Emergent BioSolutions Inc. Q1 2010 Earnings Call Transcript

Emergent BioSolutions Inc. Q1 2010 Earnings Call Transcript
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Emergent BioSolutions Inc. (EBS)

Q1 2010 Earnings Call

May 5, 2010 05:00 a.m. ET

Executives

Robert Burrows - VP, IR

Fuad El-Hibri - Chairman and CEO

Don Elsey - CFO

Analysts

Eric Schmidt - Cowen & Company

David Moskowitz - Madison Williams & Company

Jim Molloy - Caris & Company

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the Emergent BioSolutions Incorporated first quarter 2010 financial results earnings conference call. (Operator Instructions) I would now like to turn the conference over to your host for today in the company. Please proceed.

Robert Burrows

Thank you, Jasmine. Good afternoon, ladies and gentlemen. My name is Robert Burrows. I’m Vice President of Investor Relations for Emergent. Thank you for joining us today as we discuss the Emergent BioSolutions financial results for the first quarter of 2010.

As is customary, our call today is open to all participants. In addition the call is being recorded and is copyrighted by Emergent BioSolutions.

Joining me on the call this afternoon with prepared comments will be Fuad El-Hibri, Our Chairman and Chief Executive Officer and Don Elsey, our Chief Financial Officer. Additional members of our senior management team will be present on the call for purposes of the Q&A session.

Before we begin, I’m compelled to remind everyone that during the call, management may make projections and other forward-looking statements regarding future events and the Company’s prospects for future performance.

These forward-looking statements reflect Emergent’s current perspective on existing trends and information. Any such forward-looking statements are not guarantees of future performance and involve substantial risks and uncertainties.

Actual results may differ materially from those projected in any forward-looking statements.

You are encouraged to review Emergent’s bonds with the SEC on Forms 10-K, 10-Q and 8-K for more information on the risks and uncertainties that could cause actual results to differ.

For the benefit of those you may be listening to the replay, this call is held and recorded on May 5, 2010. Since then Emergent may have made announcements relating to topics discussed during today’s call, so again please reference our most recent press releases and SEC filings.

Emergent BioSolutions assumes no obligation to update the information in today’s press release or as presented on this call except as may be required by applicable laws or regulations. Today's press release may be found on our website at www.emergentbiosolutions.com under Investor Relations/Press Releases. And with that introduction, I would now like to turn the call over to Fuad El-Hibri, Emergent Biosolutions Chairman and CEO. Fuad.

Fuad El-Hibri

Thank you, Bob. Good afternoon everyone, and thank you for joining us on today's conference call. For my prepared comments, I will review our financial performance for the first quarter of 2010, provide a reaffirmation of our financial forecast, discuss updates regarding our business, and highlight key milestones for the year. To begin, let me review our financial results for the first quarter of 2010.

Our revenues of $47 million and net income of $2.5 million include the scheduled deliveries of BioThrax to the SNS as well as progress payments under development contract for the first quarter. These financial results are in line with our projections for the year. As you all know, our quarter-to-quarter deliveries vary. I'm pleased to report that we successfully completed all of our scheduled deliveries for the first quarter, and remain on track to achieve our guidance for the year. We therefore reaffirm our 2010 forecast for total revenues of $235 million to $255 million, and net income of $20 million to $30 million.

Let me now provide an update on our business. First, the development contract for BioThrax scale-up. We are in final contract negotiations with BARDA for the funding of the development, scale-up and licensure of BioThrax and Building 55.

As you know, Building 55 is our new large-scale state-of-the-art manufacturing facility on our Lansing campus. We anticipate that this award will be a multi-year development contract with potential funding in excess of $100 million. The revenue impact from this development contract in 2010 is not reflected in our forecast. We remain optimistic of an award in the next few months.

Second, the development contract for our rPA vaccine candidate. At the request of BARDA, we are in the process of submitting our final revisions for our proposal for an rPA contract award. We anticipate that this award will be a multi-year development contract with potential funding in excess of $250 million. The revenue impact from this contract for 2010 is also not reflected in our forecast.

We remain optimistic of an award in the next few months. Note that these two development contracts represent potential financial upside for the year.

Third, the follow-on procurement contract for BioThrax doses. We have commenced discussions with representatives at both HHS and the CDC regarding a procurement contract for BioThrax that would begin in 3Q, 2011 upon the conclusion of our current $400 million contract.

We remain confident that the US government will continue to procure BioThrax for the SNS over the long run. We anticipate securing a multi-year contract, similar to the last two contracts by the end of this year.

Moving on, let me now provide an update on our product development activities. For our Anthrax franchise, in addition to BioThrax and rPA vaccine candidate, we're currently working on both a polyclonal and a monoclonal antibody candidate, as well as an advanced packaging candidate utilizing a novel adjuvant and recombinant technology.

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