Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 30, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'Emergent BioSolutions Inc. | ' |
Entity Central Index Key | '0001367644 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'No | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 37,411,197 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $160,215 | $179,338 |
Accounts receivable | 62,938 | 60,587 |
Inventories | 71,268 | 14,643 |
Income tax receivable, net | 17,800 | 5,651 |
Prepaid expenses and other current assets | 14,982 | 12,896 |
Total current assets | 327,203 | 273,115 |
Property, plant and equipment, net | 303,468 | 264,240 |
In process research and development | 50,300 | 41,800 |
Intangible assets, net | 68,928 | 30,148 |
Goodwill | 47,188 | 13,954 |
Deferred tax assets, net | 1,203 | 0 |
Income tax receivable, long-term | 15,596 | 0 |
Other assets | 9,365 | 3,373 |
Total assets | 823,251 | 626,630 |
Current liabilities: | ' | ' |
Accounts payable | 36,643 | 27,521 |
Accrued expenses and other current liabilities | 4,879 | 1,252 |
Accrued compensation | 18,242 | 24,615 |
Contingent purchase consideration, current portion | 3,193 | 1,341 |
Provision for chargebacks | 4,099 | 0 |
Deferred tax liability, current portion (net) | 88 | 88 |
Deferred revenue, current portion | 5,180 | 1,834 |
Total current liabilities | 72,324 | 56,651 |
Contingent purchase consideration, net of current portion | 19,127 | 15,278 |
Long-term indebtedness, net of current portion | 251,000 | 62,000 |
Deferred tax liability, net | 0 | 1,419 |
Deferred revenue, net of current portion | 1,805 | 0 |
Other liabilities | 1,500 | 2,117 |
Total liabilities | 345,756 | 137,465 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized, 37,719,153 shares issued and 37,306,200 shares outstanding at March 31, 2014; 37,036,996 shares issued and 36,624,043 shares outstanding at December 31, 2013 | 38 | 37 |
Treasury stock, at cost, 412,953 common shares at March 31, 2014 and December 31, 2013 | -6,119 | -6,119 |
Additional paid-in capital | 255,675 | 247,637 |
Accumulated other comprehensive loss | -3,391 | -3,465 |
Retained earnings | 231,292 | 251,528 |
Total Emergent BioSolutions Inc. stockholders' equity | 477,495 | 489,618 |
Noncontrolling interest in subsidiaries | 0 | -453 |
Total stockholders' equity | 477,495 | 489,165 |
Total liabilities and stockholders' equity | $823,251 | $626,630 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Stockholders' equity: | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 37,719,153 | 37,036,996 |
Common stock, shares outstanding (in shares) | 37,306,200 | 36,624,043 |
Treasury stock (in shares) | 412,953 | 412,953 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenues: | ' | ' |
Product sales | $35,767 | $30,359 |
Contract manufacturing | 2,726 | 0 |
Contracts and grants | 15,391 | 12,741 |
Total revenues | 53,884 | 43,100 |
Operating expenses: | ' | ' |
Cost of product sales and contract manufacturing | 18,997 | 5,698 |
Research and development | 30,256 | 30,724 |
Selling, general and administrative | 30,089 | 20,028 |
Loss from operations | -25,458 | -13,350 |
Other income (expense): | ' | ' |
Interest income | 40 | 23 |
Interest expense | -3,535 | -11 |
Other income (expense), net | 512 | 17 |
Total other income (expense) | -2,983 | 29 |
Loss before benefit for income taxes | -28,441 | -13,321 |
Benefit from income taxes | -8,205 | -4,516 |
Net loss | -20,236 | -8,805 |
Net loss attributable to noncontrolling interest | 0 | 743 |
Net loss attributable to Emergent BioSolutions Inc. | ($20,236) | ($8,062) |
Loss per share - basic (in dollars per share) | ($0.55) | ($0.22) |
Loss per share - diluted (in dollars per share) | ($0.55) | ($0.22) |
Weighted-average number of shares - basic (in shares) | 36,854,370 | 35,968,064 |
Weighted-average number of shares - diluted (in shares) | 36,854,370 | 35,968,064 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Loss (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Consolidated Statements of Comprehensive Loss (Unaudited) [Abstract] | ' | ' |
Net loss attributable to Emergent BioSolutions Inc. | ($20,236) | ($8,062) |
Foreign currency translations, net of tax | 74 | 370 |
Comprehensive loss | ($20,162) | ($7,692) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net loss | ($20,236) | ($8,805) |
Adjustments to reconcile to net cash provided by operating activities: | ' | ' |
Stock-based compensation expense | 2,650 | 2,976 |
Depreciation and amortization | 6,835 | 4,163 |
Current and deferred income taxes | -8,052 | -4,516 |
Non-cash development expenses from joint venture | 0 | 190 |
Change in fair value of contingent obligations | 412 | 0 |
Write off of bank fees | 1,831 | 0 |
Excess tax benefits from stock-based compensation | -4,570 | -1,608 |
Other | 453 | 6 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 17,590 | 33,079 |
Inventories | -4,006 | -6,987 |
Income taxes | -3,753 | -7,918 |
Prepaid expenses and other assets | 556 | -246 |
Accounts payable | -10,713 | -4,196 |
Accrued expenses and other liabilities | 1,546 | 21 |
Accrued compensation | -8,720 | -10,982 |
Provision for chargebacks | 159 | 0 |
Deferred revenue | -1,227 | 197 |
Net cash used in operating activities | -29,245 | -4,626 |
Cash flows from investing activities: | ' | ' |
Purchases of property, plant and equipment | -4,590 | -7,679 |
Acquisition of Cangene Corporation | -178,167 | 0 |
Net cash used in investing activities | -182,757 | -7,679 |
Cash flows from financing activities: | ' | ' |
Proceeds from convertible debenture, net of debt issuance costs | 241,654 | 0 |
Proceeds from other long-term debt obligations | 1,000 | 0 |
Issuance of common stock subject to exercise of stock options | 8,137 | 504 |
Excess tax benefits from stock-based compensation | 4,570 | 1,608 |
Principal payments on long-term indebtedness | -62,000 | -1,117 |
Contingent obligation payments | -487 | 0 |
Net cash provided by financing activities | 192,874 | 995 |
Effect of exchange rate changes on cash and cash equivalents | 5 | -118 |
Net increase (decrease) in cash and cash equivalents | -19,123 | -11,428 |
Cash and cash equivalents at beginning of period | 179,338 | 141,666 |
Cash and cash equivalents at end of period | $160,215 | $130,238 |
Summary_of_significant_account
Summary of significant accounting policies | 3 Months Ended | |
Mar. 31, 2014 | ||
Summary of significant accounting policies [Abstract] | ' | |
Summary of significant accounting policies | ' | |
1. Summary of significant accounting policies | ||
Basis of presentation and consolidation | ||
The accompanying unaudited consolidated financial statements include the accounts of Emergent BioSolutions Inc. (the "Company" or "Emergent") and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
The unaudited consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC. | ||
In the opinion of the Company's management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, and are necessary to present fairly the financial position of the Company as of March 31, 2014 and the results of operations, comprehensive loss and cash flows for the three months ended March 31, 2014 and 2013. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year. | ||
There have been no significant changes to the Company's summary of significant accounting policies, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC, during the three months ended March 31, 2014, except for additions to the Company's accounting policies for revenue recognition and inventories related to the Cangene Corporation ("Cangene") acquisition (see Note 2). | ||
Revenue recognition | ||
The Company recognizes revenues from product sales if four basic criteria have been met: | ||
§ | there is persuasive evidence of an arrangement; | |
§ | delivery has occurred or title has passed to the Company's customer; | |
§ | the fee is fixed or determinable; and | |
§ | collectability is reasonably assured. | |
All revenues from product sales are recorded net of applicable allowances for sales returns, rebates, special promotional programs, and discounts. The Company estimates allowances for deductions from revenue using a combination of information received from third parties including market data, inventory reports from major wholesalers, historical information and analysis. These estimates are subject to the inherent limitations of estimates that rely on third-party data, as certain third- party information may itself rely on estimates and reflect other limitations. Provisions for estimated rebates and other allowances, such as discounts and promotional and other credits, are estimated based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and contract terms, and actual discounts offered. Management believes that such provisions are determinable because of the limited number of assumptions involved and the consistency of historical experience. | ||
