(Mark One)
|
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2017
|
|
OR
|
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
|
Delaware
|
14-1902018
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
400 Professional Drive, Suite 400
|
|
Gaithersburg, Maryland
|
20879
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Part I. Financial Information
|
|
|
|
Part II. Other Information
|
|
§ |
appropriations for the procurement of BioThrax
®
(Anthrax Vaccine Adsorbed) and our other public health threat products;
|
§ |
our ability to perform under our contracts with the U.S. government related to BioThrax and our other public health threat products, including the timing of and specifications relating to deliveries;
|
§ |
our ability to obtain Emergency Use Authorization pre-approval for NuThrax from the U.S. Food and Drug Administration;
|
§ |
the availability of funding for our U.S. government grants and contracts;
|
§ |
our ability to secure follow-on procurement contracts for our public health threat products that are under current contracts that will be expiring;
|
§ |
our ability to successfully execute our growth strategy and achieve our financial and operational goals;
|
§ |
our ability to successfully integrate and develop the products or product candidates, programs, operations and personnel of any entities, businesses or products that we acquire, including our recently completed acquisitions of the ACAM2000 business from Sanofi Pasteur Biologics, LLC and raxibacumab from GlaxoSmithKline LLC and the timing and receipt of required FDA approvals for actions contemplated in connection with our integration of these products;
|
§ |
our ability to identify and acquire companies or in-license products or late-stage product candidates that satisfy our selection criteria;
|
§ |
our ability to realize synergies and benefits from acquisitions or in-licenses within expected time periods or at all;
|
§ |
our ability to successfully identify and respond to new development contracts with the U.S. government, as well as successfully maintain, through achievement of development milestones, current development contracts with the U.S. government;
|
§ |
our ability to obtain and maintain intellectual property protection for our products and product candidates;
|
§ |
our ability and plans to expand our manufacturing capabilities and utilize the capacity of our manufacturing facilities;
|
§ |
our ability and the ability of our contractors and suppliers to maintain compliance with current good manufacturing practices and other regulatory obligations;
|
§ |
the results of regulatory inspections;
|
§ |
the operating and financial restrictions placed on us and our subsidiaries under our senior secured credit facility;
|
§ |
the outcome of the class action lawsuit filed against us and possible other future material legal proceedings;
|
§ |
the rate and degree of market acceptance and clinical utility of our products;
|
§ |
the success of our ongoing and planned development programs, non-clinical activities and clinical trials of our product candidates;
|
§ |
our ability to obtain and maintain regulatory approvals for our product candidates and the timing of any such approvals;
|
§ |
the success of our commercialization, marketing and manufacturing capabilities and strategy; and
|
§ |
the accuracy of our estimates regarding future revenues, expenses, capital requirements and needs for additional financing.
|
Emergent BioSolutions Inc. and Subsidiaries
|
||||||||
(in thousands, except share and per share data)
|
||||||||
September 30, 2017
|
December 31, 2016
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
340,991
|
$
|
271,513
|
||||
Restricted cash
|
1,043
|
-
|
||||||
Accounts receivable, net
|
129,357
|
138,478
|
||||||
Inventories
|
68,889
|
74,002
|
||||||
Income tax receivable, net
|
-
|
9,996
|
||||||
Prepaid expenses and other current assets
|
15,754
|
16,229
|
||||||
Total current assets
|
556,034
|
510,218
|
||||||
Property, plant and equipment, net
|
386,457
|
376,448
|
||||||
Intangible assets, net
|
29,202
|
33,865
|
||||||
Goodwill
|
41,001
|
41,001
|
||||||
Deferred tax assets, net
|
4,864
|
6,096
|
||||||
Other assets
|
6,644
|
2,483
|
||||||
Total assets
|
$
|
1,024,202
|
$
|
970,111
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
30,111
|
$
|
34,649
|
||||
