UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
____________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): May 5, 2010
Emergent
BioSolutions Inc.
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
|
001-33137
|
14-1902018
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
2273
Research Boulevard, Suite 400, Rockville, Maryland
|
20850
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (301) 795-1800
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item
2.02. Results
of Operations and Financial Condition.
On May 5,
2010, Emergent BioSolutions Inc. (the “Company”) announced financial and
operating results for the three months ended March 31, 2010. The full text of
the press release issued in connection with the announcement is attached as
Exhibit 99.1 to this Current Report on Form 8-K.
The
information in Item 2.02 of this Form 8-K, including Exhibit 99.1 hereto, shall
not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except as expressly set forth by specific reference in such a filing.
Item
9.01 Financial Statements and
Exhibits.
(d) Exhibits
See
Exhibit Index attached hereto.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Date: May
5, 2010
|
EMERGENT
BIOSOLUTIONS INC.
|
|
|
By:
|
/s/ R. Don Elsey
R.
Don Elsey
Chief
Financial Officer
|
|
Exhibit
99.1
FOR
IMMEDIATE RELEASE
Investor
Contact
Robert G.
Burrows
Vice
President, Investor Relations
301-795-1877
BurrowsR@ebsi.com
Media
Contact:
Tracey
Schmitt
Vice
President, Corporate Communications
301-795-1800
SchmittT@ebsi.com
EMERGENT
BIOSOLUTIONS REPORTS FINANCIAL RESULTS FOR FIRST QUARTER 2010
|
·
|
1Q
2010 revenues of $46.8 million and net income of $2.5 million, or $0.08
per share
|
|
·
|
1Q
2010 cash and accounts receivable balance of $149.8 million, including
$116.4 million of cash and $33.4 million of accounts
receivable
|
|
·
|
Reaffirming
2010 forecast of total revenues of $235 to $255 million and net income of
$20 to $30 million
|
ROCKVILLE, MD, May 5,
2010—Emergent BioSolutions Inc. (NYSE: EBS) announced today its financial
results for the first quarter ended March 31, 2010.
For the
first quarter 2010, total revenues were $46.8 million as compared to $64.5
million in 2009, and net income was $2.5 million, or $0.08 per share, as
compared to $11.1 million, or $0.37 per share, in 2009. The 2010
performance was primarily driven by sales of BioThrax®
(Anthrax Vaccine Adsorbed) based on scheduled deliveries to the Strategic
National Stockpile.
R. Don
Elsey, chief financial officer of Emergent BioSolutions, stated, “Our 1Q 2010
financial results were in line with our internal expectations and we remain on
track to achieve our guidance for the year. For the remainder of
2010, we anticipate strong financial performance as evidenced by our reaffirmed
forecast of total revenues of $235 to $255 million and net income of $20 to $30
million. This forecast does not reflect the revenue impact for 2010
associated with the anticipated awards of a multi-year development contract for
BioThrax scale-up with potential funding in excess of $100 million and a
multi-year development contract for our rPA vaccine candidate with potential
funding in excess of $250 million.”
1Q 2010 Key Financial
Results
Product
Sales
For 1Q
2010, product sales were $38.9 million, a decrease of $22.8 million, or 37
percent, from $61.7 million in 1Q 2009, primarily due to a 47 percent decrease
in the number of doses of BioThrax®
delivered related to the timing of scheduled deliveries under our contract with
HHS, partially offset by an 18 percent increase in the sales price per
dose. Product sales revenues in 1Q 2010 consisted of BioThrax® sales
to HHS of $38.8 million and aggregate international and other sales of
$37,000.
Contracts
and Grants Revenues
For 1Q
2010, contracts and grants revenue was $7.9 million, an increase of $5.1
million, or 180 percent, from $2.8 million in 1Q 2009. Contracts and
grants revenue for 2010 primarily consisted of development contract revenue from
NIAID and BARDA.
