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Emergent (EBS) Q2 Earnings Miss Estimates, Revenues Rise Y/Y


Emergent BioSolutions Inc. EBS reported earnings of 13 cents per share in the second quarter of 2017, which missed the Zacks Consensus Estimate of 26 cents. Earnings however increased from the year-ago loss of 1 cent.

Emergent’s shares underperformed the industry so far this year. The company’s shares have gained 7.3% compared with the industry’s increase of 9.4%.

Revenues in the reported quarter rallied 10% from the year-ago period to $100.8 million, primarily on the back of product sales and increase in contract manufacturing revenues. This upside reflects an increase in fill/finish services.

However, revenues missed the Zacks Consensus Estimate of $106 million.

Quarter in Detail

Total product sales surged 32% to $63.6 million from the year-ago period, mainly owing to the timing of BioThrax (Anthrax Vaccine Adsorbed) deliveries to the strategic national stockpile (SNS).

Notably, in March, Emergent signed a two-year contract with the Biomedical Advanced Research and Development Authority (BARDA), valued at $100 million for the delivery of BioThrax to the SNS.

Contracts, grants and collaboration revenues plunged 36% year over year to $21 million, primarily due to the timing of the ongoing development activities leading to a reduction of development funding under ongoing programs as well as expansion of the Bayview manufacturing site.

Contract manufacturing revenues were $16.2 million, soared significantly by 59% compared with the year-ago figure. The increase was primarily driven by the timing of fill/finish services as well as certain bulk manufacturing services performed for Aptevo. Notably, in August last year, Emergent completed the spin-off of certain assets and liabilities of its Biosciences business into a separate publicly traded company, Aptevo Therapeutics Inc. APVO.

Research and development expenses were $25.8 million, down 8% from the year-ago quarter. This downside is attributable to cost-reduction related to development services performed during the period.

Selling, general and administrative expenses decreased 11% to $31.9 million owing to favorable timing of professional services to support the Emergent’s strategic growth initiatives.

Other Updates

Last month, Emergent announced that it has inked an agreement to acquire the ACAM2000 (Smallpox [Vaccinia] Vaccine, Live) business of Sanofi SNY for up to $125 million in a cash transaction. This deal includes an all-cash upfront payment of $97.5 million and up to $27.5 million in near-term contingent regulatory and manufacturing-related milestones.

During the same month, the company entered into another contract with GlaxoSmithKline plc GSK to acquire raxibacumab, a fully human monoclonal antibody approved of by the FDA for treatment and prophylaxis of inhalational anthrax.

2017 Outlook

Emergent continues to expect revenues in the range of $500–$530 million in 2017, including BioThrax sales of $265–$280 million. The Zacks Consensus Estimate revenue for 2017 is $508.02 million.

The company projects revenue in the range of $115-$130 million for the third-quarter of 2017. The Zacks Consensus Estimate for the third-quarter is $140.70 million.

Emergent Biosolutions, Inc. Price, Consensus and EPS Surprise

Emergent Biosolutions, Inc. Price, Consensus and EPS Surprise | Emergent Biosolutions, Inc. Quote

Zacks Rank

Emergent currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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