Emergent BioSolutions Inc. (EBS - Free Report) reported earnings of 13 cents per share in the second quarter of 2017, which missed the Zacks Consensus Estimate of 26 cents. Earnings however increased from the year-ago loss of 1 cent.
Emergent’s shares underperformed the industry so far this year. The company’s shares have gained 7.3% compared with the industry’s increase of 9.4%.
Revenues in the reported quarter rallied 10% from the year-ago period to $100.8 million, primarily on the back of product sales and increase in contract manufacturing revenues. This upside reflects an increase in fill/finish services.
However, revenues missed the Zacks Consensus Estimate of $106 million.
Quarter in Detail
Total product sales surged 32% to $63.6 million from the year-ago period, mainly owing to the timing of BioThrax (Anthrax Vaccine Adsorbed) deliveries to the strategic national stockpile (SNS).
Notably, in March, Emergent signed a two-year contract with the Biomedical Advanced Research and Development Authority (BARDA), valued at $100 million for the delivery of BioThrax to the SNS.
Contracts, grants and collaboration revenues plunged 36% year over year to $21 million, primarily due to the timing of the ongoing development activities leading to a reduction of development funding under ongoing programs as well as expansion of the Bayview manufacturing site.
Contract manufacturing revenues were $16.2 million, soared significantly by 59% compared with the year-ago figure. The increase was primarily driven by the timing of fill/finish services as well as certain bulk manufacturing services performed for Aptevo. Notably, in August last year, Emergent completed the spin-off of certain assets and liabilities of its Biosciences business into a separate publicly traded company, Aptevo Therapeutics Inc. .
Research and development expenses were $25.8 million, down 8% from the year-ago quarter. This downside is attributable to cost-reduction related to development services performed during the period.
Selling, general and administrative expenses decreased 11% to $31.9 million owing to favorable timing of professional services to support the Emergent’s strategic growth initiatives.
Last month, Emergent announced that it has inked an agreement to acquire the ACAM2000 (Smallpox [Vaccinia] Vaccine, Live) business of Sanofi (SNY - Free Report) for up to $125 million in a cash transaction. This deal includes an all-cash upfront payment of $97.5 million and up to $27.5 million in near-term contingent regulatory and manufacturing-related milestones.
During the same month, the company entered into another contract with GlaxoSmithKline plc (GSK - Free Report) to acquire raxibacumab, a fully human monoclonal antibody approved of by the FDA for treatment and prophylaxis of inhalational anthrax.
Emergent continues to expect revenues in the range of $500–$530 million in 2017, including BioThrax sales of $265–$280 million. The Zacks Consensus Estimate revenue for 2017 is $508.02 million.
The company projects revenue in the range of $115-$130 million for the third-quarter of 2017. The Zacks Consensus Estimate for the third-quarter is $140.70 million.
Emergent currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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