The Company markets and sells its Biosciences products through commercial wholesalers (direct customers) who purchase the products at a price referred to as the wholesale acquisition cost ("WAC"). Additionally, the Company enters into agreements with indirect customers for a contracted price that is less than the WAC. The indirect customers, such as group-purchasing organizations, physician practice-management groups and hospitals, purchase the Company's products from the wholesalers. Under these agreements with the wholesalers, the Company guarantees that it will credit them for the difference between the WAC and the indirect customers' contracted price. This credit is referred to as a chargeback. Wholesalers provide detailed information regarding indirect customer purchases as part of the justification for their credit request. Once received by the Company, these requests are standardized and tracked within a software system that adjudicates and reconciles all indirect claims coming from wholesalers. The database with these claims is used for historical trending and estimating future indirect sales, which are used to estimate accruals. Adjustments to these provisions are made periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. The Company makes subjective judgments primarily based on its evaluation of current market conditions and trade inventory levels related to the products. This evaluation may result in an increase or decrease in the experience rate that is applied to current and future sales, or as an adjustment to past sales, or both. The Company estimates allowances for revenue reducing obligations such as rebates, special promotional programs, and discounts, using a combination of historical trends, contractual obligations and information received from third parties. The accuracy of these estimates is dependent upon the inherent limitations of extrapolating estimates from historical trends and upon the quality of the third-party information. | ||
Inventories | ||
Inventories are stated at the lower of cost or market with cost being determined using a standard cost method, which approximates average cost. Average cost consists primarily of material, labor and manufacturing overhead expenses (which includes fixed production-overhead costs) and includes the services and products of third party suppliers. The Company analyzes its inventory levels quarterly and writes down, in the applicable period, inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected customer demand. The Company also writes off in the applicable period the costs related to expired inventory. Costs of purchased inventories are recorded using weighted-average costing. The Company determines normal capacity for each production facility and allocates fixed production-overhead costs on that basis. Any excess, unallocated fixed production-overhead costs are expensed as incurred. |
Acquisitions
Acquisitions | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Acquisitions [Abstract] | ' | ||||||||
Acquisitions | ' | ||||||||
2. Acquisitions | |||||||||
Cangene Corporation | |||||||||
On February 21, 2014, the Company acquired 100% of the voting interest of Cangene for $3.24 per share in cash (on a fully-diluted basis), which represents a total purchase price of $221.8 million. This transaction was accounted for by the Company under the acquisition method of accounting, with the Company as the acquiror. Under the acquisition method of accounting, the assets and liabilities of Cangene were recorded as of the acquisition date, at their respective fair values, and combined with those of the Company. This acquisition diversifies the Company's Biodefense and Biosciences product portfolio and expands the Company's manufacturing capabilities. | |||||||||
The table below summarizes the preliminary allocation of the purchase price based upon estimated fair values of assets acquired and liabilities assumed at February 21, 2014. As of the date of this filing, the valuation of acquired intangible assets, inventory, deferred taxes, property plant and equipment, employee related liabilities and other fair value adjustments are not complete, and as such the purchase price allocation is subject to change. | |||||||||
(in thousands) | 21-Feb-14 | ||||||||
Fair value of tangible assets acquired and liabilities assumed: | |||||||||
Cash | $ | 43,631 | |||||||
Accounts receivable | 19,940 | ||||||||
Inventory (i) | 52,619 | ||||||||
Prepaid expenses and other assets | 2,375 | ||||||||
Property, plant and equipment | 40,264 | ||||||||
Deferred taxes, net | 2,775 | ||||||||
Income tax receivable | 18,536 | ||||||||
Accounts payable and accrued liabilities | (22,916 | ) | |||||||
Provision for chargebacks | (3,940 | ) | |||||||
Contingent purchase consideration | (5,776 | ) | |||||||
Deferred revenue | (6,378 | ) | |||||||
Total fair value of tangible assets acquired and liabilities assumed | 141,130 | ||||||||
Acquired in-process research and development | 8,500 | ||||||||
Acquired intangible assets | 40,400 | ||||||||
Goodwill | 31,770 | ||||||||
Total purchase price | $ | 221,800 | |||||||
(i) Acquired inventory reflects a $6.2 million adjustment to record inventory at fair value, referred to as a step-up adjustment. The $6.2 million step-up was estimated to be amortized through cost of product sales and contract manufacturing over the next five years based on estimated inventory turnover, which will increase costs of product sales and contract manufacturing during such period. | |||||||||
The table below summarizes the preliminary estimated fair value of intangible assets acquired and the estimated amortization periods: | |||||||||
Amortization | |||||||||
Period | |||||||||
( in thousands) | Amount | in years | |||||||
Corporate Trade Name | $ | 2,800 | 5 | ||||||
Marketed Products | 8,300 | 10 | |||||||
Licensed Products | 3,300 | 10 | |||||||
Biodefense Products | 20,400 | 10 | |||||||
Contract Manufacturing | 5,600 | 10 | |||||||
Total identified intangible assets | $ | 40,400 | |||||||
The Company determined the estimated fair value of the intangibles assets using the income approach, which is based on the present value of future cash flows. The fair value measurements are based on significant unobservable inputs that are developed by the Company using estimates and assumptions of the respective market and market penetration of the Company's products. | |||||||||
A substantial portion of the assets acquired from Cangene consisted of intangible assets. The Marketed Products intangible asset includes WinRho® SDF (Rho(D) Immune Globulin Intravenous (Human)) and VARIZIG® (Varicella Zoster Immune Globulin (Human)). The Licensed Products intangible asset includes HepaGam B® (Hepatitis B Immune Globulin Intravenous (Human)) and episil®. The Biodefense intangible asset includes BATTM (Botulism Antitoxin Heptavalent (A, B, C, D, E, F, G)-Equine), AIGIV (Anthrax Immune Globulin Intravenous (Human)) and VIGIV (Vaccinia Immune Globulin Intravenous (Human)). The Contract Manufacturing intangible asset is primarily related to contract manufacturing operations in Baltimore, Maryland. | |||||||||
The Company estimated the fair value of the Marketed, Licensed and Biodefense Product intangible assets using the income approach with a present value discount rate of 15%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of Cangene. This is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value these intangible assets. The projected cash flows from these Marketed, Licensed and Biodefense Product intangible assets were based on key assumptions including: estimates of revenues and operating profits; the life of the potential commercialized product and associated risks; and risks related to the viability of and potential alternative treatments in any future target markets. | |||||||||
