progress on Building 55 sBLA approval.

2015 FINANCIAL OUTLOOK

The Company is updating its financial outlook by raising the low end of its 2015 revenue range and reaffirming its net income guidance as follows:

Total revenues of $520-$540 million (previously $510-$540 million)

Net income of $50-$60 million (GAAP) and $60-$70 million (Adjusted)

2015 FINANCIAL PERFORMANCE

(I) Quarter Ended September 30, 2015 (unaudited)

Revenues

Product Sales

For Q3 2015, product sales were $124.0 million, an increase of 47% as compared to 2014. The increase primarily reflects increased sales of BioThrax during the quarter.

Three Months Ended

(in millions)

% Change

Other biodefense

Total Biodefense

Total Biosciences

Total Product Sales

Contract Manufacturing

For Q3 2015, revenue from the Company's contract manufacturing operations was $11.3 million, an increase of 20% as compared to 2014. The increase was primarily due to the timing of fill/finish services to third parties.

Contracts, Grants and Collaborations

For Q3 2015, contracts, grants and collaborations revenue was $29.6 million, a decrease of 33% as compared to 2014. The decrease was primarily due to recognition in 2014 of $15.3 million of the upfront fee related to MOR209/ES414, the Company's prostate cancer therapeutic candidate being developed in collaboration with MorphoSys AG.

Operating Expenses

Cost of Product Sales and Contract Manufacturing

For Q3 2015, cost of product sales and contract manufacturing was $38.5 million, an increase of 19% as compared to 2014. The increase was primarily attributable to increased sales of BioThrax to the CDC.

Research and Development

For Q3 2015, gross research and development (R&D) expenses were $41.9 million, a decrease of 5% as compared to 2014. The decrease primarily reflects lower contract service costs associated with product candidates and technology platform development activities associated with the Biosciences division. Net R&D expenses, which are more representative of the Company's actual out-of-pocket investment in product development, are calculated as gross research and development expenses less contracts, grants and collaboration revenues. For Q3 2015, net R&D expenses were $12.2 million versus $0.1 million in 2014, reflecting the recognition in 2014 of $15.3 million of the upfront fee from MorphoSys related to MOR209/ES414.

Research and Development Expenses (Gross)

Adjustments:

Contracts, grants and collaborations revenues

Net Research and Development Expenses

Selling, General and Administrative

For Q3 2015, selling, general and administrative expenses were $31.6 million, an increase of 4% as compared to 2014. The increase was primarily attributable to selling, general and administrative costs associated with the launch of IXINITY and professional services to support the Company's strategic growth initiatives.

Net Income

For Q3 2015, GAAP net income per diluted share is computed using the if-converted method. This method requires GAAP net income to be adjusted in the amount of $1.0 million, from $36.9 million to $37.9 million, related to interest expense and amortization of debt issuance cost, both net of tax, associated with the Company's 2.875% Convertible Senior Notes due 2021. For Q3 2015, the diluted shares outstanding were 47.8 million.

(II) Nine Months Ended September 30, 2015 (unaudited)

For the nine months of 2015, product sales were $224.3 million, an increase of 13% as compared to 2014. The increase primarily reflects increased sales of BioThrax in 2015.

For the nine months of 2015, revenue from the Company's contract manufacturing operations was $32.4 million, an increase of 52% as compared to 2014. The increase was primarily due to the impact of fill/finish services for the entire nine month period in 2015.

For the nine months of 2015, contracts, grants and collaborations revenue was $98.0 million, an increase of 19% as compared to 2014. The increase was primarily due to development funding for Anthrasil.

For the nine months of 2015, cost of product sales and contract manufacturing was $84.5 million, a decrease of 2% as compared 2014. The decrease was primarily attributable to the decrease in the BioThrax cost per dose sold associated with increased production yield in the period in which the doses were produced.

For the nine months of 2015, gross R&D expenses were $121.5 million, an increase of 9% as compared to 2014. The increase was primarily attributable to higher contract service costs for product candidates and manufacturing development in the Biodefense...


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