Cost
of Product Sales
For 1Q
2010, cost of product sales was $7.5 million, a decrease of $7.9 million, or 51
percent, from $15.4 million in 1Q 2009. This decrease was
attributable to the 47 percent decrease in BioThrax® doses
sold.
Research
and Development
For 1Q
2010, research and development expenses were $19.9 million, an increase of $4.0
million, or 25 percent, from $15.9 million in 1Q 2009. This increase
reflects higher contract service costs, and includes increased expenses of $5.3
million on product candidates in our biodefense programs, primarily product
candidates within our anthrax franchise, decreased expenses of $2.3 million
related to our commercial product candidates, and increased expenses of $1.0
million in other research and development, which are in support of technology
platforms and central R&D activities.
Selling,
General and Administrative
For 1Q
2010, selling, general and administrative expenses were $16.2 million, an
increase of $0.2 million, or 1 percent, from $16.0 million in 1Q
2009. This increase includes a $0.5 million non-cash charge
associated with our Frederick, Maryland facilities and increased personnel costs
related to the growth of the Company, partially offset by a $1.4 million
non-cash charge during 1Q 2009 associated with acquisitions that were in
progress but not completed as of December 31, 2008.
Financial
Condition and Liquidity
Cash and
cash equivalents at March 31, 2010 was $116.4 million compared to $102.9 million
at December 31, 2009. Additionally, at March 31, 2010, the accounts
receivable balance was $33.4 million, which is comprised primarily of unpaid
amounts due related to shipments of BioThrax®
received and accepted by the US government in the first quarter of
2010.
2010
Forecast
For 2010,
the Company is reaffirming its financial forecast of total revenues of $235 to
$255 million and net income of $20 to $30 million.
Total
revenue for 2010 is expected to be driven by, among other things:
|
·
|
the
continuation of deliveries of BioThrax®
under the current multi-year procurement contract with
CDC;
|
|
·
|
additional
sales of BioThrax®
to allied foreign governments; and
|
|
·
|
an
increase in the performance of work under contracts with the U.S.
government with respect to the Company’s BioThrax®
related programs, anthrax immune globulin therapeutic candidate, and
anthrax monoclonal antibody
candidate.
|
Conference Call and
Webcast
Company
management will host a conference call at 5:00 pm Eastern on May 5, 2010 to
discuss the financial results for the first quarter of 2010, recent business
developments and the forecast for 2010. The conference call will be
accessible by dialing 888/713-4199 or 617/213-4861 (international)
and providing passcode 20683157. 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 one hour following the
conclusion of the call, by dialing 888/286-8010 or 617/801-6888 and using the
passcode 26100735. The replay will be available through May
19. The webcast will be archived on the company’s website, www.emergentbiosolutions.com,
under “Investors”.
About
Emergent BioSolutions Inc.
Emergent
BioSolutions Inc. is a biopharmaceutical company focused on the development,
manufacture and commercialization of vaccines and antibody therapies that assist
the body’s immune system to prevent or treat disease. Emergent’s
marketed product, BioThrax®
(Anthrax Vaccine Adsorbed), is the only vaccine approved by the U.S. Food and
Drug Administration for the prevention of anthrax disease. Emergent’s
product pipeline targets infectious diseases and includes programs focused on
anthrax, tuberculosis, typhoid, flu and chlamydia. Additional
information may be found at www.emergentbiosolutions.com.
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 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 2010, and
any other statements containing the words “believes”, “expects”, “anticipates”,
“plans”, “estimates” and similar expressions, are forward-looking statements.
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 obtain new BioThrax® sales
contracts; our plans to pursue label expansions and improvements for
BioThrax®; our
ability to win a development award with the U.S. government for our recombinant
protective antigen anthrax vaccine candidate; our plans 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, preclinical studies and clinical trials; our
ability to identify and acquire or in license products and product candidates
that satisfy our selection criteria; the potential benefits of our existing
collaboration agreements and our ability to enter into selective additional
collaboration arrangements; the timing of and our ability to obtain and maintain
regulatory approvals for our other 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, 2009 and subsequent reports filed with the
SEC. The company disclaims any intention or obligation to update any
forward-looking statements as a result of developments occurring after the date
of this press release.
