Emergent BioSolutions Inc. (EBS)
Q1 2011 Earnings Call
May 5, 2011 5:00 pm ET
Robert G. Burrows – Vice President, Investor Relations
Fuad El-Hibri – Chairman and Chief Executive Officer
R. Don Elsey – Chief Financial Officer
Eric Schmidt – Cowen & Company
Greg Wade – Wedbush Morgan
Karen Jay – JPMorgan
Previous Statements by EBS
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I would now like to turn the presentation over to Mr. Bob Burrows. Please proceed, sir.
Robert G. Burrows
Thanks, Anne. Good afternoon ladies and gentlemen. Again, my name is Bob Burrows, Vice President of Investor Relations for Emergent. Thank you for joining us today as we discuss Emergent BioSolutions financial results for the first quarter of 2011. 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 May 05, 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?
Thank you, Bob. Good afternoon, everyone and thank you for joining us on our earnings call today. In my prepared comments, I will review our financial performance for the first quarter of 2011, provide guidance on the second quarter revenue, discuss relevant updates to our business, and highlight key near-term milestones.
Before I begin, I’d like to take a moment to comment on our news earlier this week. On Monday, May 2, we announced a modification to our current BioThrax procurement contract with CDC. The contract was expanded by 3.4 million doses with a total additional value of up to $101 million. This brings the total number of does to be delivered the under the contract to 17.9 million. Deliveries are contracted to be completed by the third quarter of this year.
In addition, we continue to have discussions with CDC representatives regarding to form multi-year procurement contract. We anticipate an award by the end of the third quarter this year.
Now, let me review our first quarter financial results. We achieved total revenues of $18.5 million and realized a net loss of $21 million. As you may remember from our March earnings call, we anticipated reduced deliveries in the first quarter. We redeployed our potency testing capacity primarily to the qualification of replacement reference standards. This process, which is required to enable continued release of BioThrax doses, has now been substantially completed.
Moving onto guidance, we maintain our full year 2011 guidance of total revenues of $320 million to $340 million. We expect second quarter total revenues of $80 million to $90 million, reflecting return to normal levels of product growth. We anticipate catching up to our total revenue guidance by the end of the year. We also maintained our full year 2011 net income guidance of $35 million to $45 million.
Let me now discuss the relevant update to our business since our March earnings call, beginning with our BioDefense division. I’m pleased to report substantial progress across key programs.
We completed multiple engineering runs in Building 55 under our funded multi-year program to license the large-scale manufacturer BioThrax. We completed qualification activities and are preparing a BLA supplement to obtain regulatory approval for a second fill/finish contractor for BioThrax as part of our risk mitigation strategy.
We completed dosing patients in the Phase I safety study for both Thravixa, our monoclonal Anthrax therapeutic and NuThrax, which combines BioThrax with an old novel regimen. We also submitted proposals totaling over $95 million to fund continued development of Anthrivig, our polyclonal Anthrax therapeutic, Thravixa, and post-exposure indication vaccine.
With respect to our BioSciences division, the last of about 2800 infants have been vaccinated and they’re at Phase IIb efficacy trial evaluating our MVA based TB vaccine candidate. This is the largest infant clinical study for a next generation TB vaccine conducted to date. We’re pleased to be developing this product in partnership with the University of Oxford, Aeras, The Wellcome Trust, (inaudible) our South African CRO. We look forward to a final study report in the second half of 2012.