Emergent BioSolutions Inc. (EBS)
31st Annual J.P. Morgan Healthcare Conference Call
January 08, 2013, 01:00 pm ET
Dan Abdun-Nabi - President & CEO
Karen Jay - J.P. Morgan
Karen Jay - J.P. Morgan
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And with that I'll turn it over to the CEO, Dan Abdun-Nabi.
Good morning ladies and gentlemen and thanks for attending the Emergent presentation today and a special thank you to J.P. Morgan for the invitation to participate in this year’s Annual Healthcare Conference. We really appreciate it.
Just a reminder, my presentation today will include forward-looking statements and actual results might differ, so I encourage you to review our SEC filings for a complete description of the risks and uncertainties facing our business.
Just in terms of overview, Emergent is a specialty pharmaceutical company that seeks to protect and enhance life by offering specialized products to healthcare providers and governments to address medical needs and emerging health threats. We are uniquely positioned for growth and that's what really this presentation is all about. What's the growth plan for Emergent? I would like to walk you through that.
Before doing so, let's talk about the history a little bit. We were founded in 1998 and that was through the acquisition of MBPI, Michigan Biologics Products Institute; a state-owned laboratory in Lansing, Michigan over the last 15 years or so. We have expanded dramatically. We have eight locations now worldwide spanning across the US, the West Coast, the Midwest, the East Coast, Western Europe and an outpost in Singapore to support sales and marketing operations.
We are about 850 employees globally and we have one marketed product that is BioThrax. BioThrax is the only FDA approved vaccine for the prevention of anthrax disease. We have five clinical stage candidates. Three of them operate in the BioDefense space and yes, three of them operate in the BioDefense space and we have two that operate outside in other specialty markets in the infectious disease space. We have a candidate that is addressing tuberculosis disease, that’s called MVA85A. We are completing a Phase IIb efficacy study and we expect to see some data within the coming month or so and the results of that study, it is a blinded trial, so the data should be out in about a month.
The other candidate TRU-016 is targeting CLL. It is in a Phase II study right now underway. It started last year. It's a combination study with bendamustine and we expect to see some data forthcoming the middle of this year. We are focused on two specialty markets, BioDefense as well as other specialty areas which I will talk about as part of our growth plan.
In terms of financials set of glance, for 2012, we recently announced the preliminary results for the year with revenues coming in between $280 million and $284 million and bottomline, $21 million to $24 million. Significantly, our cash position is quite strong. Cash investments and accounts receivable coming in at $235 million; so a very strong balance sheet. Historically, we’ve had significant growth year-over-year both in terms of revenue and net income. Over the last ten years, we're seeing a CAGR of in excess of 17% for both the revenue and the net income side.
Over the last five years, a very solid financial performance. You can see on the left, on top, total revenues continue to decline and net income we have been positive in terms of net income. Every year since the year 2002 and that has allowed us to accumulate a significant cash investment and account receivable balance as I indicated for last year targeting around $235 million.
Significantly, I want to point out a couple of things; one is on the revenue side, you can see the last few years we started to flatten out and that is really attributable to the fact that BioThrax, the licensed product that I mentioned is capacity constrained. We manufacture it in our facilities in Lansing; we are able to produce somewhere between 7 million and 9 million doses per annum; we are at the max and we are delivering every dose that we can produce to the US government for purposes of stock piling in their strategic national stock pile. As a result, we are evaluating and in the process of completing expansion plans for BioThrax, it’s known as Building 55, a large scale facility and I will talk a little bit about that in terms of how that drives our growth going forward.
On the net income side, we have been historically over the last five years reinvesting our cash into our pipeline in order to advance the portfolio that’s within Emergent. And consciously, we want to maintain profitability, but we have been targeting a $20 million number in terms of net income. The philosophy that we have adopted has enabled us to advance our pipeline to the state now where we are going to see some efficacy results on the TB vaccine as well as see some promising hopefully results on our TRU-016 candidate middle of this year.
However, as we sat back, when I was appointed CEO we sat back and evaluated what the growth plan ought to be for Emergent to bring us back to our more traditional historical growth over the last 10 years; and we developed the plan that was really designed to grow both topline and bottomline growth from now to the end of 2015.