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Emergent (EBS) Earnings & Revenues Miss Estimates in Q1

Emergent BioSolutions Inc.’s EBS first-quarter 2019 loss of 13 cents per share significantly came in against the Zacks Consensus Estimate of earnings of 13 cents. Moreover, the loss was wider than the year-ago loss of 3 cents.

Revenues in the reported quarter soared 61.8% from the prior-year period’s $190.6 million, primarily backed by high product sales owing to the company’s recent acquisitions. The top line, however, missed the Zacks Consensus Estimate of $205 million.

Shares of Emergent have decreased 9.9% so far this year versus the industry’s increase of 2.9%.


Quarter in Detail

Total product sales rose a massive 102% to $153 million from the year-earlier quarter’s tally. This revenue uptick was mainly on the back of contribution from Narcan nasal spray, which was acquired from Adapt Pharma last October and small pox vaccine, ACAM2000, acquired from Sanofi SNY in the fourth quarter of 2017.

BioThrax’s sales plunged 42% year over year in the reported quarter to $11.7 million. Other product sales declined 10.6% to $30.2 million from $33.8 million in the comparable quarter last year. Newly acquired product Narcan (naloxone HCl) nasal spray added $65 million to product sales.

Other product sales include contribution from anthrax monoclonal antibody, raxibacumab which was also acquired in the fourth quarter of 2017 from GlaxoSmithkline GSK.

Contracts, grants and collaboration revenues surged 36% year over year to $21.7 million, primarily owing to greater R&D activities associated with certain development funding programs, most notably, the anthrax vaccine AV7909.

Contract manufacturing revenues decreased 39% to $15.9 million compared with the year-ago tally. This downside was primarily due to the contracted service work that took place in first-quarter 2018 but did not recur in the reported quarter.

The company recorded adjusted EBITDA of $7.4 million in the reported quarter as compared to $3.3 million in 2018, reflecting a jump of 124.2%.

2019 Outlook

Emergent retained its previously issued guidance for earnings and sales. It expects revenues in the range of $1.06-$1.14 billion in 2019. The company anticipates adjusted net income in the band of $150-$180 million and adjusted EBITDA in the bracket of $280-$310 million.

In the second quarter of 2019, the company anticipates total revenues within $200-$220 million.

Other Updates

In January, Emergent’s board of directors appointed Robert G. Kramer, Sr. as the company’s new president and CEO. He will succeed Daniel J. Abdun-Nabi, the current CEO, who decided to retire and also quit as a board member, effective Apr 1, 2019.

Last month, Emergent announced positive interim results from the mid-stage study on its chikungunya vaccine candidate, CHIKV-VLP. The company is evaluating the safety and immunogenicity of CHIKV-VLP in a phase II program across a series of dosing regimens.

The chikungunya virus has a major unmet medical need with no vaccines presently available. With the positive interim outcomes, Emergent plans to finalize the development plan and initiate a pivotal assessment on the candidate next year. Notably, last May, CHIKV-VLP was granted a Fast Track designation by the FDA.

Moreover, this March, Emergent initiated a phase III study to evaluate AV7909 for the post-exposure prophylaxis of anthrax disease. The candidate is designed to bring about a faster immune response in patients as compared to the currently available anthrax vaccine.

Emergent Biosolutions Inc. Price, Consensus and EPS Surprise

Zacks Rank & Key Pick

Emergent currently carries a Zacks Rank #5 (Strong Sell).

A better-ranked stock in the healthcare sector is PDL BioPharma, Inc. PDLI, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PDL BioPharma’s earnings estimates have been revised 100% upward for 2019 and 30% for 2020 over the past 60 days. The stock has gained 15.5% year to date.

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