The Company estimated the fair value of the Contract Manufacturing intangible asset using the income approach with a present value discount rate of 15%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of Cangene. This is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value this intangible asset. The projected cash flows from the Contract Manufacturing intangible asset was based on key assumptions including: estimates of revenues and operating profits; and viability of attaining/maintaining future third-party manufacturing relationships with the Company's customers. | |||||||||
The Company estimated the fair value of the Corporate Trade Name intangible asset using the relief of royalty method with a present value discount rate of 15%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of Cangene. This is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value this intangible asset. | |||||||||
The weighted average amortization period of the intangible assets is 116 months. For the three months ended March 31, 2014, the Company recorded amortization expense of $450,000 for intangible assets acquired from Cangene, which has been recorded in cost of product sales and contract manufacturing. Amortization expense of $237,000 and $213,000 was recorded within the Biosciences and Biodefense segments, respectively. | |||||||||
Intangible assets associated with in-process research and development ("IPR&D") acquired from Cangene relate to the IXinity product candidate. Management determined that the estimated acquisition-date fair value of intangible assets related to IPR&D was $8.5 million. The estimated fair value was determined using the income approach, which discounts expected future cash flows to present value. The Company estimated the fair value using a present value discount rate of 16%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of Cangene. This is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value the IPR&D. The projected cash flows from the IPR&D projects were based on key assumptions including: estimates of revenues and operating profits related to each project considering its stage of development on the acquisition date; the time and resources needed to complete the development and approval of the product candidate; the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a product candidate such as obtaining marketing approval from the FDA and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets. IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. | |||||||||
The Company recorded approximately $31.8 million in goodwill related to the Cangene acquisition, representing the purchase price paid in the acquisition that was in excess of the fair value of the tangible and intangible assets acquired. None of the goodwill generated from the Cangene acquisition is expected to be deductible for tax purposes. | |||||||||
The Company has incurred transaction costs related to the Cangene acquisition of approximately $3.7 million for the three months ended March 31, 2014, which has been recorded in selling, general and administrative expenses within the Company's Biosciences segment. The Company has incurred to date a total of $7.0 million through March 31, 2014 in transaction costs associated with the Cangene acquisition, of which $3.3 million was incurred in 2013. | |||||||||
From the date of the acquisition to March 31, 2014, the Company has recognized revenues of $10.6 million and a net loss attributable to Emergent BioSolutions Inc. of $2.9 million from the operations of the acquired entity. | |||||||||
The following pro forma information is presented as if the acquisition had occurred on January 1, 2013, and combines the historical results of operations of the Company and Cangene for the periods ended March 31, 2014 and 2013. | |||||||||
March 31, | |||||||||
(in thousands) | 2014 | 2013 | |||||||
Pro forma revenue | $ | 81,363 | $ | 69,023 | |||||
Pro forma net loss | $ | (21,730 | ) | $ | (17,227 | ) | |||
Healthcare Protective Products Division | |||||||||
On August 1, 2013, the Company acquired substantially all of the assets of the HPPD, a division of Bracco Diagnostics Inc. ("Bracco"), for $25.9 million in cash along with contingent purchase consideration obligations to Bracco. The assets acquired in this acquisition include HPPD's product, RSDL, and a majority of the customer and distributor agreements associated with RSDL along with $1.5 million of manufacturing equipment. In addition, the Company assumed a $1.5 million liability associated with the Canadian Technology Development Fund. The acquisition diversifies the Biodefense segment by adding product sales from RSDL. | |||||||||
The contingent purchase consideration obligation due to Bracco is based on a percentage of RSDL net sales, ranging from 5-10%, for the period August 1, 2013 through July 31, 2028. At August 1, 2013, the contingent purchase consideration obligation was recorded at a fair value of $16.2 million. The Level 3 fair value of this obligation is based on management's assessment of the potential future realization of the contingent purchase consideration payments. This assessment is based on inputs that have no observable market. The obligation is measured using the income approach (a discounted cash flow model). | |||||||||
The total purchase price is summarized below: | |||||||||
(in thousands) | |||||||||
Amount of cash paid to Bracco Diagnostics Inc. | $ | 25,873 | |||||||
Fair value of contigent purchase consideration | 16,232 | ||||||||
Total purchase price | $ | 42,105 | |||||||
The table below summarizes the allocation of the purchase price based upon fair values of assets acquired and liabilities assumed at August 1, 2013. | |||||||||
(in thousands) | |||||||||
Acquired intangible assets | $ | 32,099 | |||||||
Goodwill | 9,916 | ||||||||
Acquired equipment | 1,543 | ||||||||
Other | 11 | ||||||||
Assumed liabilities | (1,464 | ) | |||||||
Total purchase price | $ | 42,105 | |||||||
A substantial portion of the assets acquired from Bracco consisted of intangible assets associated with the RSDL product. As of the date of acquisition, the Company has recorded intangible assets of approximately $28.6 million related to RSDL, which is being amortized over 8 years, and $3.5 million related to a manufacturing agreement with Bracco, which is being amortized over 3 years. For the three months ended March 31, 2014, the Company recorded $1.2 million amortization expense for intangible assets acquired from Bracco which was recorded in cost of product sales and contract manufacturing within the Company's Biodefense segment. The weighted average remaining amortization period for the intangible assets is 83 months. | |||||||||
The Company recorded approximately $9.9 million in goodwill related to the HPPD acquisition representing the purchase price paid in the acquisition in excess of the fair value of the tangible and intangible assets acquired. This goodwill is included in the Company's biodefense segment. None of the goodwill generated from the HPPD acquisition is expected to be deductible for tax purposes. | |||||||||
The Company has determined the historical results of HPPD were not significant to the Company's results of operations, and as such no proforma disclosures have been presented. |
Fair_value_measurements
Fair value measurements | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Fair value measurements [Abstract] | ' | ||||||||||||||||
Fair value measurements | ' | ||||||||||||||||
3. Fair value measurements | |||||||||||||||||
The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
At March 31, 2014 | |||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | |||||||||||||||||
Investment in money market funds (1) | $ | 23,293 | $ | - | $ | - | $ | 23,293 | |||||||||
Total assets | $ | 23,293 | $ | - | $ | - | $ | 23,293 | |||||||||
Liabilities: | |||||||||||||||||
Contingent purchase consideration | $ | - | $ | - | $ | 22,320 | $ | 22,320 | |||||||||
Total liabilities | $ | - | $ | - | $ | 22,320 | $ | 22,320 | |||||||||
At Decembr 31, 2013 | |||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | |||||||||||||||||
Investment in money market funds (1) | $ | 37,701 | $ | - | $ | - | $ | 37,701 | |||||||||
Total assets | $ | 37,701 | $ | - | $ | - | $ | 37,701 | |||||||||
Liabilities: | |||||||||||||||||
Contingent purchase consideration | $ | - | $ | - | $ | 16,619 | $ | 16,619 | |||||||||
Total liabilities | $ | - | $ | - | $ | 16,619 | $ | 16,619 | |||||||||
(1) Included in cash and cash equivalents in accompanying consolidated balance sheets. | |||||||||||||||||
