News Release Details

• Total revenues of $50.3 million resulting primarily from growth in year over year BioThrax^® doses delivered
• Net loss of $6.8 million or $0.19 per share, calculated in accordance with US GAAP
• Non-GAAP adjusted net loss of $0.7 million or $0.02 per share
• FY 2012 forecast: reaffirmed total revenues of $280 to $300 million and net income of $15 to $25 million
• Q2 2012 forecast: total revenues of $70 to $80 million

ROCKVILLE, Md.--(BUSINESS WIRE)--May. 3, 2012-- Emergent BioSolutions Inc. (NYSE: EBS) announced today its financial results for the first quarter ended March 31, 2012.

Total revenues for Q1 2012 were $50.3 million as compared to $18.5 million in 2011. In addition, for Q1 2012 the company recorded a net loss of $6.8 million, or $0.19 per share, as compared to a net loss of $21.4 million, or $0.61 per share, in 2011. The Q1 2012 net loss included a one-time, non-cash charge of $9.6 million. This charge is related to impairment of in-process research and development associated with the SBI-087 product candidate, which was being developed by Pfizer. Pfizer recently notified the company of its intent to terminate its current development programs with respect to SBI-087, thus triggering the impairment charge. Without this non-cash charge, the company’s non-GAAP adjusted net loss was $0.7 million, or $0.02 per share.

Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions, stated, “The performance of our core business during the first quarter was in line with expectations. We continued to manufacture and deliver BioThrax into the SNS while investing in the ongoing development of both our Biosciences and Biodefense product development programs. We look forward to achieving key milestones in 2012, including completion of Building 55 consistency lot manufacture, reviewing preliminary efficacy data from our Phase 2b TB infant trial, completing enrollment in our Phase 2 CLL combination study, and publishing data from our Phase 1b NHL combination study.”

Q1 2012 Key Financial Results

Product Sales

For Q1 2012, product sales were $34.4 million, an increase of $28.8 million, from $5.6 million for Q1 2011. This increase was primarily due to a 636 percent increase in the number of doses of BioThrax delivered.

Contracts and Grants Revenues

For Q1 2012, contracts and grants revenues were $16.0 million, an increase of $3.0 million, or 23 percent, from $12.9 million for Q1 2011. The increase was primarily due to increased activity and associated revenue from our development contracts, specifically large-scale manufacturing of BioThrax and development of PreviThrax™, both funded by BARDA.

Cost of Product Sales

For Q1 2012, cost of product sales was $7.5 million, an increase of $6.4 million, from $1.1 million for Q1 2011. This increase was substantially attributable to the 636 percent increase in the number of BioThrax doses sold.

Research and Development

For Q1 2012, research and development expenses were $26.2 million, a decrease of $8.5 million, or 24 percent, from $34.8 million for Q1 2011. This decrease primarily reflects lower contract service expenses, and includes decreased expenses of $9.6 million for product candidates and technology platform development activities within the Biosciences segment, offset by increased expenses of $1.1 million related to development of product candidates within the Biodefense segment and other research and development activities. Net of development contracts and grants revenue along with the net loss attributable to noncontrolling interests, research and development expenses were $9.1 million for Q1 2012.

Selling, General and Administrative

For Q1 2012, selling, general and administrative expenses were $19.5 million, an increase of $1.3 million, or 7 percent, from $18.2 million for Q1 2011. This increase is primarily due to legal and other professional services to support business initiatives. Selling, general and administrative expenses for Q1 2012 consisted of $14.5 million associated with the Biodefense segment and $5.0 million associated with the Biosciences segment.

In-Process Research & Development

During Q1 2012, the company recorded a charge of $9.6 million attributable to impairment of the company’s SBI-087 in-process research and development asset.

Financial Condition and Liquidity

Cash and cash equivalents combined with investments at March 31, 2012 was $150.4 million compared to $145.9 million at December 31, 2011. Additionally, at March 31, 2012, the accounts receivable balance was $43.7 million, which is comprised primarily of unpaid amounts due for shipments of BioThrax accepted by the US government.

Forecast: 2Q 2012

For the second quarter of 2012, the company anticipates total revenues of $70 to $80 million.

Forecast: Full Year 2012

For full year 2012, the company is reaffirming its forecast of total revenues of $280 to $300 million, split between product sales of $220 to $230 million and contracts and grants revenue of $60 to $70 million. The company also reaffirms its forecast of net income of $15 to $25 million.

Reconciliation of GAAP to Non-GAAP Net Loss

During Q1 2012, the company recorded an impairment charge of $9.6 million, which represents the entire carrying value of the company’s SBI-087 in-process research and development asset. Without this non-cash charge, after taking into consideration the tax effect, the net loss for the period is reduced from $6.8 million to $0.7 million, a difference of approximately $6.1 million. The company believes that disclosing adjusted earnings figures which exclude the impact of this non-cash impairment charge provides a more meaningful measure of its operating results for comparison to future periods and previously announced guidance.

Conference Call and Webcast

Company management will host a conference call at 5:00 pm Eastern on May 3, 2012 to discuss these financial results. The conference call will be accessible by dialing 888/713-4213 or 617/213-4865 (international) and providing passcode 54709934. 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 passcode 27346515. The replay will be available through May 17, 2012. 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 about the company may be found at www.emergentbiosolutions.com.

Forward-Looking Statements

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 expected revenue growth and net earnings for 2012, and our expected revenue for 2Q 2012, and any other statements containing the words “believes”, “expects”, “anticipates”, “plans”, “estimates” and similar expressions, are forward-looking statements. Such statements are based upon the current beliefs and expectations of management that are subject to risks, uncertainties and other 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, including our ability to develop and obtain regulatory approval for manufacturing of BioThrax^® in our large-scale vaccine manufacturing facility in Lansing, Michigan; 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; the extent to which our licensing and acquisition activities are complementary to the company’s existing business and whether anticipated synergies and benefits are realized within expected time periods; our ability to identify and acquire or in-license products and product candidates that satisfy our selection criteria; ongoing and planned development programs, preclinical studies and clinical trials; the timing of and our ability to obtain and maintain regulatory approvals for our product candidates; our commercialization, marketing and manufacturing capabilities and strategy; our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and other factors identified in the company’s Annual Report on Form 10-K for the year ended December 31, 2011 and subsequent reports filed with the SEC The company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.

Financial Statements Follow

Source: Emergent BioSolutions Inc.

Emergent BioSolutions Inc.
Investor Contact
Robert G. Burrows
Vice President, Investor Relations
301-795-1877
BurrowsR@ebsi.com
or
Media Contact:
Tracey Schmitt
Vice President, Corporate Communications
301-795-1800
SchmittT@ebsi.com