Emergent (EBS) Misses on Q1 Earnings, Retains 2018 View

Emergent BioSolutions Inc. EBS incurred a loss of 3 cents per share in the first quarter of 2018, significantly missing the Zacks Consensus Estimate of earnings of 30 cents. Moreover, the loss came in against the company’s reported earnings of 29 cents in the year-ago period.

Shares of Emergent were down almost 1.5% on May 3 in after-hours trading. However, the stock has outperformed the industry so far this year with a gain of 8.8% against the industry's decrease of 13.1%.

 

Revenues in the reported quarter inch up 0.8% from the year-ago period to $117.8 million, primarily on the back of substantially higher contract manufacturing revenues. This was however, partially offset by lower product sales and contracts plus grants revenues. Moreover, the top line missed the consensus mark of $137 million.

Quarter in Detail

Total product sales decreased 8% to $75.8 million from the year-earlier quarter, mainly owing to lower sales of Emergent’s anthrax vaccine, BioThrax and botulism antitoxin, BAT (Botulism Antitoxin Heptavalent). However, this was partially offset by an increase in sales of other product like raxibacumab (anthrax monoclonal antibody) and ACAM2000 (smallpox vaccine).

Notably, raxibacumab and ACAM2000 were acquired by Emergent from GlaxoSmithkline GSK and Sanofi SNY, respectively, in the fourth quarter of 2017.

Contracts, grants and collaboration revenues declined 8% year over year to $15.9 million, primarily due to decrease in revenues following the completion of multiple contracts with the U.S. government as well as reduction in the R&D activities, related to certain ongoing funded development programs.

On the flip side, contract manufacturing revenues soared 48% to $26.1 million compared with the year-ago figure. This upside was primarily owing to the completion of a milestone payment regarding the expansion of specific contract manufacturing capabilities at Emergent’s Lansing site.

Research and development expenses were $29.1 million, up 42% from the comparable quarter last year. This rise is attributable to higher contract development services performed for next-generation anthrax vaccine, NuThrax as well as cost associated with technology transfer for manufacturing raxibacumab at the company’s Bayview manufacturing site in Baltimore.

Selling, general and administrative expenses also increased 14.2% to $40.2 million due to higher compensation expense and professional services fees.

2018 Outlook

Emergent maintained its previously issued revenue guidance in the range of $715-$755 million in 2018. The Zacks Consensus Estimate for current-year top line is pegged at $733.61 million.

The company continues to expect adjusted net income between $110 million and $125 million.

Second-Quarter 2018 Outlook

The company anticipates total revenues between $205 million and $230 million in the second quarter of 2018. The Zacks Consensus Estimate is pegged at $172 million during the same period.

Other Updates

In April, Emergent announced successful completion of the Mutual Recognition Procedure for market authorization of its anthrax vaccine, BioThrax across five Concerned Member States within the European Union including Italy, the Netherlands, Poland, the U.K. and France.

Meanwhile, in February, Emergent was awarded a contract by the Centers for Disease Control and Prevention valued at $26 million over a 12-month period for the continued supply of Vaccinia Immune Globulin Intravenous into the U.S. Strategic National Stockpile for the treatment of complications due to smallpox vaccination.

Additionally, in January, Emergent initiated a phase II dose ranging study to evaluate the safety, pharmacokinetics and clinical benefit of the company’s pipeline candidate, FLU-IGIV, developed as an intravenous treatment for serious illness caused by influenza A infection in hospitalized patients. The phase II study will enroll approximately 75 adult patients at up to 50 sites within the United States.

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise | Emergent Biosolutions Inc. Quote

 

Zacks Rank & Key Picks

Emergent carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Ligand Pharmaceuticals Incorporated LGND, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates have moved north from $4.20 to $4.43 for 2018 in the last 30 days. The company delivered a positive surprise in three of the trailing four quarters with an average beat of 24.88%. Share price of the company has surged 36.9% over a year.

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