Emergent Biosolutions, Inc. (EBS)

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Emergent BioSolutions, Inc. (EBS)

Q4 2010 Earnings Conference Call

March 10, 2011, 5:00 pm ET


Bob Burrows – VP, IR

Fuad El-Hibri – Chairman and CEO

Don Elsey – CFO


Cory Kasimov – JP Morgan

Greg Wade – Wedbush

David Moskowitz – Madison Williams

Eric Schmidt – Cowen



Good day, ladies and gentlemen, and welcome to the Emergent BioSolutions fourth quarter and full year 2010 financial results conference call. My name is Jeff and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today Mr. Robert Burrows, Vice President of Investor Relations. Please proceed, Mr. Burrows.

Robert Burrows

Thank you, Jeff. Thank you everyone for joining us today as we discuss Emergent BioSolutions financial results for 4Q and full year 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 filings 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 was held and recorded on March 10, 2011. 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 Investors/Press Releases.

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 2010 and forecast for 2011. Discuss major accomplishments achieved during 2010 and highlight key milestones for 2011.

To being, let me review our financial results for 2010 we achieved revenues of $286 million and net income of $52 million this financial performance reflects the strengths of our core Anthrax franchise and demonstrates our continued success in growing revenue from the sale of our flagship product BioThrax. This performance also reflects our continued ability to manage our overall expenditures while investing in the advancement for our pipeline of vaccines and therapeutics targeting key disease areas.

These results also take into account our successful acquisition of Trubion in October last year. Also today we reaffirm our 2011 forecast for total revenues of $320 million to $340 million and net income of $35 million to $45 million. In 2010, we made progress on a number of key initiatives. First, let me address our accomplishments related to BioThrax I’m pleased to report that in 2010 we delivered 8.9 million doses of BioThrax to the strategic national stock pile under our current contract. This delivery level was achieved through higher than normal production yields combined with gaining an extra month production through a shift in the timing of our annual maintenance shutdown.

Moreover in December we received notice that CDC intends to expand the current contract to allow for delivery for up to an additional 3.4 million doses of BioThrax. We are diligently working on securing this contract expansion. Beyond that, we continue discussions with CDC representatives regarding a follow on procurement contract. We anticipate this contract will cover a multi-year period and will be structured to secure substantially all of our projected BioThrax capacity in Building 12. We expect to finalize this follow on contract before the end of September this year.

Let me now review the major accomplishments in the area of business development. First, the BioThrax scale up contract, in mid July BARDA awarded us a contract valued at up to $107 million. This contract funds activity through FDA license for large scale manufacturing of BioThrax at our state-of-the-art facility in Lansing. In Building 55 we anticipate the future annual output to be at least 26 million doses of BioThrax which is a significant increase over our current capacity of 7 million to 9 million doses a year. Since the award we initiated scale-up activities in Building 55 and completed a number of characterization run we also made progress on gearing up activities in support of process validation which we expect will allow the initiation of the manufacturing consistency loss in late 2011. We believe that the U.S. government considers this contract a key component in meetings its stated requirement of 75 million doses of licensed Anthrax vaccine for the SMS.

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