As of March 31, 2014 and 2013, the Company did not have any transfers between Level 1 and Level 2 assets or liabilities. | |||||||||||||||||
The fair value of contingent purchase consideration obligations are based on management's assessment of changes as a result of adjustments to the discount rates and updates in the assumed and actual achievement of net sales for RSDL, HepaGam B and episil, which are inputs that have no observable market (Level 3). For the three months ended March 31, 2014, the contingent purchase consideration obligation increased by $412,000, primarily due to an adjustment to the actual and expected timing of RSDL, HepaGam B and episil sales. This increase resulted in a charge that is classified in the Company's statement of operations as cost of product sales and contract manufacturing. | |||||||||||||||||
The following table is a reconciliation of the beginning and ending balance of the liabilities measured at fair value using significant unobservable inputs (Level 3) during the three months ended March 31, 2014. | |||||||||||||||||
(in thousands) | |||||||||||||||||
Balance at December 31, 2013 | $ | 16,619 | |||||||||||||||
Expense (income) included in earnings | 412 | ||||||||||||||||
Settlements | (487 | ) | |||||||||||||||
Purchases, sales and issuances | 5,776 | ||||||||||||||||
Transfers in/(out) of Level 3 | - | ||||||||||||||||
Balance at March 31, 2014 | $ | 22,320 | |||||||||||||||
Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis, as documented above, from those measured at fair value on a nonrecurring basis. As of March 31, 2013 the Company had no assets or liabilities that were measured at fair value on a nonrecurring basis. |
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventories [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
4. Inventories | |||||||||
Inventories consist of the following: | |||||||||
March 31, | December 31, | ||||||||
(in thousands) | 2014 | 2013 | |||||||
Raw materials and supplies | $ | 18,335 | $ | 2,656 | |||||
Work-in-process | 33,666 | 9,819 | |||||||
Finished goods | 19,267 | 2,168 | |||||||
Total inventories | $ | 71,268 | $ | 14,643 | |||||
Intangible_assets_inprocess_re
Intangible assets, in-process research and development and goodwill | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
Intangible assets, in-process research and development and goodwill [Abstract] | ' | ||||||||||||||||||||||||||||||||
Intangible assets, in-process research and development and goodwill | ' | ||||||||||||||||||||||||||||||||
5. Intangible assets, in-process research and development and goodwill | |||||||||||||||||||||||||||||||||
As of March 31, 2014, the Company had $50.3 million of IPR&D assets, which are included in the Biosciences business segment. This includes $41.8 million related to the Company's otlertuzumab product candidate and $8.5 million related to the Company's IXinity product candidate. | |||||||||||||||||||||||||||||||||
Intangible assets consist of the following: | |||||||||||||||||||||||||||||||||
Manufacturing | Corporate | Marketed | Licensed | Biodefense | Contract | ||||||||||||||||||||||||||||
(in thousands) | RSDL | Agreement | Tradename | Products | Products | Products | Manufacturing | Total | |||||||||||||||||||||||||
Cost basis | |||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 28,621 | $ | 3,478 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 32,099 | |||||||||||||||||
Additions | - | - | 2,800 | 8,300 | 3,300 | 20,400 | 5,600 | 40,400 | |||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 28,621 | $ | 3,478 | $ | 2,800 | $ | 8,300 | $ | 3,300 | 20,400 | $ | 5,600 | $ | 72,499 | ||||||||||||||||||
Accumulated amortization | |||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | (1,468 | ) | $ | (483 | ) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | (1,951 | ) | ||||||||||||||
Amortization | (880 | ) | (290 | ) | (58 | ) | (87 | ) | (34 | ) | (213 | ) | (58 | ) | (1,620 | ) | |||||||||||||||||
Balance at March 31, 2014 | $ | (2,348 | ) | $ | (773 | ) | $ | (58 | ) | $ | (87 | ) | $ | (34 | ) | $ | (213 | ) | $ | (58 | ) | $ | (3,571 | ) | |||||||||
Net book value at March 31, 2014 | $ | 26,273 | $ | 2,705 | $ | 2,742 | $ | 8,213 | $ | 3,266 | $ | 20,187 | 5,542 | $ | 68,928 | ||||||||||||||||||
Goodwill consists of the following: | |||||||||||||||||||||||||||||||||
(in thousands) | Total | ||||||||||||||||||||||||||||||||
Cost basis | |||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 13,954 | |||||||||||||||||||||||||||||||
Additions | 33,234 | ||||||||||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 47,188 |
Longterm_debt
Long-term debt | 3 Months Ended |
Mar. 31, 2014 | |
Long-term debt [Abstract] | ' |
Long-term debt | ' |
6. Long-term debt | |
On January 29, 2014, the Company issued $250.0 million aggregate principal amount of 2.875% Convertible Senior Notes due 2021 (the "Notes"). The Notes bear interest at a rate of 2.875% per year, payable semi-annually in arrears on January 15 and July 15 of each year, commencing July 15, 2014. The Notes mature on January 15, 2021, unless earlier purchased by the Company, redeemed or converted. The conversion rate is equal to 30.8821 shares of common stock per $1,000 principal amount of notes (which is equivalent to an initial conversion price of approximately $32.38 per share of common stock). The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. The Company incurred approximately $8.3 million in debt issuance costs associated with the Notes which has been capitalized on the consolidated balance sheets and is being amortized over seven years. | |
On December 11, 2013, the Company entered into a senior secured credit agreement (the "Credit Agreement") with three lending financial institutions (the "Lenders"), led by Bank of America, N.A., as administrative agent. The Credit Agreement originally provided for a revolving credit facility of up to $100 million through December 11, 2018 (or such earlier date required by the terms of the Credit Agreement) and a term loan facility of up to $125 million to be drawn in full, if at all, on or prior to March 31, 2014. In connection with the Credit Agreement, the Company borrowed $62.0 million under the revolving credit facility primarily to repay obligations under existing loan agreements. On January 29, 2014, in connection with the Company's issuance of the Notes, the unused $125 million term loan portion of the Credit Agreement terminated automatically in accordance with the terms of the Credit Agreement. In addition, following the closing of the Notes offering, we repaid the $62.0 million outstanding indebtedness under the revolving credit facility, which restored the full $100 million revolving credit capacity under this facility. In addition, the Company expensed $1.8 million of debt issuance cost associated with the term loan facility. As of March 31, 2014, no amounts were drawn under the revolving credit facility. | |
The Company's payment obligations under the Credit Agreement are secured by a lien on substantially all of the Company's assets, including the stock of all of the Company's subsidiaries, and the assets of the subsidiary guarantors, including mortgages over certain of their real properties, including the Company's large-scale vaccine manufacturing facility in Lansing, Michigan and the Company's product development and manufacturing facility in Baltimore, Maryland. | |
The Credit Agreement, as amended, contains affirmative and negative covenants customary for financings of this type. Negative covenants in the Credit Agreement limit the Company's ability to, among other things: incur indebtedness (other than the issuance of the Notes) and liens; dispose of assets; make investments including loans, advances or guarantees; and enter into certain mergers or similar transactions. The Credit Agreement also contains financial covenants, tested quarterly and in connection with any triggering events under the Credit Agreement that include the maintenance of: (1) a minimum consolidated debt service coverage ratio of 2.50 to 1.00, (2) a maximum consolidated leverage ratio for the period ending on or prior to September 30, 2014 of 4.00 to 1.00, for the measurement period ending December 31, 2014 of 3.75 to 1.00, and thereafter of 3.50 to 1.00, (3) a maximum consolidated senior leverage ratio of 2.00 to 1.00 (when no term loan is outstanding) and (4) a minimum liquidity requirement of $50 million. Upon the occurrence and continuance of an event of default under the Credit Agreement, the commitments of the lenders to make loans under the Credit Agreement may be terminated (other than commitments to make the term loan, which may only be terminated upon the occurrence and continuance of certain specified defaults) and the Company's payment obligations under the Credit Agreement may be accelerated. The events of default under the Credit Agreement include, among others, subject in some cases to specified cure periods: payment defaults; inaccuracy of representations and warranties in any material respect; defaults in the observance or performance of covenants; bankruptcy and insolvency related defaults; the entry of a final judgment in excess of a threshold amount; change of control; and the invalidity of loan documents relating to the Credit Agreement. | |
