Emergent BioSolutions (NYSE:EBS) released fourth-quarter earnings last week. With sales of BioThrax to the government firing along, investors should be focused on increasing manufacturing of BioThrax and the spinoff of its biosciences business, Aptevo Therapeutics.

Emergent BioSolutions results: The raw numbers


Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)


$168 million

$148 million


Income From Operations

$49.9 million

$44.6 million


Income Per Share




What happened with Emergent BioSolutions this quarter?


    The year-over-year increase in sales in the fourth quarter was primarily due to a jump in sales of BioThrax that rose 27% year over year.
  • Sales of BioThrax should be able to pick up further once the Food and Drug Administration signs off on the new manufacturing facility, dubbed Building 55. Emergent BioSolutions plans to complete the reanalysis of the data that was requested by the FDA in the first half of the year.
  • We'd rather not see income growing slower than revenue, but some of the discourse has to do with expenses associated with the spinoff of Aptevo Therapeutics, so that's a one-time expense that'll go away once the spinoff is complete toward the middle of the year. Emergent BioSolutions also has more outstanding shares compared to a year ago, which hurt earnings per share.
  • Emergard, the company's recently acquired military-grade auto-injector platform was selected by the U.S. Department of Defense and Battelle for testing.

What management had to say
While most of Emergent BioSolutions' sales are stateside, management is looking to expand globally. "With an expanding product portfolio, we see real potential to meaningfully grow our international sales over time," said Dan Abdun-Nabi, Emergent BioSolutions' president and CEO. "We are targeting to achieve at least 10% of our revenues from ex-US sources by 2020."

As you may recall, Emergent BioSolutions is taking a two-pronged approach to answering the FDA's questions about showing equivalence between the old manufacturing and manufacturing at Building 55, with the quicker results giving the company the potential for a faster approval. "If they come back to us and say, 'You know what? We're satisfied with what you have provided; it's good enough; let's stop here,' then the process gets accelerated," Abdun-Nabi said.

Looking forward
Management is looking for revenue of $600 million to $630 million, resulting in adjusted income of $90 million to $100 million in 2016. First-quarter revenue is expected to be in the range of $105 million to $120 million, so look for revenue to grow as the year progresses.

If it hits the midpoints of the 2016 guidance, revenue will be up about 17% while adjusted income will rise more than 25%. The difference is likely due to shedding Aptevo Therapeutics, which contributes very little revenue, but has high research and development costs.

Looking further forward, the testing of Emergard is expected to be completed this year, which could result in sales in the years ahead.

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