Financial Statements
Follow
|
Emergent
BioSolutions Inc. and Subsidiaries
|
||||||||
|
Consolidated
Statements of Operations
|
||||||||
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(in
thousands, except share and per share data)
|
||||||||
|
Three
Months Ended
|
||||||||
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March
31,
|
||||||||
|
2010
|
2009
|
|||||||
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(Unaudited)
|
||||||||
|
Revenues:
|
||||||||
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Product
sales
|
$ | 38,853 | $ | 61,678 | ||||
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Contracts
and grants
|
7,947 | 2,841 | ||||||
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Total
revenues
|
46,800 | 64,519 | ||||||
|
Operating
expenses:
|
||||||||
|
Cost
of product sales
|
7,508 | 15,368 | ||||||
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Research
and development
|
19,922 | 15,910 | ||||||
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Selling,
general and administrative
|
16,192 | 15,975 | ||||||
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Income
from operations
|
3,178 | 17,266 | ||||||
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Other
income (expense):
|
||||||||
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Interest
income
|
388 | 300 | ||||||
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Interest
expense
|
(5 | ) | (4 | ) | ||||
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Other
income (expense), net
|
(8 | ) | (24 | ) | ||||
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Total
other income (expense)
|
375 | 272 | ||||||
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Income
before provision for income taxes
|
3,553 | 17,538 | ||||||
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Provision
for income taxes
|
1,635 | 7,366 | ||||||
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Net
income
|
1,918 | 10,172 | ||||||
|
Net
loss attributable to noncontrolling interest
|
605 | 947 | ||||||
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Net
income attributable to Emergent BioSolutions Inc.
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$ | 2,523 | $ | 11,119 | ||||
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Earnings
per share - basic
|
$ | 0.08 | $ | 0.37 | ||||
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Earnings
per share - diluted
|
$ | 0.08 | $ | 0.35 | ||||
|
Weighted-average
number of shares - basic
|
30,879,970 | 30,184,098 | ||||||
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Weighted-average
number of shares - diluted
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31,432,751 | 31,454,456 | ||||||
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Emergent
BioSolutions Inc. and Subsidiaries
|
||||||||
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Consolidated
Balance Sheets
|
||||||||
|
(in
thousands, except share and per share data)
|
||||||||
|
March
31,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
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ASSETS
|
(Unaudited)
|
|||||||
|
Current
assets:
|
||||||||
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Cash
and cash equivalents
|
$ | 116,384 | $ | 102,924 | ||||
|
Restricted
cash
|
215 | 215 | ||||||
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Accounts
receivable
|
33,405 | 54,872 | ||||||
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Inventories
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17,081 | 13,521 | ||||||
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Note
receivable
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10,000 | 10,000 | ||||||
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Deferred
tax assets, net
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2,147 | 1,870 | ||||||
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Income
tax receivable, net
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5,033 | 2,574 | ||||||
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Prepaid
expenses and other current assets
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7,271 | 7,838 | ||||||
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Total
current assets
|
191,536 | 193,814 | ||||||
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Property,
plant and equipment, net
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133,493 | 131,834 | ||||||
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Assets
held for sale