In January 2014, the Company entered into forgiveable loan agreements with the State of Maryland and Montgomery County, Maryland for which the Company received $1.0 million. The proceeds of the forgiveable loans were used to reimburse the Company for eligible costs it incurred to relocate and expand its headquarters operations and improve its research and development facility in Maryland, collectively the ("Montgomery County Site"). The principal and accrued interest may be forgiven if specified employment levels are achieved and maintained and at least $15.0 million in project costs are expended at the Montgomery County Site prior to December 2018. If the Company fails to meet the criteria above, it will have to repay all or a portion of the loan. |
Equity_awards
Equity awards | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Equity awards [Abstract] | ' | ||||||||||||||||||||
Equity awards | ' | ||||||||||||||||||||
7. Equity awards | |||||||||||||||||||||
The following is a summary of stock option award activity under the Second Amended and Restated Emergent BioSolutions Inc., 2006 Stock Incentive Plan (the "2006 Plan") and the Emergent BioSolutions Employee Stock Option Plan (the "2004 Plan"): | |||||||||||||||||||||
2006 Plan | 2004 Plan | ||||||||||||||||||||
Number of Shares | Weighted-Average Exercise Price | Number of Shares | Weighted-Average Exercise Price | Aggregate Intrinsic Value | |||||||||||||||||
Outstanding at December 31, 2013 | 3,639,995 | $ | 17.01 | 53,156 | $ | 8.86 | $ | 23,148,738 | |||||||||||||
Granted | 1,013,221 | 28.09 | - | - | |||||||||||||||||
Exercised | (483,569 | ) | 16.82 | - | - | ||||||||||||||||
Forfeited | (32,721 | ) | 15.93 | - | - | ||||||||||||||||
Outstanding at March 31, 2014 | 4,136,926 | $ | 19.76 | 53,156 | $ | 8.86 | $ | 26,541,184 | |||||||||||||
Exercisable at March 31, 2014 | 2,164,933 | $ | 17.66 | 53,156 | $ | 8.86 | $ | 17,357,967 | |||||||||||||
The following is a summary of restricted stock unit award activity under the 2006 Plan: | |||||||||||||||||||||
Number of Shares | Weighted-Average Grant Price | Aggregate Intrinsic Value | |||||||||||||||||||
Outstanding at December 31, 2013 | 792,626 | $ | 16.53 | $ | 18,246,611 | ||||||||||||||||
Granted | 506,612 | 28.09 | |||||||||||||||||||
Vested | (298,489 | ) | 27.51 | ||||||||||||||||||
Forfeited | (15,462 | ) | 15.74 | ||||||||||||||||||
Outstanding at March 31, 2014 | 985,287 | $ | 22.1 | $ | 24,898,202 | ||||||||||||||||
Variable_interest_entities
Variable interest entities | 3 Months Ended |
Mar. 31, 2014 | |
Variable interest entities [Abstract] | ' |
Variable interest entities | ' |
8. Variable interest entities | |
In July 2008, the Company entered into a collaboration with the University of Oxford ("Oxford") and certain Oxford researchers to advance a vaccine product candidate for tuberculosis, resulting in the formation of the Oxford-Emergent Tuberculosis Consortium ("OETC"). The Company liquidated OETC during the three month period ending March 31, 2014. In addition, the Company recorded an adjustment related to noncontrolling interest of $453,000 due to the liquidation. This adjustment was recorded as selling, general and administrative expense within the Company's Biosciences segment. |
Earnings_per_share
Earnings per share | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings per share [Abstract] | ' | ||||||||
Earnings per share | ' | ||||||||
9. Earnings per share | |||||||||
Basic earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the if-converted method by dividing net income (loss) (adjusted for interest expense, net of tax, and amortization of debt issuance cost, net of tax, associated with the Company's convertible debt) by the weighted average number of shares of common stock outstanding during the period, adjusted for the potential dilutive effect of other securities if such securities were converted or exercised. | |||||||||
The following table presents the calculation of basic and diluted net loss per share: | |||||||||
Three Months Ended March 31, | |||||||||
(in thousands, except share and per share data) | 2014 | 2013 | |||||||
Numerator: | |||||||||
Net loss | $ | (20,236 | ) | $ | (8,062 | ) | |||
Interest expense applicable to convertible debt, net of tax | - | - | |||||||
Amortization of debt issuance costs, net of tax | - | - | |||||||
Adjusted net loss | (20,236 | ) | (8,062 | ) | |||||
Denominator: | |||||||||
Weighted-average number of shares—basic | 36,854,370 | 35,968,064 | |||||||
Dilutive securities—equity awards | - | - | |||||||
Weighted-average number of shares—diluted | 36,854,370 | 35,968,064 | |||||||
Earnings per share-basic | $ | (0.55 | ) | $ | (0.22 | ) | |||
Earnings per share-diluted | $ | (0.55 | ) | $ | (0.22 | ) | |||
No adjustment to the net loss was computed under the if-converted method as the effect would have been anti-dilutive. For the three months ended March 31, 2014 and 2013, outstanding stock options to purchase approximately 5.2 million and 5.0 million shares of common stock, respectively, along with 8.1 million shares related to the Company's convertible debt, were excluded from the calculation of diluted earnings per share because of the adjusted net loss incurred for the three months ended March 31, 2014 and 2013 would make these awards anti-dilutive. |
Segment_information
Segment information | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment information [Abstract] | ' | ||||||||||||||||
Segment information | ' | ||||||||||||||||
10. Segment information | |||||||||||||||||
For financial reporting purposes, the Company reports financial information for two business segments: Biodefense and Biosciences. The Company's two business segments, or divisions, engage in business activities for which discrete financial information is reviewed by the chief operating decision maker. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company's reportable segments are business units that offer different products and product candidates and are managed separately because they manufacture and develop distinct products with different manufacturing and development processes. | |||||||||||||||||
The Biodefense division is directed to government-sponsored development and supply of countermeasures against potential agents of bioterror or biowarfare and consists of two business units: vaccines and therapeutics, and medical devices. Revenues in this segment are primarily from sales of the Company's FDA-licensed product, BioThrax® (Anthrax Vaccine Adsorbed), to the U.S. government. The Biosciences division is directed to commercial opportunities and primarily targets hematology/oncology, transplantation and infectious diseases, and consists of two business units, therapeutics and vaccines. The "All Other" segment relates to the general operating costs of the Company and includes costs of the centralized services departments, which are not allocated to the other segments, as well as spending on activities that are not classified as Biodefense or Biosciences. | |||||||||||||||||
Reportable Segments | |||||||||||||||||
(in thousands) | Biodefense | Biosciences | All Other | Total | |||||||||||||
Three Months Ended March 31, 2014 | |||||||||||||||||
External revenue | $ | 47,439 | $ | 6,445 | $ | - | $ | 53,884 | |||||||||
Net income (loss) | 1,412 | (19,510 | ) | (2,138 | ) | (20,236 | ) | ||||||||||
Three Months Ended March 31, 2013 | |||||||||||||||||
External revenue | $ | 42,159 | $ | 941 | $ | - | $ | 43,100 | |||||||||
Net income (loss) | 4,610 | (11,372 | ) | (1,300 | ) | (8,062 | ) |
Summary_of_significant_account1
