News Release Details

• Strong year-over-year growth in third quarter and nine month revenue and net income
• Full year 2013 guidance revised to upper end of the previous range

ROCKVILLE, Md.--(BUSINESS WIRE)--Nov. 7, 2013-- Emergent BioSolutions Inc. (NYSE: EBS) announced today its financial results for the third quarter and nine months ended September 30, 2013.

Total revenues for Q3 2013 were $89.1 million as compared to $66.6 million in 2012. Total revenues for the first nine months of 2013 were $214.6 million as compared to $187.3 million in 2012. Net income for Q3 2013 was $13.5 million, or $0.37 per basic share, as compared to $6.6 million, or $0.18 per basic share, in 2012. Net income for the first nine months of 2013 was $15.9 million, or $0.44 per basic share, as compared to $7.4 million, or $0.21 per basic share, in 2012.

Based upon these results, the company is revising upward its 2013 financial forecast to reflect a narrowing to the upper end of the previous guidance. Specifically, the company is forecasting full year 2013 total revenues of $300 to $310 million, split between product revenues of $250 to $255 million and contracts and grants revenue of $50 to $55 million, and net income of $25 to $30 million.

Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions, stated, “We are very pleased with our financial results during the third quarter and first nine months of 2013. As a result of this performance and our visibility into our operations through the end of the year, we are revising upward our full year guidance. We are also very encouraged by our operational performance. Our biodefense business continued its strong performance as evidenced by increased BioThrax doses shipped, and better than expected sales of our newly acquired medical countermeasure RSDL. In addition, we continue to advance our key bioscience product development programs with the goal of partnering for advanced development. Finally, we continue to pursue acquisitions of additional products or companies that leverage our competencies and drive us toward achieving the goals identified in our growth plan.”

Q3 2013 and Subsequent Operational Accomplishments

• Closed on the acquisition and integrated the operations of the Healthcare Protective Products Division (HPPD) of Bracco Diagnostics Inc.;
• Achieved better than expected initial sales of RSDL^® (Decontamination Lotion);
• Received Paul-Ehrlich-Institut approval to market BioThrax^® (Anthrax Vaccine Adsorbed) in Germany with a three-dose primary schedule over six months with triennial boosters thereafter;
• Initiated the mutual recognition process to obtain BioThrax licensure in other key EU countries;
• Submitted to the Biomedical Advanced Research and Development Authority (BARDA) and FDA the Clinical Study Report related to the pivotal study evaluating the immunogenicity and safety of a three-dose regimen for a post-exposure prophylaxis (PEP) indication for BioThrax; and
• Completed all vaccinations and visits in the antibiotic non-interference clinical study in support of the BioThrax PEP indication.

Financial Results

Product Sales

For Q3 2013, product sales were $76.3 million, an increase of $22.3 million from $54.0 million for Q3 2012. This increase was primarily due to a 26% increase in the number of doses of BioThrax delivered, along with $7.0 million in RSDL sales.

For the nine month period of 2013, product sales were $172.3 million, an increase of $30.7 million from $141.5 million in the comparable period of 2012, primarily due to a 14% increase in the number of doses of BioThrax delivered, along with $7.0 million in RSDL sales.

Contracts and Grants Revenues

For Q3 2013, contracts and grants revenues were $12.8 million, an increase of $0.2 million from $12.6 million for Q3 2012. The increase was primarily due to increased revenues from BARDA related to large-scale manufacturing of BioThrax in Building 55, and to the establishment of the company’s Center for Innovation in Advanced Development and Manufacturing (CIADM).

For the nine month period of 2013, contracts and grants revenues were $42.4 million, a decrease of $3.4 million from $45.8 million for the comparable period of 2012. The decrease was primarily due to decreased revenue from BARDA for development of the PreviThrax™ (Recombinant Protective Antigen Anthrax Vaccine, Purified) product candidate, as well as various development and licensing-related payments received in 2012 that did not occur in 2013, partially offset by revenues from CIADM.