Accrued expenses and other current liabilities
|
3,918
|
6,368
|
||||||
Accrued compensation
|
32,626
|
34,537
|
||||||
Notes payable
|
-
|
20,000
|
||||||
Contingent consideration, current portion
|
2,393
|
3,266
|
||||||
Income taxes payable
|
1,875
|
-
|
||||||
Deferred revenue, current portion
|
4,509
|
7,036
|
||||||
Total current liabilities
|
75,432
|
105,856
|
||||||
Contingent consideration, net of current portion
|
9,398
|
9,919
|
||||||
Long-term indebtedness
|
248,994
|
248,094
|
||||||
Deferred revenue, net of current portion
|
24,966
|
8,433
|
||||||
Other liabilities
|
1,702
|
1,604
|
||||||
Total liabilities
|
360,492
|
373,906
|
||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at both September 30, 2017 and December 31, 2016
|
-
|
-
|
||||||
Common stock, $0.001 par value; 200,000,000 shares authorized, 41,807,978 shares issued and 41,382,429 shares outstanding at September 30, 2017; 40,996,890 shares issued and 40,574,060 shares outstanding at December 31, 2016
|
41
|
41
|
||||||
Treasury stock, at cost, 425,549 and 422,830 common shares at September 30, 2017 and December 31, 2016, respectively
|
(6,503
|
)
|
(6,420
|
)
|
||||
Additional paid-in capital
|
370,855
|
352,435
|
||||||
Accumulated other comprehensive loss
|
(3,815
|
)
|
(4,331
|
)
|
||||
Retained earnings
|
303,132
|
254,480
|
||||||
Total stockholders' equity
|
663,710
|
596,205
|
||||||
Total liabilities and stockholders' equity
|
$
|
1,024,202
|
$
|
970,111
|
(in thousands, except share and per share data)
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
Revenues:
|
||||||||||||||||
Product sales
|
$
|
114,296
|
$
|
96,698
|
$
|
259,875
|
$
|
208,785
|
||||||||
Contract manufacturing
|
18,912
|
14,712
|
52,700
|
32,455
|
||||||||||||
Contracts and grants
|
16,226
|
31,504
|
54,489
|
95,879
|
||||||||||||
Total revenues
|
149,434
|
142,914
|
367,064
|
337,119
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Cost of product sales and contract manufacturing
|
44,503
|
39,560
|
125,449
|
93,025
|
||||||||||||
Research and development
|
22,659
|
27,188
|
68,886
|
81,173
|
||||||||||||
Selling, general and administrative
|
34,503
|
40,688
|
101,521
|
108,328
|
||||||||||||
Income from operations
|
47,769
|
35,478
|
71,208
|
54,593
|
||||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
637
|
358
|
1,593
|
764
|
||||||||||||
Interest expense
|
(1,991
|
)
|
(2,049
|
)
|
(5,734
|
)
|
(5,082
|
)
|
||||||||
Other expense, net
|
(101
|
)
|
(234
|
)
|
(387
|
)
|
(176
|
)
|
||||||||
Total other expense, net
|
(1,455
|
)
|
(1,925
|
)
|
(4,528
|
)
|
(4,494
|
)
|
||||||||
Income from continuing operations before provision for income taxes
|
46,314
|
33,553
|
66,680
|
50,099
|
||||||||||||
Provision for income taxes
|
12,763
|
13,165
|
18,028
|
19,861
|
||||||||||||
Net income from continuing operations
|
33,551
|
20,388
|
48,652
|
30,238
|
||||||||||||
Net income (loss) from discontinued operations
|
-
|
952
|
-
|
(15,854
|
)
|
|||||||||||
Net income
|
$
|
33,551
|
$
|
21,340
|
$
|
48,652
|
$
|
14,384
|
||||||||
Net income per share from continuing operations - basic
|
$
|
0.81
|
$
|
0.50
|
$
|
1.19
|
$
|
0.75
|
||||||||
Net income (loss) per share from discontinued operations - basic
|
-
|
0.02
|
-
|
(0.40
|
)
|
|||||||||||
Net income per share - basic
|
$
|
0.81
|
$
|
0.52
|
$
|
1.19
|
$
|
0.35
|
||||||||
Net income per share from continuing operations - diluted
|
$
|
0.68
|
$
|
0.43
|
$
|
1.03
|
$
|
0.68
|
||||||||
Net income (loss) per share from discontinued operations - diluted
|
-
|
0.02
|
-
|
(0.32
|
)
|
|||||||||||
Net income per share - diluted (1)
|
$
|
0.68
|
$
|
0.45
|
$
|
1.03
|
$
|
0.36
|
||||||||
Weighted-average number of shares - basic
|
41,222,504
|
40,465,423
|
40,989,813
|
40,071,730
|
||||||||||||
Weighted-average number of shares - diluted
|
50,467,829
|
49,440,313
|
50,090,088
|
48,826,597
|
Emergent BioSolutions Inc. and Subsidiaries
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
Net income
|
$
|
33,551
|
$
|
21,340
|
$
|
48,652
|
$
|
14,384
|
||||||||
Foreign currency translations, net of tax
|
(296
|
)
|
(492
|
)
|
516
|
(859
|
)
|
|||||||||
Comprehensive income
|
$
|
33,255
|
$
|
20,848
|
$
|
49,168
|
$
|
13,525
|
·
|
development services for the NuThrax product candidate under the BARDA NuThrax Contract; and
|
·
|
procurement of BioThrax under the BARDA BioThrax Contract.
