Emergent BioSolutions Reports Financial Results for Fourth Quarter and Full Year 2012

Emergent BioSolutions Inc. (NYSE: EBS) announced today its financial results for the fourth quarter and full year ended December 31, 2012.

Total revenues for 2012 were $281.9 million as compared to $273.4 million in 2011, and net income for 2012 was $23.5 million, or $0.65 per basic share, as compared to $23.0 million, or $0.65 per basic share, in 2011.

For the fourth quarter 2012, total revenues were $94.6 million as compared to $107.9 million in 2011, and net income was $16.1 million, or $0.45 per basic share, as compared to $28.7 million, or $0.80 per basic share, in 2011.

Robert Kramer, executive vice president and chief financial officer of Emergent BioSolutions, commented, “Our operational achievements in 2012 marked another solid year of performance for the company, highlighted by our ongoing deliveries of BioThrax to the SNS, continued advancement of our many biodefense development contracts, progress toward licensure of Building 55, and securing designation of our Baltimore facility by BARDA as one of three Centers for Innovation in Advanced Development and Manufacturing in the nation. We look to build upon these successes in 2013 as we take definitive steps toward achieving the financial and operational goals we set out in our growth plan.”

2012 Key Operational Accomplishments

• Received FDA approval for BioThrax^® (Anthrax Vaccine Adsorbed) administered in a three-dose primary series with booster doses at 12 and 18 months and annually thereafter;
• Advanced toward a post-exposure prophylaxis indication for BioThrax by initiating a pivotal antibiotic non-interference study;
• Progressed toward licensure of Building 55 by initiating manufacture of consistency lots;
• Secured a contract option from BARDA for development of PreviThrax™ (Recombinant Protective Antigen Anthrax Vaccine, Purified);
• Partnered with BARDA to establish a Center for Innovation in Advanced Development and Manufacturing;
• Initiated a Phase 2 study of TRU-016 in combination with bendamustine in patients with relapsed refractory Chronic Lymphocytic Leukemia (CLL);
• Initiated a Phase 1b study of TRU-016 in combination with rituximab in patients with previously untreated CLL; and
• Announced a three-year plan for growth and established key financial and operational goals to be achieved by year-end 2015.

2012 Key Financial Results

Product Sales

For the full twelve months of 2012, product sales were $215.9 million, an increase of $13.5 million, or 7 percent, from $202.4 million in 2011, primarily due to a 15 percent increase in the number of doses of BioThrax delivered.

For 4Q 2012, product sales were $74.4 million, a decrease of $7.3 million, or 9 percent, from $81.7 million in 4Q 2011, primarily due to a 4 percent decrease in the number of BioThrax doses delivered and a decrease in the average sales price per dose.

Contracts and Grants Revenues

For the full twelve months of 2012, contracts and grants revenue was $66.0 million, a decrease of $5.0 million, or 7 percent, from $71.0 million in 2011. The decrease in contracts and grants revenue was primarily due to decreased revenues from our agreements with Abbott and Pfizer.

For 4Q 2012, contracts and grants revenue was $20.3 million, a decrease of $6.0 million, or 23 percent, from $26.3 million in 4Q 2011. The decrease in contracts and grants revenue was primarily due to decreased revenues from our agreement with Abbott.

Cost of Product Sales

For the full twelve months of 2012, cost of product sales was $46.1 million, an increase of $3.9 million, or 9 percent, from $42.2 million in 2011. The increase in 2012 was primarily attributable to the 15 percent increase in the number of BioThrax doses delivered.

For 4Q 2012, cost of product sales was $15.1 million, an increase of $0.8 million, or 6 percent, from $14.3 million in 4Q 2011. The increase was primarily attributable to a 4 percent decrease in the number of BioThrax doses delivered.

Research and Development

For the full twelve months of 2012, gross research and development expenses were $120.2 million, a decrease of $4.6 million, or 4 percent, from $124.8 million in 2011. This decrease primarily reflects lower contract service costs.

