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Emergent BioSolutions, Inc. (EBS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:

We are impressed by the measures announced by Emergent BioSolutions in September this year to boost its bottom line. The company aims to drive growth by improving efficiencies and trimming its cost structure. We are also positive on the company securing a $29 million U.S. contract for developing a dry formulation of NuThrax a next generation Anthrax vaccine. Moreover, the company's efforts to get a manufacturing facility approved which has the capacity to produce more than three times the existing amount of BioThrax is on track with the initiation of the fifth and final study needed for licensure. In view of the above positives we are upgrading the stock to Outperform.

Overview:

Headquartered in Rockville, MD and founded in 1998, Emergent BioSolutions, Inc. is a specialty pharmaceutical company. The company aims to offer specialized products to healthcare providers and governments to fulfill unmet medical needs and combat threats posed by serious diseases to human health.

The company, which operates in multiple countries across the globe, reports revenues through two segments -- Biodefense and Biosciences. The company acquired Cangene Corporation for approximately $222 million in Feb 2014. The acquisition significantly boosted Emergent BioSolutions' portfolio.

The Biodefense segment focuses on government-sponsored development and supply of measures to counter bioterrorism threats. Prior to the Cangene acquisition, the unit had only two marketed products BioThrax and Reactive Skin Decontamination Lotion (RSDL). While BioThrax is marketed for anthrax prevention, RSDL is available for removing or neutralizing the effects of chemical warfare agents from the skin, including nerve agents, mustard gas and toxins. BioThrax is the sole vaccine to be approved for pre-exposure prophylaxis of anthrax disease. RSDL was added to Emergent BioSolutions' product portfolio following its acquisition of Bracco Diagnostics Inc.'s healthcare protective products unit in Aug 2013.

The Cangene acquisition took the number of revenue generating products at the segment to five. The new additions are Bat (botulism antitoxin heptavalent (A, B, C, D, E, F, G)-equine), Vigiv (vaccinia immune globulin intravenous (human)) and Aigiv (anthrax immune globulin intravenous (human)).

Bat is approved in the U.S. for the treatment of suspected or documented exposure to botulinum neurotoxin A, B, C, D, E, F or G. Vigiv has gained approvals in the U.S. and Canada for post-exposure prophylaxis of vaccinia (a virus against small pox). Aigiv, though not yet approved by any regulatory agency, is purchased by the U.S. Health & Human Services (HHS) for delivery into the Strategic National Stockpile to combat a crisis under an emergency use authorization.

The U.S. government is the primary purchaser of Emergent BioSolutions' Biodefense segment products. The unit also has multiple pipeline candidates such as NuThrax and PreviThrax. In Sep 2014, the company was awarded a five-year contract worth up to $29 million by the National Institutes of Health's (NIH) National Institute of Allergy and Infectious Diseases (NIAID) for developing a dry formulation of NuThrax

The Biosciences division focuses on developing therapeutics and vaccines in the fields of hematology/oncology, transplantation and infectious disease. The acquisition of Cangene brought four marketed products to the division WinRho SDF (immune thrombocytopenic purpura and to prevent hemolytic disease of the newborn), HepaGam B (approved in the U.S. for post-exposure prophylaxis for hepatitis B), Varizig (approved in the U.S. for post-exposure prophylaxis for varicella (chickenpox) in high-risk patients) and Episil (pain). The acquisition of Cangene also added a contract manufacturing services business which operates under the Biosciences division.

In 2012, the Biodefense segment accounted for 98.1% of the company's total revenues of $281.9 million. The company derived 76.4% of its 2012 revenues from selling BioThrax to the U.S. government. Emergent BioSolutions is under contract to deliver up to 44.75 million doses of the vaccine to the U.S. Strategic National Stockpile (SNS) over a five-year period ending Sep 30, 2016. This contract with the Centers for Disease Control and Prevention (CDC) is worth up to $1.25 billion.

In Oct 2014, after a detailed review the company decided to bring changes in the Biodefense and Biosciences segments to drive earnings growth.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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