|
·
|
$137.1 million was allocated to the development services for the NuThrax product candidate under the BARDA NuThrax Contract; and
|
·
|
$93.6 million was allocated to the procurement of BioThrax under the BARDA BioThrax Contract.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||
(in thousands)
|
2016
|
2016
|
||||||
Revenues:
|
||||||||
Product sales
|
$
|
3,019
|
$
|
21,183
|
||||
Collaborations
|
68
|
187
|
||||||
Total revenues
|
3,087
|
21,370
|
||||||
Operating expense:
|
||||||||
Cost of product sales
|
907
|
11,556
|
||||||
Research and development
|
2,509
|
18,024
|
||||||
Selling, general and administrative
|
7,499
|
23,792
|
||||||
Loss from operations
|
(7,828
|
)
|
(32,002
|
)
|
||||
Other expense, net:
|
(116
|
)
|
(41
|
)
|
||||
Loss from discontinued operations before benefit from income taxes
|
(7,944
|
)
|
(32,043
|
)
|
||||
Benefit from income taxes
|
(8,896
|
)
|
(16,189
|
)
|
||||
Net income (loss) from discontinued operations
|
$
|
952
|
$
|
(15,854
|
)
|
Nine Months Ended September 30,
|
||||
(in thousands)
|
2016
|
|||
Net cash used in operating activities
|
$
|
(10,299
|
)
|
|
Net cash used in investing activities
|
(1,926
|
)
|
||
Net cash provided by financing activities
|
7,733
|
|||
Net decrease in cash and cash equivalents
|
$
|
(4,492
|
)
|
(in thousands)
|
||||
Balance at December 31, 2016
|
$
|
13,185
|
||
Expense included in earnings
|
1,350
|
|||
Settlements
|
(2,744
|
)
|
||
Balance at September 30, 2017
|
$
|
11,791
|
September 30,
|
December 31,
|
|||||||
(in thousands)
|
2017
|
2016
|
||||||
Raw materials and supplies
|
$
|
34,075
|
$
|
30,687
|
||||
Work-in-process
|
14,776
|
19,821
|
||||||
Finished goods
|
20,038
|
23,494
|
||||||
Total inventories
|
$
|
68,889
|
$
|
74,002
|
September 30,
|
December 31,
|
|||||||
(in thousands)
|
2017
|
2016
|
||||||
Land and improvements
|
$
|
20,333
|
$
|
20,340
|
||||
Buildings, building improvements and leasehold improvements
|
152,064
|
147,130
|
||||||
Furniture and equipment
|
194,385
|
190,157
|
||||||
Software
|
52,613
|
52,564
|
||||||
Construction-in-progress
|
100,328
|
77,813
|
||||||
Property, plant and equipment, gross
|
519,723
|
488,004
|
||||||
Less: Accumulated depreciation and amortization
|
(133,266
|
)
|
(111,556
|
)
|
||||
Total property, plant and equipment, net
|
$
|
386,457
|
$
|
376,448
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
(in thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Cost of product sales and contract manufacturing
|
$
|
1,067
|
$
|
1,163
|
$
|
3,199
|
$
|
3,873
|
||||||||
Research and development
|
348
|
348
|
1,044
|
1,044
|
||||||||||||
Selling, general and administrative
|
140
|
140
|
420
|
420
|
||||||||||||
Total amortization expense
|
$
|
1,555
|
$
|
1,651
|
$
|
4,663
|
$
|
5,337
|
Number of Shares
|
Weighted-Average Exercise Price
|
Aggregate Intrinsic Value
|
||||||||||
Outstanding at December 31, 2016
|
2,559,331
|
$
|
22.94
|
$
|
25,348,245
|
|||||||
Granted
|
418,141
|
30.85
|
||||||||||
Exercised
|
(512,542
|
)
|
19.90
|
|||||||||
Forfeited
|
(24,625
|
)
|
27.81
|
|||||||||
Outstanding at September 30, 2017
|
2,440,305
|
$
|
24.88
|
$
|
37,991,459
|
Number of Shares
|
Weighted-Average Grant Price
|
Aggregate Intrinsic Value
|
||||||||||
Outstanding at December 31, 2016
|
875,584
|
$
|
28.94
|
$
|
28,754,179
|
|||||||
Granted
|
454,513
|
30.86
|
||||||||||
Vested
|
(413,752
|
)
|
20.66
|
|||||||||
Forfeited
|
(34,355
|
)
|
28.87
|
|||||||||
Outstanding at September 30, 2017
|
881,990
|
$
|
30.39
|
$
|
35,676,496
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
(in thousands, except share and per share data)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Numerator:
|
||||||||||||||||
Net income from continuing operations
|
$
|
33,551
|
$
|
20,388
|
$
|
48,652
|
$
|
30,238
|
||||||||
Interest expense, net of tax
|
704
|
934
|
2,445
|
2,234
|
||||||||||||
Amortization of debt issuance costs, net of tax
|
195
|
183
|
586
|
569
|
||||||||||||
Net income, adjusted from continuing operations
|
34,450
|
21,505
|
51,683
|
33,041
|
||||||||||||
Net income (loss) from discontinued operations
|
-
|
952
|
-
|
(15,854
|
)
|
|||||||||||
Net income, adjusted
|
$
|
34,450
|
$
|
22,457
|
$
|
51,683
|
$
|
17,187
|
||||||||
Denominator:
|
||||||||||||||||
Weighted-average number of shares—basic
|
41,222,504
|
40,465,423
|
40,989,813
|
40,071,730
|
||||||||||||
Dilutive securities—equity awards
|
1,148,857
|
878,390
|
1,003,794
|
658,367
|
||||||||||||
Dilutive securities—convertible debt
|
8,096,468
|
8,096,500
|
8,096,481
|
8,096,500
|
||||||||||||
Weighted-average number of shares—diluted
|
50,467,829
|
49,440,313
|
50,090,088
|
48,826,597
|
||||||||||||
Net income per share from continuing operations - basic
|
$
|
0.81
|
$
|
0.50
|
$
|
1.19
|
$
|
0.75
|
||||||||
Net income (loss) per share from discontinued operations - basic
|
-
|
0.02
|
-
|
(0.40
|
)
|
|||||||||||
Net income per share - basic
|
$
|
0.81
|
$
|
0.52
|
$
|
1.19
|
$
|
0.35
|
||||||||
Net income per share from continuing operations - diluted
|
$
|
0.68
|
$
|
0.43
|
$
|
1.03
|
$
|
0.68
|
||||||||
Net income (loss) per share from discontinued operations - diluted
