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Emergent (EBS) Posts Preliminary '19 Results, Gives 2020 View

Zacks Equity Research

Emergent BioSolutions Inc. EBS reported preliminary results for 2019, in line with its previous expectation. The company also issued guidance for 2020. Shares slid 2.1% following this announcement on Monday.

A glimpse of the company’s price trend reveals that Emergent has underperformed its industry in a year’s time. The stock has lost 15.7% compared with the industry’s decline of 2.2%.

2019 Preliminary Results

Emergent anticipates total revenues for 2019 in the band of $1.10-$1.11 billion, tightened from the previous guidance of $1.06-$1.14 billion. The mid-point of the range represents year-over-year growth of 41% from 2018 levels. This increase is mainly on higher product sales of ACAM2000 and Narcan (naloxone HCl) nasal spray along with stronger revenues from contracts and grants. However, this was offset by lower revenues from anthrax vaccines (BioThrax and AV7909). The Zacks Consensus Estimate for the metric is pegged at $1.09 billion.

Emergent tightened its view of adjusted net income to $150-$160 million from the previous projection of $150-$180 million.

We remind investors that Emergent’s key Biodefense product BioThrax is marketed for the general use in both pre-exposure prophylaxis and post-exposure prophylaxis of anthrax disease. The U.S. government is the primary purchaser of the Biodefense products. The company also markets smallpox vaccine, ACAM2000, and anthrax monoclonal antibody, raxibacumab. Both were acquired in the fourth quarter of 2017 from Sanofi SNY and GlaxoSmithKline GSK, respectively.

Emergent is also developing a next-generation anthrax vaccine candidate AV7909 (anthrax vaccine adsorbed with adjuvant) for post-exposure prophylaxis of anthrax disease.

2020 Outlook

Emergent predicts revenues of $1.75-$1.27 billion for 2020. The Zacks Consensus Estimate for the metric stands at $1.14 billion for the period. Emergent envisions adjusted net income within $160-$210 million.

In 2020, Emergent forecasts steady growth in sales of Narcan nasal spray, in the bracket of $285-$315 million. Deliveries are anticipated of ACAM2000 (expected in the band of $180-$200 million) and raxibacumab to the Strategic National Stockpile (SNS) under the Biomedical Advanced Research and Development Authority procurement contract along with continued expansion of CMO services.

In a separate press release, Emergent announced that it has received agreement from the European Medicines Agency (EMA) to develop its chikungunya vaccine candidate CHIKV VLP. The company is looking to conduct a phase III safety and immunogenicity study using serum neutralizing antibodies (SNA) as an immune correlate of protection to predict the clinical benefit of the vaccine candidate.

Notably, in September 2019, the EMA’s Committee for Medicinal Products for Human Use (CHMP) granted PRIority Medicines (PRIME) designation to CHIKV VLP.

Notably, CHIKV VLP was granted a Fast Track tag by the FDA in May 2019.

Zacks Rank & Key Pick

Emergent currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the biotech sector is Denali Therapeutics Inc. DNLI, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Denali’s loss per share estimates have narrowed 0.4% for 2020 over the past 60 days.

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