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Emergent BioSolutions (NYSE:EBS) reported earnings on Monday, but investors are still waiting for the big news from the biodefense specialist: terms of the new U.S. government contract for its anthrax vaccine BioThrax.

Emergent BioSolutions results: The raw numbers


Q3 2016 Actuals

Q3 2015 Actuals

Growth (YOY)


$143 million

$158 million


Income from continuing operations

$20.4 million

$42.1 million


Earnings per share




Data source: Company press release.

What happened with Emergent BioSolutions this quarter?

  • Emergent spun off Aptevo Therapeutics (NASDAQ:APVO) on Aug. 1, shedding its high-cost biologic drugs division and making the company a pure play on biodefense.
  • Revenue fell year over year, but that wasn't unexpected since the CDC elected to buy all of the remaining doses of Emergent BioThrax under the old contract at the end of the quarter, so some doses weren't delivered until the fourth quarter.
  • Emergent signed a contract from the Biomedical Advanced Research and Development Authority (BARDA) to pay for development of its next-generation anthrax vaccine NuThrax, which could be worth as much as $1.6 billion.
  • The FDA signed off on Emergent BioSolutions' new larger manufacturing plant for BioThrax, dubbed Building 55.
  • But it's still unknown how much product made in the new building will still be sold to the U.S. government because the renewal of the contract to sell BioThrax hasn't been signed yet, although Emergent expects will happen "in the coming weeks."

What management had to say

"We expect our growth to be driven by diversification of our product and revenue mix, both organically and through M&A, and the expansion of our customer base," Dan Abdun-Nabi, Emergent's president and CEO said. Later he further commented on potential acquisitions which would be late in development or already approved, "They're intended to be revenue generators and contributing to the bottom line within 12 months following the acquisition."

The new Building 55 offers more capacity, which could result in sales of BioThrax to other countries, but Bob Kramer, Emergent's CFO and treasurer, pointed out that the sales to other countries are likely to be a bundled deal with its other products: "We're taking a portfolio approach because oftentimes customers have some interest in countermeasures for a whole broad portfolio of targets, and so we think about it more in terms of the cross-functional needs as the customers rather than simply targeting one product or another."

Looking forward

The next near-term event for Emergent BioSolutions should be the new contract for BioThrax. The terms of the deal will be key to valuing the company in the short term.

Longer term, the government wants to switch over to NuThrax, which requires one less dose and therefore protects patients quicker. Sales to the government could start in late 2018 or early 2019 as soon as Emergent BioSolutions secures an Emergency Use Authorization from the FDA.

Between now and then, Emergent should release some more details on its plan to diversify away from BioThrax/NuThrax through acquisitions and development of products internally.

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