|
-
|
0.02
|
-
|
(0.32
|
)
|
|||||||||||
Net income per share - diluted
|
$
|
0.68
|
$
|
0.45
|
$
|
1.03
|
$
|
0.36
|
Incurred in
|
Inception
|
|||||||
(in thousands)
|
2017
|
to Date
|
||||||
Termination benefits
|
$
|
40
|
$
|
5,286
|
||||
Abandonment of equipment
|
-
|
3,749
|
||||||
Other costs
|
-
|
691
|
||||||
Total
|
$
|
40
|
$
|
9,726
|
Termination
|
||||
(in thousands)
|
Benefits
|
|||
Balance at December 31, 2016
|
$
|
4,357
|
||
Expenses incurred
|
40
|
|||
Amount paid
|
(4,298
|
)
|
||
Balance at September 30, 2017
|
$
|
99
|
§ |
BioThrax
®
(Anthrax Vaccine Adsorbed), the only vaccine licensed by the U.S. Food and Drug Administration, or the FDA, for the general use prophylaxis and post-exposure prophylaxis of anthrax disease. BioThrax is also licensed by the Paul-Ehrlich-Institut of the German Federal Ministry of Health for general use prophylaxis of anthrax disease;
|
§ |
Anthrasil
®
[Anthrax Immune Globulin Intravenous (Human)], the only polyclonal antibody therapeutic licensed by the FDA for the treatment of inhalational anthrax;
|
§ |
BAT
®
[Botulism Antitoxin Heptavalent (A,B,C,D,E,F,G)- (Equine)], the only heptavalent therapeutic licensed by the FDA and Health Canada for the treatment of botulinum disease;
|
§ |
VIGIV [Vaccinia Immune Globulin Intravenous (Human)], the only therapeutic licensed by the FDA to address certain complications from smallpox vaccination;
|
§ |
RSDL
®
(Reactive Skin Decontamination Lotion Kit), the only device cleared by the FDA intended to remove or neutralize chemical warfare agents and T-2 toxin from the skin;
|
§ |
Tro
bigard™ (atropine sulfate, obidoxime chloride),
an auto-injector drug-device combination product designed for intramuscular self-injection
of atropine sulfate and obidoxime chloride, a nerve agent countermeasure. This product is not currently approved or cleared by the FDA or any other similar regulatory body, and is only distributed to authorized government buyers for use outside the U.S. The product is not distributed in the U.S.;
|
§ |
ACAM2000
®
(Smallpox (Vaccinia) Vaccine, Live), the only smallpox vaccine licensed in the U.S. by the FDA for active immunization against smallpox disease for persons determined to be at high risk for smallpox (acquired from Sanofi Pasteur Biologics, LLC in October 2017); and
|
§ |
raxibacumab, a fully human monoclonal antibody approved by the FDA for the treatment and prophylaxis of inhalational anthrax (acquired from GlaxoSmithKline LLC in October 2017).
|
§ |
NuThrax™ (anthrax vaccine adsorbed with CPG 7909 adjuvant), a next generation anthrax vaccine;
|
§ |
UV-4B, a novel antiviral being developed for dengue and influenza infections;
|
§ |
GC-072, the lead compound in the EV-035 series of broad spectrum antibiotics, being developed for
Burkholderia pseudomallei
;
|
§ |
FLU-IG (NP025), a human polyclonal antibody therapeutic being developed to treat seasonal influenza;
|
§ |
ZIKA-IG (NP024), a human polyclonal antibody therapeutic being developed as a prophylaxis for Zika infections;
|
§ |
FILOV (NP026), an equine polyclonal antibody therapeutic being developed to treat Ebola infections;
|
§ |
ZIKV-VLA1601, a highly purified inactivated vaccine candidate against the Zika virus; and
|
§ |
SIAN, a stabilized form of isoamyl nitrite in a spray device for the treatment of known or suspected acute cyanide poisoning.
|
Development Programs
|
Funding Source
|
Award Date
|
Performance Period
|
Anthrasil
|
BARDA
|
09/2005
|
9/2005 — 4/2021
|
BARDA
|
09/2013
|
9/2013 — 9/2018
|
|
Auto-injector platform
|
DoD
|
07/2017
|
7/2017 — 6/2022
|
BAT
|
BARDA
|
05/2006
|
5/2006 — 12/2027
|
CIADM
|
BARDA
|
06/2012
|
6/2012 — 6/2037
|
GC-072
|
DTRA
|
08/2014
|
8/2014 — 3/2018
|
Large-scale manufacturing for BioThrax
|
BARDA
|
07/2010
|
7/2010 — 7/2017
|
NuThrax
|
NIAID
|
08/2014
|
8/2014 — 1/2019
|
BARDA
|
03/2015
|
3/2015 — 12/2017
|
|
BARDA
|
09/2016
|
9/2016 — 9/2021
|
|
SIAN
|
BARDA
|
09/2017
|
9/2017 — 9/2022
|
UV-4B
|
NIAID
|
09/2011
|
9/2011 — 9/2018
|
VIGIV
|
CDC
|
08/2012
|
8/2012 — 8/2017
|
|
Three Months Ended September 30,
|
|||||||||||||||
(in thousands)
|
2017
|
2016
|
Change
|
% Change
|
||||||||||||
Product sales:
|
||||||||||||||||
BioThrax
|
$
|
83,485
|
$
|
94,116
|
$
|
(10,631
|
)
|
(11
|
%)
|
|||||||
Other
|
30,811
|
2,582
|
28,229
|
1,093
|
%
|
|||||||||||
Total Product sales
|
114,296
|
96,698
|
17,598
|
18
|
%
|
|||||||||||
Contract manufacturing
|
18,912
|
14,712
|
4,200
|
29
|
%
|
|||||||||||
Contracts and grants
|
16,226
|
31,504
|
(15,278
|
)
|
(48
|
%)
|
||||||||||
Total revenues
|
$
|
149,434
|
$
|
142,914
|
$
|
6,520
|
5
|
%
|
§ |
decreased development funding of $10.1 million related to our CIADM program, which includes a decrease of $5.2 million for CIADM task orders primarily related to Ebola and Zika;
|
§ |
decreased development funding of $3.2 million for VIGIV related to the timing of plasma collection; and
|
§ |
decreased development funding of $1.8 million for large scale manufacturing of BioThrax primarily due to the successful completion of the Building 55 development program in 2016 that did not recur in 2017.