Summary of significant accounting policies (Policies) | 3 Months Ended | |
Mar. 31, 2014 | ||
Summary of significant accounting policies [Abstract] | ' | |
Basis of presentation and consolidation | ' | |
Basis of presentation and consolidation | ||
The accompanying unaudited consolidated financial statements include the accounts of Emergent BioSolutions Inc. (the "Company" or "Emergent") and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
The unaudited consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC. | ||
In the opinion of the Company's management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, and are necessary to present fairly the financial position of the Company as of March 31, 2014 and the results of operations, comprehensive loss and cash flows for the three months ended March 31, 2014 and 2013. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year. | ||
There have been no significant changes to the Company's summary of significant accounting policies, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC, during the three months ended March 31, 2014, except for additions to the Company's accounting policies for revenue recognition and inventories related to the Cangene Corporation ("Cangene") acquisition (see Note 2). | ||
Revenue recognition | ' | |
Revenue recognition | ||
The Company recognizes revenues from product sales if four basic criteria have been met: | ||
§ | there is persuasive evidence of an arrangement; | |
§ | delivery has occurred or title has passed to the Company's customer; | |
§ | the fee is fixed or determinable; and | |
§ | collectability is reasonably assured. | |
All revenues from product sales are recorded net of applicable allowances for sales returns, rebates, special promotional programs, and discounts. The Company estimates allowances for deductions from revenue using a combination of information received from third parties including market data, inventory reports from major wholesalers, historical information and analysis. These estimates are subject to the inherent limitations of estimates that rely on third-party data, as certain third- party information may itself rely on estimates and reflect other limitations. Provisions for estimated rebates and other allowances, such as discounts and promotional and other credits, are estimated based on historical payment experience, historical relationship to revenues, estimated customer inventory levels and contract terms, and actual discounts offered. Management believes that such provisions are determinable because of the limited number of assumptions involved and the consistency of historical experience. | ||
The Company markets and sells its Biosciences products through commercial wholesalers (direct customers) who purchase the products at a price referred to as the wholesale acquisition cost ("WAC"). Additionally, the Company enters into agreements with indirect customers for a contracted price that is less than the WAC. The indirect customers, such as group-purchasing organizations, physician practice-management groups and hospitals, purchase the Company's products from the wholesalers. Under these agreements with the wholesalers, the Company guarantees that it will credit them for the difference between the WAC and the indirect customers' contracted price. This credit is referred to as a chargeback. Wholesalers provide detailed information regarding indirect customer purchases as part of the justification for their credit request. Once received by the Company, these requests are standardized and tracked within a software system that adjudicates and reconciles all indirect claims coming from wholesalers. The database with these claims is used for historical trending and estimating future indirect sales, which are used to estimate accruals. Adjustments to these provisions are made periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. The Company makes subjective judgments primarily based on its evaluation of current market conditions and trade inventory levels related to the products. This evaluation may result in an increase or decrease in the experience rate that is applied to current and future sales, or as an adjustment to past sales, or both. The Company estimates allowances for revenue reducing obligations such as rebates, special promotional programs, and discounts, using a combination of historical trends, contractual obligations and information received from third parties. The accuracy of these estimates is dependent upon the inherent limitations of extrapolating estimates from historical trends and upon the quality of the third-party information. | ||
Inventories | ' | |
Inventories | ||
Inventories are stated at the lower of cost or market with cost being determined using a standard cost method, which approximates average cost. Average cost consists primarily of material, labor and manufacturing overhead expenses (which includes fixed production-overhead costs) and includes the services and products of third party suppliers. The Company analyzes its inventory levels quarterly and writes down, in the applicable period, inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of expected customer demand. The Company also writes off in the applicable period the costs related to expired inventory. Costs of purchased inventories are recorded using weighted-average costing. The Company determines normal capacity for each production facility and allocates fixed production-overhead costs on that basis. Any excess, unallocated fixed production-overhead costs are expensed as incurred. |
Acquisitions_Tables
Acquisitions (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Acquisitions [Abstract] | ' | ||||||||
Purchase Price | ' | ||||||||
The total purchase price is summarized below: | |||||||||
(in thousands) | |||||||||
Amount of cash paid to Bracco Diagnostics Inc. | $ | 25,873 | |||||||
Fair value of contigent purchase consideration | 16,232 | ||||||||
Total purchase price | $ | 42,105 | |||||||
Fair Value of Intangible Assets | ' | ||||||||
The table below summarizes the preliminary estimated fair value of intangible assets acquired and the estimated amortization periods: | |||||||||
Amortization | |||||||||
Period | |||||||||
( in thousands) | Amount | in years | |||||||
Corporate Trade Name | $ | 2,800 | 5 | ||||||
Marketed Products | 8,300 | 10 | |||||||
Licensed Products | 3,300 | 10 | |||||||
Biodefense Products | 20,400 | 10 | |||||||
Contract Manufacturing | 5,600 | 10 | |||||||
Total identified intangible assets | $ | 40,400 | |||||||
Pro Forma Information | ' | ||||||||
The following pro forma information is presented as if the acquisition had occurred on January 1, 2013, and combines the historical results of operations of the Company and Cangene for the periods ended March 31, 2014 and 2013. | |||||||||
March 31, | |||||||||
(in thousands) | 2014 | 2013 | |||||||
Pro forma revenue | $ | 81,363 | $ | 69,023 | |||||
Pro forma net loss | $ | (21,730 | ) | $ | (17,227 | ) | |||
Cangene [Member] | ' | ||||||||
Business Acquisition [Line Items] | ' | ||||||||
Purchase Price Allocation | ' | ||||||||
The table below summarizes the preliminary allocation of the purchase price based upon estimated fair values of assets acquired and liabilities assumed at February 21, 2014. As of the date of this filing, the valuation of acquired intangible assets, inventory, deferred taxes, property plant and equipment, employee related liabilities and other fair value adjustments are not complete, and as such the purchase price allocation is subject to change. | |||||||||
(in thousands) | 21-Feb-14 | ||||||||
Fair value of tangible assets acquired and liabilities assumed: | |||||||||
Cash | $ | 43,631 | |||||||
Accounts receivable | 19,940 | ||||||||
Inventory (i) | 52,619 | ||||||||
Prepaid expenses and other assets | 2,375 | ||||||||
Property, plant and equipment | 40,264 | ||||||||
Deferred taxes, net | 2,775 | ||||||||
Income tax receivable | 18,536 | ||||||||
Accounts payable and accrued liabilities | (22,916 | ) | |||||||
Provision for chargebacks | (3,940 | ) | |||||||
Contingent purchase consideration | (5,776 | ) | |||||||
Deferred revenue | (6,378 | ) | |||||||
Total fair value of tangible assets acquired and liabilities assumed | 141,130 | ||||||||
Acquired in-process research and development | 8,500 | ||||||||
Acquired intangible assets | 40,400 | ||||||||
Goodwill | 31,770 | ||||||||