For 4Q 2012, gross research and development expenses were $35.9 million, an increase of $6.6 million, or 22 percent, from $29.4 million in 4Q 2011. This increase primarily reflects higher contract service costs and an upfront payment for an exclusive license to certain rights to pandemic influenza products.

Net R&D expense is calculated as research and development expenses less development contract and grant reimbursements and the net loss attributable to non-controlling interests. For the full twelve months of 2012 and 2011, net R&D expenses were $48.8 million and $47.0 million, respectively. For 4Q 2012 and 2011, net R&D expenses were $14.6 million and $1.3 million, respectively.

Selling, General and Administrative

For the full twelve months of 2012, general and administrative expenses were $76.0 million, an increase of $1.7 million, or 2 percent, from $74.3 million in 2011.

For 4Q 2012, selling, general and administrative expenses were $19.5 million, an increase of $1.2 million, or 7 percent, from $18.3 million in 4Q 2011. The twelve month and 4Q increases were primarily due to increased spending related to professional and personnel costs.

Financial Condition and Liquidity

Cash and cash equivalents combined with investments at December 31, 2012 was $141.7 million compared to $145.9 million at December 31, 2011. Additionally, at December 31, 2012, the accounts receivable balance was $96.0 million, as compared to $74.2 million at December 31, 2011. The accounts receivable balance for both periods is comprised primarily of unpaid amounts due related to shipments of BioThrax accepted by the US government.

2013 Forecast

For 2013, the company is reaffirming its financial forecast of total revenue of $290 to $310 million, split between product sales of $230 to $240 million and contracts and grants revenue of $60 to $70 million. The company also forecasts 2013 net income of $20 to $30 million.

For the first quarter of 2013, the company anticipates total revenues of $40 to $50 million.

Conference Call and Webcast

Company management will host a conference call at 5:00 pm Eastern on March 7, 2013 to discuss these financial results. The conference call will be accessible by dialing 888/679-8038 or 617/213-4850 (international) and providing passcode 76232628. A webcast of the conference call will be accessible from the company’s website at www.emergentbiosolutions.com, under “Investors”. A replay of the conference call will be accessible, approximately two hours following the conclusion of the call, by dialing 888/286-8010 or 617/801-6888 and using the passcode 28122043. The replay will be available through March 21, 2013. The webcast will be archived on the company’s website, www.emergentbiosolutions.com, under “Investors”.

About Emergent BioSolutions Inc.

Emergent BioSolutions is a specialty pharmaceutical company seeking to protect and enhance life by offering specialized products to healthcare providers and governments to address medical needs and emerging health threats. Additional information about the company may be found at www.emergentbiosolutions.com.

Follow us on twitter: @emergentbiosolu

Safe Harbor Statement

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, including our expected revenue growth and net income, and any other statements containing the words “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates” and similar expressions, are forward-looking statements. These forward-looking statements are based on our current intentions, beliefs and expectations regarding future events. We cannot guarantee that any forward-looking statement will be accurate. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Investors are, therefore, cautioned not to place undue reliance on any forward-looking statement. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events or circumstances.

There are a number of important factors that could cause the company’s actual results to differ materially from those indicated by such forward-looking statements, including appropriations for BioThrax^® procurement; our ability to obtain new BioThrax^® sales contracts; our plans to pursue label expansions and improvements for BioThrax^®; availability of funding for our US government grants and contracts; our ability to identify and acquire or in license products and product candidates that satisfy our selection criteria; the potential benefits of our existing collaboration agreements and our ability to enter into selective additional collaboration arrangements; our ability to expand our manufacturing facilities and capabilities; the rate and degree of market acceptance and clinical utility of our products; the success of our ongoing and planned development programs; the timing of and our ability to obtain and maintain regulatory approvals for our product candidates; and our commercialization, marketing and manufacturing capabilities and strategy. The foregoing sets forth many, but not all, of the factors that could cause actual results to differ from our expectations in any forward-looking statement. Investors should consider this cautionary statement, as well as the risk factors identified in our periodic reports filed with the SEC, when evaluating our forward-looking statements.

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