|
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(in thousands)
|
2017
|
2016
|
Change
|
% Change
|
||||||||||||
NuThrax
|
$
|
7,384
|
$
|
6,182
|
$
|
1,202
|
19
|
%
|
||||||||
FLU-IG (NP025)
|
1,832
|
-
|
1,832
|
N/A
|
||||||||||||
UV-4B
|
1,407
|
2,147
|
(740
|
)
|
(34
|
%)
|
||||||||||
BAT
|
838
|
814
|
24
|
3
|
%
|
|||||||||||
Auto-injector platform
|
1,107
|
2,475
|
(1,368
|
)
|
(55
|
%)
|
||||||||||
CIADM task orders
|
330
|
2,600
|
(2,270
|
)
|
(87
|
%)
|
||||||||||
EV-035 series of molecules
|
772
|
1,331
|
(559
|
)
|
42
|
%
|
||||||||||
VIGIV
|
374
|
1,474
|
(1,100
|
)
|
(75
|
%)
|
||||||||||
Large-scale manufacturing for BioThrax
|
64
|
1,491
|
(1,427
|
)
|
(96
|
%)
|
||||||||||
Anthrasil
|
247
|
178
|
69
|
(39
|
%)
|
|||||||||||
BioThrax related programs
|
238
|
1,012
|
(774
|
)
|
(76
|
%)
|
||||||||||
Other
|
8,066
|
7,484
|
582
|
8
|
%
|
|||||||||||
Total
|
$
|
22,659
|
$
|
27,188
|
$
|
(4,529
|
)
|
(17
|
%)
|
|
Nine Months Ended September 30,
|
|||||||||||||||
(in thousands)
|
2017
|
2016
|
Change
|
% Change
|
||||||||||||
Product sales:
|
||||||||||||||||
BioThrax
|
$
|
179,620
|
$
|
193,255
|
$
|
(13,635
|
)
|
(7
|
%)
|
|||||||
Other
|
80,255
|
15,530
|
64,725
|
417
|
%
|
|||||||||||
Total Product sales
|
259,875
|
208,785
|
51,090
|
24
|
%
|
|||||||||||
Contract manufacturing
|
52,700
|
32,455
|
20,245
|
62
|
%
|
|||||||||||
Contracts and grants
|
54,489
|
95,879
|
(41,390
|
)
|
(43
|
%)
|
||||||||||
Total revenues
|
$
|
367,064
|
$
|
337,119
|
$
|
29,945
|
9
|
%
|
§ |
decreased development funding of $20.3 million related to our CIADM program, which includes a decrease of $10.5 million for CIADM task orders primarily related to Ebola and Zika;
|
§ |
decreased development funding of $18.8 million for VIGIV due to the timing of plasma collection; and
|
§ |
decreased development funding of $3.7 million for large scale manufacturing of BioThrax primarily due to the successful completion of the Building 55 development program in 2016 that did not recur in 2017.
|
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(in thousands)
|
2017
|
2016
|
Change
|
% Change
|
||||||||||||
NuThrax
|
$
|
23,964
|
$
|
15,847
|
$
|
8,117
|
51
|
%
|
||||||||
FLU-IG (NP025)
|
5,189
|
-
|
5,189
|
N/A
|
||||||||||||
UV-4B
|
4,663
|
4,179
|
484
|
12
|
%
|
|||||||||||
BAT
|
2,509
|
2,964
|
(455
|
)
|
(15
|
%)
|
||||||||||
Auto-injector platform
|
2,551
|
7,646
|
(5,095
|
)
|
(67
|
%)
|
||||||||||
CIADM task orders
|
2,511
|
7,899
|
(5,388
|
)
|
(68
|
%)
|
||||||||||
EV-035 series of molecules
|
1,856
|
2,972
|
(1,116
|
)
|
(38
|
%)
|
||||||||||
VIGIV
|
1,211
|
7,428
|
(6,217
|
)
|
84
|
%
|
||||||||||
Large-scale manufacturing for BioThrax
|
885
|
4,870
|
(3,985
|
)
|
(82
|
%)
|
||||||||||
Anthrasil
|
737
|
626
|
111
|
18
|
%
|
|||||||||||
BioThrax related programs
|
594
|
2,701
|
(2,107
|
)
|
(78
|
%)
|
||||||||||
Other
|
22,216
|
24,041
|
(1,825
|
)
|
(8
|
%)
|
||||||||||
Total
|
$
|
68,886
|
$
|
81,173
|
$
|
(12,287
|
)
|
(15
|
%)
|
|
Nine Months Ended
|
|||||||
September 30,
|
||||||||
(in thousands)
|
2017
|
2016
|
||||||
Net cash provided by (used in):
|
||||||||
Operating activities(i)
|
$
|
129,114
|
$
|
67,390
|
||||
Investing activities
|
(42,381
|
)
|
(56,243
|
)
|
||||
Financing activities
|
(17,255
|
)
|
(25,010
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
$
|
69,478
|
$
|
(13,863
|
)
|
|
our ability to secure a new BioThrax procurement contract on favorable terms;
|
§ |
the level, timing and cost of product sales;
|
|
the extent to which we acquire or invest in and integrate companies, businesses, products or technologies;
|
|
the acquisition of new facilities and capital improvements to new or existing facilities;
|
|
the payment obligations under our indebtedness;
|
|
the scope, progress, results and costs of our development activities;
|
|
our ability to obtain funding from collaborative partners, government entities and non-governmental organizations for our development programs;
|
§ |
the extent to which we repurchase our common stock under our share repurchase program; and
|
|
the costs of commercialization activities, including product marketing, sales and distribution.