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13,411 | 13,960 | ||||||
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Deferred
tax assets, net
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3,174 | 3,894 | ||||||
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Other
assets
|
1,177 | 1,187 | ||||||
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Total
assets
|
$ | 342,791 | $ | 344,689 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 16,164 | $ | 17,159 | ||||
|
Accrued
expenses and other current liabilities
|
1,575 | 1,570 | ||||||
|
Accrued
compensation
|
9,346 | 14,926 | ||||||
|
Indebtedness
under line of credit
|
15,000 | 15,000 | ||||||
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Long-term
indebtedness, current portion
|
5,797 | 5,791 | ||||||
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Deferred
revenue
|
241 | 255 | ||||||
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Total
current liabilities
|
48,123 | 54,701 | ||||||
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Long-term
indebtedness, net of current portion
|
44,165 | 44,927 | ||||||
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Other
liabilities
|
1,387 | 1,246 | ||||||
|
Total
liabilities
|
93,675 | 100,874 | ||||||
|
Commitments
and contingencies
|
- | - | ||||||
|
Stockholders’
equity:
|
||||||||
|
Preferred
stock, $0.001 par value; 15,000,000 shares authorized, 0
shares issued and outstanding at March 31, 2010 and December 31, 2009,
respectively
|
- | - | ||||||
|
Common
stock, $0.001 par value; 100,000,000 shares authorized, 31,004,343 and
30,831,360 shares issued and outstanding at March 31, 2010 and December
31, 2009, respectively
|
31 | 31 | ||||||
|
Additional
paid-in capital
|
123,643 | 120,492 | ||||||
|
Accumulated
other comprehensive loss
|
(1,261 | ) | (1,476 | ) | ||||
|
Retained
earnings
|
124,675 | 122,152 | ||||||
|
Total
Emergent BioSolutions Inc. stockholders' equity
|
247,088 | 241,199 | ||||||
|
Noncontrolling
interest in subsidiary
|
2,028 | 2,616 | ||||||
|
Total
stockholders’ equity
|
249,116 | 243,815 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 342,791 | $ | 344,689 | ||||
|
Emergent
BioSolutions Inc. and Subsidiaries
|
||||||||
|
Consolidated
Statements of Cash Flows
|
||||||||
|
(in
thousands)
|
||||||||
|
Three
Months Ended
|
||||||||
|
March
31,
|
||||||||
|
2010
|
2009
|
|||||||
|
(Unaudited)
|
||||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
$ | 1,918 | $ | 10,172 | ||||
|
Adjustments
to reconcile to net cash provided by (used in) operating
activities:
|
||||||||
|
Stock-based
compensation expense
|
1,522 | 860 | ||||||
|
Depreciation
and amortization
|
1,296 | 1,262 | ||||||
|
Deferred
income taxes
|
819 | 933 | ||||||
|
Non-cash
development expenses from joint venture
|
17 | 1,633 | ||||||
|
Gain
(loss) on disposal of property and equipment
|
(34 | ) | 25 | |||||
|
Provision
for impairment of long-lived assets
|
548 | - | ||||||
|
Excess
tax benefits from stock-based compensation
|
(376 | ) | (196 | ) | ||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
21,467 | (49,281 | ) | |||||
|
Inventories
|
(3,560 | ) | 6,885 | |||||
|
Income
taxes
|
(2,459 | ) | 4,599 | |||||
|
Prepaid
expenses and other assets
|
576 | 1,070 | ||||||
|
Accounts
payable
|
1,115 | (189 | ) | |||||
|
Accrued
compensation
|
(5,580 | ) | (3,094 | ) | ||||
|
Accrued
expenses and other liabilities
|
146 | (120 | ) | |||||
|
Deferred
revenue
|
(14 | ) | (5 | ) | ||||
|
Net
cash provided by (used in) operating activities
|
17,401 | (25,446 | ) | |||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property, plant and equipment
|
(5,030 | ) | (4,755 | ) | ||||
|
Net
cash used in investing activities
|
(5,030 | ) | (4,755 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Proceeds
from borrowings on long-term indebtedness and line of
credit
|
15,000 | 15,000 | ||||||
|
Principal
payments on long-term indebtedness and line of credit
|
(15,755 | ) | (15,659 | ) | ||||
|
Issuance
of common stock subject to exercise of stock options
|
1,253 | 651 | ||||||
|
Excess
tax benefits from stock-based compensation
|
376 | 196 | ||||||
|
Net
cash provided by financing activities
|
874 | 188 | ||||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
215 | (80 | ) | |||||
|
Net
increase (decrease) in cash and cash equivalents
|
13,460 | (30,093 | ) | |||||
|
Cash
and cash equivalents at beginning of period
|
102,924 | 91,473 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 116,384 | $ | 61,380 | ||||