Total purchase price | $ | 221,800 | |||||||
(i) Acquired inventory reflects a $6.2 million adjustment to record inventory at fair value, referred to as a step-up adjustment. The $6.2 million step-up was estimated to be amortized through cost of product sales and contract manufacturing over the next five years based on estimated inventory turnover, which will increase costs of product sales and contract manufacturing during such period. | |||||||||
HPPD [Member] | ' | ||||||||
Business Acquisition [Line Items] | ' | ||||||||
Purchase Price Allocation | ' | ||||||||
The table below summarizes the allocation of the purchase price based upon fair values of assets acquired and liabilities assumed at August 1, 2013. | |||||||||
(in thousands) | |||||||||
Acquired intangible assets | $ | 32,099 | |||||||
Goodwill | 9,916 | ||||||||
Acquired equipment | 1,543 | ||||||||
Other | 11 | ||||||||
Assumed liabilities | (1,464 | ) | |||||||
Total purchase price | $ | 42,105 | |||||||
Fair_value_measurements_Tables
Fair value measurements (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Fair value measurements [Abstract] | ' | ||||||||||||||||
Fair Value Hierarchy for Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||
The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis: | |||||||||||||||||
At March 31, 2014 | |||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | |||||||||||||||||
Investment in money market funds (1) | $ | 23,293 | $ | - | $ | - | $ | 23,293 | |||||||||
Total assets | $ | 23,293 | $ | - | $ | - | $ | 23,293 | |||||||||
Liabilities: | |||||||||||||||||
Contingent purchase consideration | $ | - | $ | - | $ | 22,320 | $ | 22,320 | |||||||||
Total liabilities | $ | - | $ | - | $ | 22,320 | $ | 22,320 | |||||||||
At Decembr 31, 2013 | |||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | |||||||||||||||||
Investment in money market funds (1) | $ | 37,701 | $ | - | $ | - | $ | 37,701 | |||||||||
Total assets | $ | 37,701 | $ | - | $ | - | $ | 37,701 | |||||||||
Liabilities: | |||||||||||||||||
Contingent purchase consideration | $ | - | $ | - | $ | 16,619 | $ | 16,619 | |||||||||
Total liabilities | $ | - | $ | - | $ | 16,619 | $ | 16,619 | |||||||||
(1) Included in cash and cash equivalents in accompanying consolidated balance sheets. | |||||||||||||||||
Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) | ' | ||||||||||||||||
The following table is a reconciliation of the beginning and ending balance of the liabilities measured at fair value using significant unobservable inputs (Level 3) during the three months ended March 31, 2014. | |||||||||||||||||
(in thousands) | |||||||||||||||||
Balance at December 31, 2013 | $ | 16,619 | |||||||||||||||
Expense (income) included in earnings | 412 | ||||||||||||||||
Settlements | (487 | ) | |||||||||||||||
Purchases, sales and issuances | 5,776 | ||||||||||||||||
Transfers in/(out) of Level 3 | - | ||||||||||||||||
Balance at March 31, 2014 | $ | 22,320 |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventories [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Inventories consist of the following: | |||||||||
March 31, | December 31, | ||||||||
(in thousands) | 2014 | 2013 | |||||||
Raw materials and supplies | $ | 18,335 | $ | 2,656 | |||||
Work-in-process | 33,666 | 9,819 | |||||||
Finished goods | 19,267 | 2,168 | |||||||
Total inventories | $ | 71,268 | $ | 14,643 | |||||
Intangible_assets_inprocess_re1
Intangible assets, in-process research and development and goodwill (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||||||
Intangible assets, in-process research and development and goodwill [Abstract] | ' | ||||||||||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||||||||||
Intangible assets consist of the following: | |||||||||||||||||||||||||||||||||
Manufacturing | Corporate | Marketed | Licensed | Biodefense | Contract | ||||||||||||||||||||||||||||
(in thousands) | RSDL | Agreement | Tradename | Products | Products | Products | Manufacturing | Total | |||||||||||||||||||||||||
Cost basis | |||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 28,621 | $ | 3,478 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 32,099 | |||||||||||||||||
Additions | - | - | 2,800 | 8,300 | 3,300 | 20,400 | 5,600 | 40,400 | |||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 28,621 | $ | 3,478 | $ | 2,800 | $ | 8,300 | $ | 3,300 | 20,400 | $ | 5,600 | $ | 72,499 | ||||||||||||||||||
Accumulated amortization | |||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | (1,468 | ) | $ | (483 | ) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | (1,951 | ) | ||||||||||||||
Amortization | (880 | ) | (290 | ) | (58 | ) | (87 | ) | (34 | ) | (213 | ) | (58 | ) | (1,620 | ) | |||||||||||||||||
Balance at March 31, 2014 | $ | (2,348 | ) | $ | (773 | ) | $ | (58 | ) | $ | (87 | ) | $ | (34 | ) | $ | (213 | ) | $ | (58 | ) | $ | (3,571 | ) | |||||||||
Net book value at March 31, 2014 | $ | 26,273 | $ | 2,705 | $ | 2,742 | $ | 8,213 | $ | 3,266 | $ | 20,187 | 5,542 | $ | 68,928 | ||||||||||||||||||
Goodwill | ' | ||||||||||||||||||||||||||||||||
Goodwill consists of the following: | |||||||||||||||||||||||||||||||||
(in thousands) | Total | ||||||||||||||||||||||||||||||||
Cost basis | |||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 13,954 | |||||||||||||||||||||||||||||||
Additions | 33,234 | ||||||||||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 47,188 |
Equity_awards_Tables
Equity awards (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||
Equity awards [Abstract] | ' | ||||||||||||||||||||
Option Award Activity | ' | ||||||||||||||||||||
The following is a summary of stock option award activity under the Second Amended and Restated Emergent BioSolutions Inc., 2006 Stock Incentive Plan (the "2006 Plan") and the Emergent BioSolutions Employee Stock Option Plan (the "2004 Plan"): | |||||||||||||||||||||
2006 Plan | 2004 Plan | ||||||||||||||||||||
Number of Shares | Weighted-Average Exercise Price | Number of Shares | Weighted-Average Exercise Price | Aggregate Intrinsic Value | |||||||||||||||||
Outstanding at December 31, 2013 | 3,639,995 | $ | 17.01 | 53,156 | $ | 8.86 | $ | 23,148,738 | |||||||||||||
Granted | 1,013,221 | 28.09 | - | - | |||||||||||||||||
Exercised | (483,569 | ) | 16.82 | - | - | ||||||||||||||||
Forfeited | (32,721 | ) | 15.93 | - | - | ||||||||||||||||
Outstanding at March 31, 2014 | 4,136,926 | $ | 19.76 | 53,156 | $ | 8.86 | $ | 26,541,184 | |||||||||||||
Exercisable at March 31, 2014 | 2,164,933 | $ | 17.66 | 53,156 | $ | 8.86 | $ | 17,357,967 | |||||||||||||
Restricted Stock Units Activity | ' | ||||||||||||||||||||
The following is a summary of restricted stock unit award activity under the 2006 Plan: | |||||||||||||||||||||
Number of Shares | Weighted-Average Grant Price | Aggregate Intrinsic Value | |||||||||||||||||||
Outstanding at December 31, 2013 | 792,626 | $ | 16.53 | $ | 18,246,611 | ||||||||||||||||
Granted | 506,612 | 28.09 | |||||||||||||||||||
Vested | (298,489 | ) | 27.51 | ||||||||||||||||||
Forfeited | (15,462 | ) | 15.74 | ||||||||||||||||||
Outstanding at March 31, 2014 | 985,287 | $ | 22.1 | $ | 24,898,202 | ||||||||||||||||
Earnings_per_share_Tables
Earnings per share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings per share [Abstract] | ' | ||||||||
Summary of Basic and Diluted Net Income per Share | ' | ||||||||
Basic earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the if-converted method by dividing net income (loss) (adjusted for interest expense, net of tax, and amortization of debt issuance cost, net of tax, associated with the Company's convertible debt) by the weighted average number of shares of common stock outstanding during the period, adjusted for the potential dilutive effect of other securities if such securities were converted or exercised. | |||||||||
The following table presents the calculation of basic and diluted net loss per share: | |||||||||
Three Months Ended March 31, | |||||||||
(in thousands, except share and per share data) | 2014 | 2013 | |||||||
Numerator: | |||||||||
Net loss | $ | (20,236 | ) | $ | (8,062 | ) | |||
Interest expense applicable to convertible debt, net of tax | - | - | |||||||
Amortization of debt issuance costs, net of tax | - | - | |||||||
Adjusted net loss | (20,236 | ) | (8,062 | ) | |||||
Denominator: | |||||||||
Weighted-average number of shares—basic | 36,854,370 | 35,968,064 | |||||||
Dilutive securities—equity awards | - | - | |||||||