|
§ |
the possibility that we may be ineligible to respond to a request for proposal issued by the government;
|
§ |
the commitment of substantial time and attention of management and key employees to the preparation of bids and proposals for contracts that may not be awarded to us;
|
§ |
the need to accurately estimate the resources and cost structure that will be required to perform any contract that we might be awarded;
|
§ |
the submission by third parties of protests to our responses to requests for proposal that could result in delays or withdrawals of those requests for proposal; and
|
§ |
in the event our competitors protest or challenge contract or grant awards made to us pursuant to competitive bidding, the potential that we may incur expenses or delays, and that any such protest or challenge could result in the resubmission of bids based on modified specifications, or in the termination, reduction or modification of the awarded contract.
|
§ |
the Federal Acquisition Regulation, or FAR, and agency-specific regulations supplemental to FAR, which comprehensively regulate the award, formation, administration and performance of government contracts;
|
§ |
the Defense Federal Acquisition Regulations, or DFARs, and agency-specific regulations supplemental to DFARs, which comprehensively regulate the award, formation, administration and performance of U.S. Department of Defense, or DoD, government contracts;
|
§ |
business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act, the Procurement Integrity Act, the False Claims Act and the Foreign Corrupt Practices Act;
|
§ |
export and import control laws and regulations, including but not limited to International Traffic in Arms Regulations; and
|
§ |
laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.
|
§ |
terminate existing contracts, in whole or in part, for any reason or no reason;
|
§ |
unilaterally reduce or modify contracts or subcontracts, including by imposing equitable price adjustments;
|
§ |
cancel multi-year contracts and related orders, if funds for contract performance for any subsequent year become unavailable;
|
§ |
decline, in whole or in part, to exercise an option to purchase product under a procurement contract or to fund additional development under a development contract;
|
§ |
decline to renew a procurement contract;
|
§ |
claim rights to facilities or to products, including intellectual property, developed under the contract;
|
§ |
require repayment of contract funds spent on construction of facilities in the event of contract default;
|
§ |
take actions that result in a longer development timeline than expected;
|
§ |
direct the course of a development program in a manner not chosen by the government contractor;
|
§ |
suspend or debar the contractor from doing business with the government or a specific government agency;
|
§ |
pursue civil or criminal remedies under acts such as the False Claims Act and False Statements Act; and
|
§ |
control or prohibit the export of products.
|
§ |
warning letters and other communications;
|
§ |
product seizure or withdrawal of the product from the market;
|
§ |
restrictions on the marketing or manufacturing of a product;
|
§ |
suspension or withdrawal of regulatory approvals or refusal to approve pending applications or supplements to approved applications;
|
§ |
fines or disgorgement of profits or revenue; and
|
§ |
injunctions or the imposition of civil or criminal penalties.
|
§ |
equipment malfunctions or failures;
|
§ |
technology malfunctions;
|
§ |
cyber-attacks;
|
§ |
work stoppages or slow-downs;
|
§ |
protests, including by animal rights activists;
|
§ |
injunctions;
|
§ |
damage to or destruction of the facility; and
|
§ |
product contamination or tampering.
|
§ |
retaining existing customers and attracting new customers;
|
§ |
retaining key employees;
|
§ |
diversion of management attention and resources;
|
§ |
conforming internal controls, policies and procedures, business cultures and compensation programs;
|
§ |
consolidating corporate and administrative infrastructures;
|
§ |
successfully executing technology transfers and obtaining required regulatory approvals;
|
§ |
consolidating sales and marketing operations;
|
§ |
identifying and eliminating redundant and underperforming operations and assets;
|
§ |
assumption of known and unknown liabilities;
|
§ |
coordinating geographically dispersed organizations; and
|
§ |
managing tax costs or inefficiencies associated with integrating operations.
|
§ |
successful development, formulation and cGMP scale-up of manufacturing that meets FDA or other foreign regulatory requirements;
|
§ |
successful program partnering;
|
§ |
successful completion of clinical or non-clinical development, including toxicology studies and studies in approved animal models;
|
§ |
receipt of marketing approvals from the FDA and equivalent foreign regulatory authorities;
|
§ |
establishment of commercial manufacturing processes and product supply arrangements;
|
§ |
training of a commercial sales force for the product, whether alone or in collaboration with others;
|
§ |
successful registration and maintenance of relevant patent and/or other proprietary protection; and
|
§ |
acceptance of the product by potential government and other customers.