Cost of Product Sales

For Q3 2013, cost of product sales was $20.1 million, an increase of $9.8 million from $10.2 million for Q3 2012. The increase was primarily due to the 26% increase in the number of BioThrax doses delivered and costs attributable to RSDL sales. In addition, 3Q 2012 cost of product sales reflected the sale of certain BioThrax doses that had been expensed in a prior period.

For the nine month period of 2013, cost of product sales was $42.7 million, an increase of $11.8 million from $30.9 million for the comparable period of 2012. The increase was primarily due to the 14% increase in the number of BioThrax doses delivered coupled with an increase in the cost per dose associated with lower production yields in the period in which the doses were produced, as well as costs attributable to RSDL sales.

Research and Development

For Q3 2013, gross research and development expense was $28.9 million, an increase of $1.5 million from $27.4 million for Q3 2012. For the nine month period of 2013, gross research and development expense was $89.9 million, an increase of $5.7 million from $84.3 million for the comparable period of 2012. The increase in both periods primarily reflects increased depreciation expense related to the company’s Baltimore facility and higher contract services costs.

After adjusting for development contracts and grants revenue and the net loss attributable to noncontrolling interests, net research and development expense for Q3 2013 was $16.1 million, as compared to $13.8 million for Q3 2012. Net research and development expense for the first nine months of 2013 was $46.7 million, as compared to $34.3 million in the comparable period in 2012.

Selling, General and Administrative

For Q3 2013, selling, general and administrative expenses were $22.0 million, an increase of $2.8 million from $19.2 million for Q3 2012. The increase is primarily due to increased spending related to professional services attributable to M&A and other activities related to the company’s growth plan, including the acquisition of HPPD, and costs associated with RSDL sales.

For the nine month period of 2013, selling, general and administrative expenses were $62.5 million, an increase of $5.9 million from $56.5 million for the comparable period of 2012. The increase was primarily due to costs related to restructuring of the company’s U.K. operations, increased spending related to professional services attributable to M&A and other activities related to the company’s growth plan, including the acquisition of HPPD, as well as costs associated with RSDL sales.

Financial Condition and Liquidity

Cash and cash equivalents plus accounts receivable balance, which consists of unpaid amounts due from the US government, at September 30, 2013 was $202.7 million.

Conference Call and Webcast

Thursday, November 7, 2013 at 5:00 PM Eastern
U.S. Attendee Dial-in: 888/713-4214
International Attendee Dial-in: 617/213-4866
Attendee Passcode: 61415069
24-HOUR REPLAY U.S.: 888/286-8010
24-HOUR REPLAY INTERNATIONAL: 617/801-6888
Conference ID: 86326167
Replay will be available for 14 days.

CALL WILL ALSO BE BROADCAST LIVE, LISTEN ONLY, VIA THE WEB AT:
www.emergentbiosolutions.com
No Password Required
Replay will be available for 90 days at www.emergentbiosolutions.com

About Emergent BioSolutions Inc.

Emergent BioSolutions is a specialty pharmaceutical company seeking to protect and enhance life by offering specialized products to healthcare providers and governments to address medical needs and emerging health threats. Additional information about the company may be found at www.emergentbiosolutions.com.

Follow us on twitter: @emergentbiosolu

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 financial guidance, and any other statements containing the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates” and similar expressions, 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 appropriations for BioThrax procurement; our ability to successfully integrate the HPPD business and realize the benefits of the transaction; our ability to obtain new BioThrax sales contracts or modifications to existing contracts; our plans to pursue label expansions and improvements for BioThrax; availability of funding for our U.S. government grants and contracts; our ability to obtain regulatory approval for large-scale manufacturing of BioThrax in Building 55; our ability to identify and acquire companies, 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 or at all; our ability to enter into selective collaboration arrangements; our ability to expand our manufacturing facilities and capabilities; 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 products and 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.

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