Fuad El-Hibri EBS IPO and BioThrax
“When you have two parties you can maybe exercise control over one party, which is ourselves. Our relationship with HHS continues to be strong, and we’re excited about this opportunity,” said Fuad El-Hibri, chief executive officer, in a conference call with analysts. “These are half-billion-dollar types of contracts. They just take time to negotiate.”
Delayed orders of its anthrax product drastically cut into
Emergent BioSolutions Inc.’s fourth-quarter revenue and profits.
The Rockville biotech earned nearly $35.8 million in revenue in the fourth quarter last year, a 60 percent drop from the $89.6 million it pulled in during the same period of 2007. That also resulted in a nearly 95 percent plunge in fourth-quarter profits, from $27.7 million to nearly $1.5 million.
The company said it had expected to ship three additional lots of its BioThrax anthrax vaccine to the
“Such an event is further evidence that our revenues fluctuate quarter to quarter based on the timing of deliveries of BioThrax to HHS,” said Don Elsey, chief financial officer, in a statement.
Despite that drop, Emergent’s revenue for the full year in 2008 dipped only 2 percent, from $182.9 million to $178.5 million, and profit fell 10 percent, from $22.9 million to $20.7 million. Nearly all of the company’s product sales came from BioThrax, and Emergent said it saw a 16 percent drop in BioThrax doses delivered to HHS. That was offset, though, by an 18 percent rise in Emergent’s BioThrax dose price.
The company earns most of its money from HHS contracts. While Emergent still has two contracts outstanding, worth a total $853 million, to deliver more than 33 million doses to HHS, the larger of those two contracts, worth $448 million, will be completed in the third quarter of this year.
Emergent is awaiting an HHS decision on its bid last year to sell 25 million doses of a separate anthrax vaccine to the agency — a negotiation process that has been delayed by a protest from one of the other bidders on the HHS request for proposals, Emergent officials said.
Emergent thinks its revenue this year will grow by 25 to 35 percent and lie between $225 million and $240 million. It also expects profits to exceed $20 million this year.
Emergent had plans to expand its manufacturing space into Frederick, Md., but those plans have been put on hold as it concentrates its work at a current plant in Lansing, Mich. Emergent officials have been wary of giving any timelines for further manufacturing expansions but did say nothing would occur before the end of next year.
“We would be using existing manufacturing process, existing scale, existing equipment,” El-Hibri said. “We have plenty of space.”
By the end of last year, the company had $91.5 million in cash and equivalents.
Emergent’s share price (NYSE: EBS) dropped $1.08, or a little more than 6 percent, in trading after closing bell Thursday, when the company released its earnings.
Tags: Anthrax, Biological and Chemical, BioThrax, Chief executive officer, Chief financial officer, Emergent BioSolutions, Terrorism, United States Department of Health and Human Services
Fuad El-Hibri and EBS Initial Public Offering
A Gaithersburg drug company that makes most of its money selling the only federally approved vaccine against anthrax is in the final stages of preparing an initial public offering to raise up to $92 million.
Late last month, Emergent Biosolutions Inc. set the range of its offering at $14 to $16 a share. The company said it intends to use the money on its manufacturing facilities in Frederick and Michigan and to fund development of several products, according to documents filed with the Securities and Exchange Commission.
The company is tightly controlled by Fuad El-Hibri, its chairman and chief executive. El-Hibri, who lives in Potomac, has an extensive background in the telecommunications industry. He and his father have also had significant involvement with a British provider of anthrax vaccines. El-Hibri, who became a U.S. citizen in 1999, was born in Germany and grew up around Europe and the Middle East before attending Stanford and Yale universities.
El-Hibri controls 99.5 percent of the Emergent’s outstanding stock. After going public, he will control 81.4 percent. In SEC documents, the company said El-Hibri “will continue to have substantial control over us after this offering, including through his ability to control the election of the members of our board of directors, and could delay or prevent a change of control.”