|
§ |
our inability to manufacture sufficient quantities of materials for use in trials;
|
§ |
the unavailability or variability in the number and types of subjects for each study;
|
§ |
safety issues or inconclusive or incomplete testing, trial or study results;
|
§ |
drug immunogenicity;
|
§ |
lack of efficacy of product candidates during the trials;
|
§ |
government or regulatory restrictions or delays; and
|
§ |
greater than anticipated costs of trials.
|
§ |
requiring us to dedicate a substantial portion of any cash flow from operations to payment on our debt, which would reduce the amounts available to fund other corporate initiatives;
|
§ |
increasing the amount of interest that we have to pay on debt with variable interest rates, if market rates of interest increase;
|
§ |
subjecting us, as under our senior secured revolving credit facility, to restrictive covenants that may reduce our ability to take certain corporate actions, acquire companies, products or technology, or obtain further debt financing;
|
§ |
requiring us to pledge our assets as collateral, which could limit our ability to obtain additional debt financing;
|
§ |
limiting our flexibility in planning for, or reacting to, general adverse economic and industry conditions; and
|
§ |
placing us at a competitive disadvantage compared to our competitors that have less debt, better debt servicing options or stronger debt servicing capacity.
|
§ |
the level, timing and cost of product sales;
|
§ |
the extent to which we acquire or invest in and integrate companies, businesses, products or technologies;
|
§ |
the acquisition of new facilities and capital improvements to new or existing facilities;
|
§ |
the payment obligations under our indebtedness;
|
§ |
the scope, progress, results and costs of our development activities;
|
§ |
our ability to obtain funding from collaborative partners, government entities and non-governmental organizations for our development programs;
|
§ |
the extent to which we repurchase our common stock under our share repurchase program; and
|
§ |
the costs of commercialization activities, including product marketing, sales and distribution.
|
§ |
decreased demand or withdrawal of a product;
|
§ |
injury to our reputation;
|
§ |
withdrawal of clinical trial participants;
|
§ |
costs to defend the related litigation;
|
§ |
substantial monetary awards to trial participants or patients;
|
§ |
loss of revenue; and
|
§ |
an inability to commercialize products that we may develop.
|
§ |
the classification of our directors;
|
§ |
limitations on changing the number of directors then in office;
|
§ |
limitations on the removal of directors;
|
§ |
limitations on filling vacancies on the board;
|
§ |
advance notice requirements for stockholder nominations of candidates for election to the Board of Directors and other proposals;
|
§ |
the inability of stockholders to act by written consent;
|
§ |
the inability of stockholders to call special meetings; and
|
§ |
the ability of our Board of Directors to designate the terms of and issue a new series of preferred stock without stockholder approval.
|
§ |
contracts, decisions and procurement policies by the U.S. government affecting BioThrax and our other products and product candidates;
|
§ |
the success of competitive products or technologies;
|
§ |
results of clinical and non-clinical trials of our product candidates;
|
§ |
announcements of acquisitions, financings or other transactions by us;
|
§ |
litigation or legal proceedings;
|
§ |
public concern as to the safety of our products;
|
§ |
termination or delay of a development program;
|
§ |
the recruitment or departure of key personnel;
|
§ |
variations in our product revenue and profitability; and
|
§ |
the other factors described in this "Risk Factors" section.
|
Exhibit
Number
|
Description
|
2.1
††
|
Asset Purchase Agreement, dated July 14, 2017, among Sanofi Pasteur Biologics, LLC, Acambis Research Ltd. and Emergent BioSolutions Inc. (incorporated by reference to Exhibit 2 to the Company's Current Report on Form 8-K, filed on July 14, 2017).
|
2.2
††
|
Asset Purchase Agreement, dated July 19, 2017, among GlaxoSmithKline LLC, Human Genome Sciences, Inc., and Emergent BioSolutions Inc. (incorporated by reference to Exhibit 2 to the Company's Current Report on Form 8-K, filed on October 3, 2017
)
.
|
Credit Agreement, dated September 29, 2017, among Emergent BioSolutions Inc., the lenders party thereto from time to time, and Wells Fargo Bank, National Association, as the Administrative Agent (incorporated by reference to Exhibit 10 to the Company's Current Report on Form 8-K, filed on October 2, 2017).
|
|
10.2
#
††
|
Modification No. 5, effective September 8, 2017, to the Solicitation/Contract/Order for Commercial Items (the "CDC BioThrax Procurement Contract"), effective December 8, 2016, from the Centers for Disease Control and Prevention to Emergent Biodefense Operations Lansing LLC.
|
12
#
|
Ratio of Earnings to Fixed Charges.
|
31.1
#
|
Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a).
|
31.2
#
|
Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).
|
32.1
#
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
#
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101. INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Calculation Linksbase Document.
|
101.DEF
|
XBRL Taxonomy Definition Linksbase Document.
|
101.LAB
|
XBRL Taxonomy Label Linksbase Document.
|
101.PRE
|
XBRL Taxonomy Presentation Linksbase Document.
|
Ratio of Earnings to Fixed Charges
|
|||||||||||||||||||||||
Year to Date
|
|||||||||||||||||||||||
|
September 30,
|
Year Ended December 31,
|
|||||||||||||||||||||
(in thousands)
|
2017
|
2016
|
2015
|
2014
|
2013
|
2012
|
|||||||||||||||||
|
|||||||||||||||||||||||
Pretax income from continuing operations (1)
|
$
|
66,680
|
|
$
|
99,221
|
$
|
135,716
|
$
|
84,194
|
$
|
83,439
|
$
|
68,011
|
||||||||||
Fixed charges
|
|||||||||||||||||||||||
Interest expense
|
5,760
|
8,270
|
7,834
|
7,480
|
1,973
|
2,177
|
|||||||||||||||||
Debt issuance cost
|
1,523
|
1,526
|
1,564
|
3,290
|
319
|
67
|
|||||||||||||||||
Total fixed charges (2)
|
7,283
|
9,796
|
9,398
|
10,770
|
2,292
|
2,244
|
|||||||||||||||||
Noncontrolling interest in pretax income (3)
|
-
|
-
|
-
|
-
|
876
|
5,381
|
|||||||||||||||||
Capitalized interest (4)
|
1,549
|
2,179
|
2,875
|
2,530
|
1,973
|
2,177
|
|||||||||||||||||
Earnings ((1) + (2) -(3) -(4))
|
72,414
|
|
106,838
|
142,239
|
92,434
|
82,882
|
62,697
|
||||||||||||||||
Fixed charges
|
7,283
|
9,796
|
9,398
|
10,770
|
2,292
|
2,244
|
|||||||||||||||||
Ratio of earnings to fixed charges
|
9.9
|
10.9
|
15.1
|
8.6
|
36.2
|
27.9
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
|
1. CONTRACT ID CODE
|
PAGE OF PAGES
|
||||||
1
|
2
|
|||||||
2. AMENDMENT/MODIFICATION NO.
00005
|
3. EFFECTIVE DATE
09/08/2017
|
4. REQUISITION/PURCHASE REQ. NO.
0000HCGE-2017-12762
|
5. PROJECT NO.
(If applicable)
|
|||||
6. ISSUED BY
CODE
|
2543
|
7. ADMINISTERED BY
(If other than Item 6)
CODE
|
2543
|
|||||
Centers for Disease Control and Prevention
Office of Acquisition Services (OAS)
2920 Brandywine Rd, RM 3000
Atlanta, GA 30341-5539
|
Centers for Disease Control and Prevention
Office of Acquisition Services (OAS)
2920 Brandywine Rd, RM 3000
Atlanta, GA 30341-5539
|
|||||||
8. NAME AND ADDRESS OF CONTRACTOR
(No., street, county, State and ZIP Code)
EMERGENT BIODEFENSE OPERATIONS LANSING LLC
3500 N MARTIN LUTHER KING JR BLVD # 1
LANSING, MI 48906-2933
|
(
Ö
)
|
9A. AMENDMENT OF SOLICITATION NO.
|
||||||
9B. DATED
(See Item 11)
|
||||||||
X
|
10A. MODIFICATION OF CONTRACT/ORDER NO.
200-2017-92634
|
|||||||
10B. DATED
(See Item 13)
12/08/2016
|
||||||||
CODE
026489018
|
FACILITY CODE
|
(
Ö
)
|
A. THIS CHANGE ORDER IS ISSUED PURSUANT TO:
(Specify authority)
THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A.
|
B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES
(such as changes in paying office, appropriation date, etc.)
SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).
|
|
C.
THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:
|
|
X
|
D.
OTHER
(Specify type of modification and authority)
52.217-7 Option for Increased Quantity—Separately Priced Line Item.
|
E.
|
IMPORTANT: Contractor
X
is not,
is required to sign this document and returncopies to the issuing office.
|
1.
|
Exercise alternate SubCLIN 1005 from Optional CLIN 0001
|
2.
|
Increase and fund [**] doses on CLIN 1005 in the amount of $[**]
|
3.
|
Total fundng for this contract has increased by $[**] from [**] to $[**]
|
15A. NAME AND TITLE OF SIGNER
(Type or print)
|
16A. NAME OF CONTRACTING OFFICER
Christine N Godfrey
|
||
15B. CONTRACTOR/OFFEROR
(Signature of person authorized to sign)
|
15C. DATE SIGNED
|
16B. UNITED STATES OF AMERICA
BY:
/s/CHRISTINE N. GODFREY
(Signature of Contracting Officer)
|
16C. DATE SIGNED
9/8/2017
|
ITEM
|
SUPPLIES / SERVICES
|
QTY / UNIT
|
UNIT PRICE
|
NOT TO EXCEED
|
||||||||
0001
|
BioThrax [**] product
[**] upon date of delivery:
[**] product at a unit price of $[**] estimated per the [**] unit price.
Delivery Address: Contractor's Facility
Delivery to occur within [**] of exercise of option
|
[**] Doses
|
$
|
[
|
**]
|
$
|
[
|
**]
|
ITEM
|
SUPPLIES / SERVICES
|
QTY / UNIT
|
UNIT PRICE
|
NOT TO EXCEED
|
||||||||
1005
|
BioThrax [**] product
[**] upon date of delivery:
[**] product at a unit price of $[**] estimated per the [**] unit price.
Delivery Address: Contractor's Facility
Delivery to occur NLT [**]
|
[**] Doses
|
$
|
[
|
**]
|
$
|
[
|
**]
|
||||
Line(s) Of Accounting:
93904ZU 2642 2017 75-X-0956
5664711101 $[**]
93907PY 2642 2017 75-X-0956
5664711101 $[**]
93907WF 2642 2017 75-X-0943
5664311101 $[**]
939ZWUX 2642 2017 75-X-0956
5664711101 $[**]
|