Biotech analysts said Emergent could have a tough time with its initial public offering. Just two biotech companies — Osiris Therapeutics, a Baltimore biotechnology firm working on stem-cell therapies, is one — went public in the third quarter, and the market for IPOs in general has been spotty.
According to Thomson Financial, more companies have withdrawn IPOs this year than in any of the previous five years, indicating investors are skeptical of new company stock offerings despite the generally strong market for stocks. And venture capital-backed IPOs, traditionally the most prolific source of new company issues, fell significantly in the third quarter.
Companies that have managed to go public are in a broad range of industries, and those that have had the most success are in tried-and-true money-making or technologically hot industries. For example, locally, government contracting giant SAIC Inc. is up 33 percent since its Oct. 12 IPO. And Osiris Therapeutics is up 89 percent since its August IPO.
Emergent Biosolutions’ effort to finish its IPO comes as federal health officials deal with a troubled $877.5 million contract for another anthrax vaccine, made by VaxGen Inc. VaxGen is supposed to provide 75 million doses for the national stockpile, but the Food and Drug Administration recently halted human testing of the California company’s vaccine because of concerns about its potency, throwing the entire contract into doubt.
VaxGen’s contract was awarded under the Project Bioshield initiative, which seeks to develop modern vaccines and drugs for chemical, biological, radiological or nuclear attacks. VaxGen’s proposed anthrax vaccine, if successful, would require fewer doses over a shorter period of time to produce immunity than the older version made by Emergent.
Emergent has been urging Congress and federal health officials to buy more of its anthrax vaccine, called BioThrax, for the stockpile. The efforts are being aided by Louis W. Sullivan, who was health and human services secretary from 1989 to 1993, and Jerome M. Hauer, a former senior HHS official who oversaw public health emergency preparedness. Both men are on Emergent’s board.
So far, the government has purchased 10 million doses.
In its SEC filings, Emergent said the government’s efforts to stockpile a newer version “would limit, possibly significantly, the market for BioThrax.” The company said it is in the early stages of developing a next-generation anthrax vaccine and products for other diseases and bioterrorism agents.
Emergent officials could not comment because the company is in a quiet period before its offering.
While the $5.6 billion Project Bioshield program is potentially the most lucrative outlet for BioThrax, Emergent also sells the vaccine to the Defense Department. Since 1998, the Defense Department has vaccinated 1.5 million people with more than 5.7 million doses, according to SEC documents. It is providing 1.5 million doses to the military through September 2007.
BioThrax has been controversial in the military. Some soldiers have complained of significant side effects and have refused to use the vaccine, leading to a court battle that temporarily stopped mandatory vaccinations. The government recently resumed mandatory vaccinations with BioThrax after the FDA said the vaccine was safe and effective.
John T. McCamant, editor of the Medical Technology Stock Letter, said Emergent’s IPO could be particularly difficult because the only customer for bioterrorism products is the government.
“That’s a tall trick because the money will come in lumps at best,” he said.
Staff writer Terence O’Hara contributed to this report.
Posted in El-Hibri Fuad, Emergent BioSolutions, Emergent BioSolutions Inc, Fuad El-Hibri, Initial Public Offering
Tags: Board of directors, United States, Emergent BioSolutions, U.S. Food and Drug Administration, Health, Vaccine, VaxGen, U.S. Securities and Exchange Commission
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=330930d3-dd13-44ee-b2a8-456b455cbac2)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=9c07644d-1447-4b10-ac62-88699df00405)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=6125f119-8dbc-459d-93f3-741f268c1821)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=fd6323a2-8be5-47e7-9011-06f54808d5e1)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=8b9e2b9c-97fc-4bef-8cd7-74df8d448ff2)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=b9e13af6-a041-48ef-abc2-4b061233e9be)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=3becb41a-1ed0-499b-8067-94556cac1a69)
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=d7d05f1b-e7c7-4828-8998-a2c27603f00e)
Recent Comments