Weighted-average number of shares—diluted | 36,854,370 | 35,968,064 | |||||||
Earnings per share-basic | $ | (0.55 | ) | $ | (0.22 | ) | |||
Earnings per share-diluted | $ | (0.55 | ) | $ | (0.22 | ) | |||
Segment_information_Tables
Segment information (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment information [Abstract] | ' | ||||||||||||||||
Segment Information | ' | ||||||||||||||||
The Biodefense division is directed to government-sponsored development and supply of countermeasures against potential agents of bioterror or biowarfare and consists of two business units: vaccines and therapeutics, and medical devices. Revenues in this segment are primarily from sales of the Company's FDA-licensed product, BioThrax® (Anthrax Vaccine Adsorbed), to the U.S. government. The Biosciences division is directed to commercial opportunities and primarily targets hematology/oncology, transplantation and infectious diseases, and consists of two business units, therapeutics and vaccines. The "All Other" segment relates to the general operating costs of the Company and includes costs of the centralized services departments, which are not allocated to the other segments, as well as spending on activities that are not classified as Biodefense or Biosciences. | |||||||||||||||||
Reportable Segments | |||||||||||||||||
(in thousands) | Biodefense | Biosciences | All Other | Total | |||||||||||||
Three Months Ended March 31, 2014 | |||||||||||||||||
External revenue | $ | 47,439 | $ | 6,445 | $ | - | $ | 53,884 | |||||||||
Net income (loss) | 1,412 | (19,510 | ) | (2,138 | ) | (20,236 | ) | ||||||||||
Three Months Ended March 31, 2013 | |||||||||||||||||
External revenue | $ | 42,159 | $ | 941 | $ | - | $ | 43,100 | |||||||||
Net income (loss) | 4,610 | (11,372 | ) | (1,300 | ) | (8,062 | ) |
Summary_of_significant_account2
Summary of significant accounting policies (Details) | 3 Months Ended |
Mar. 31, 2014 | |
Criteria | |
Summary of significant accounting policies [Abstract] | ' |
Basic criteria for revenue recognition | 4 |
Acquisitions_Details
Acquisitions (Details) (USD $) | 3 Months Ended | 3 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||||||||
Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Aug. 01, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Feb. 21, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 11, 2013 | Feb. 21, 2014 | Feb. 21, 2014 | Feb. 21, 2014 | Mar. 31, 2014 | Feb. 21, 2014 | Mar. 31, 2014 | Feb. 21, 2014 | Feb. 21, 2014 | Aug. 01, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Aug. 01, 2013 | Aug. 01, 2013 | Mar. 31, 2014 | Aug. 01, 2013 | Aug. 01, 2013 | ||
Corporate Trade Name [Member] | Licensed Products [Member] | Contract Manufacturing [Member] | RSDL [Member] | Manufacturing Agreement [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | Cangene [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | HPPD [Member] | ||||
Corporate Trade Name [Member] | Marketed Products [Member] | Licensed Products [Member] | Biosciences [Member] | Biodefense [Member] | Biodefense [Member] | Contract Manufacturing [Member] | Minimum [Member] | Maximum [Member] | Biodefense [Member] | RSDL [Member] | Manufacturing Agreement [Member] | |||||||||||||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Price paid per share of acquisition (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3.24 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Estimated Purchase Price [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Cash | ' | ' | ' | ' | ' | ' | ' | $43,631,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Accounts receivable | ' | ' | ' | ' | ' | ' | ' | 19,940,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Inventory | ' | ' | ' | ' | ' | ' | ' | 52,619,000 | [1] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Prepaid expenses and other assets | ' | ' | ' | ' | ' | ' | ' | 2,375,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Property, plant and equipment | ' | ' | ' | ' | ' | ' | ' | 40,264,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,543,000 | ' | ' | ' | ' | ' | ' | ' | |
Deferred taxes, net | ' | ' | ' | ' | ' | ' | ' | 2,775,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Income tax receivable | ' | ' | ' | ' | ' | ' | ' | 18,536,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Accrued liabilities and Accounts Payable | ' | ' | ' | ' | ' | ' | ' | -22,916,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,464,000 | ' | ' | ' | ' | ' | ' | ' | |
Provision for chargebacks | ' | ' | ' | ' | ' | ' | ' | -3,940,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Contingent consideration | ' | ' | ' | ' | ' | ' | ' | -5,776,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Deferred revenue | ' | ' | ' | ' | ' | ' | ' | -6,378,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Total fair value of tangible assets acquired and liabilities assumed | ' | ' | ' | ' | ' | ' | ' | 141,130,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Amount of cash paid to Bracco Diagnostics, Inc. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,873,000 | ' | ' | ' | ' | ' | ' | ' | |
Contingent purchase consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 16,232,000 | ' | ' | ' | ' | ' | ' | ' | |
Acquired in-process research and development | ' | ' | ' | ' | ' | ' | ' | 8,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Acquired intangible assets | ' | ' | ' | ' | 3,500,000 | ' | ' | 40,400,000 | ' | ' | ' | 2,800,000 | 8,300,000 | 3,300,000 | ' | 20,400,000 | ' | 5,600,000 | ' | 32,099,000 | ' | ' | ' | ' | ' | 28,600,000 | ' | |
Goodwill | 47,188,000 | 13,954,000 | ' | ' | ' | ' | ' | 31,770,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,916,000 | ' | ' | ' | ' | ' | ' | ' | |
Other | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,000 | ' | ' | ' | ' | ' | ' | ' | |
Total purchase price | ' | ' | ' | ' | ' | ' | ' | 221,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42,105,000 | 42,105,000 | ' | ' | ' | ' | ' | ' | |
Step up adjustment to inventory | ' | ' | ' | ' | ' | ' | ' | 6,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Amortization period of step up adjustment | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Intangible Assets Acquired [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Finite-Lived Intangible Asset, Useful Life | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | '10 years | '10 years | ' | '10 years | ' | '10 years | '116 months | '8 years | ' | ' | ' | ' | ' | ' | '3 years | |
Transaction costs | ' | ' | ' | ' | ' | ' | ' | ' | 3,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Inception to date transaction costs | ' | ' | ' | ' | ' | ' | ' | ' | 7,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Business Acquisition, Pro Forma Information [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Pro forma revenue | ' | ' | ' | ' | ' | ' | ' | ' | 81,363,000 | 69,023,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Pro forma net income | ' | ' | ' | ' | ' | ' | ' | ' | -21,730,000 | -17,227,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Contingent consideration, percentage of RSDL net sales (in hundredths) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | 10.00% | ' | ' | ' | |
Amortization for intangible assets | -1,620,000 | ' | -58,000 | -34,000 | ' | -880,000 | -290,000 | ' | 450,000 | ' | ' | ' | ' | ' | 237,000 | ' | 213,000 | ' | ' | ' | ' | 1,400 | ' | ' | 1,200,000 | ' | ' | |
Weighted average amortization period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '83 months | ' | ' | ' | ' | ' | |
Present value discount rate (in hundredths) | ' | ' | ' | ' | ' | ' | ' | ' | 16.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Recognized revenues | ' | ' | ' | ' | ' | ' | ' | ' | 10,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11,200,000 | ' | ' | ' | ' | ' | ' | |
Net loss attributable to Emergent BioSolutions Inc. | ' | ' | ' | ' | ' | ' | ' | ' | $2,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,900,000 | ' | ' | ' | ' | ' | ' | |
[1] | Acquired inventory reflects a $6.3 million adjustment to record inventory at fair value, referred to as a step-up adjustment. The $6.3 million step-up was estimated to be amortized through cost of product sales and contract manufacturing over the next five years based on estimated inventory turnover, which will increase costs of product sales and contract manufacturing during such period. |
Fair_value_measurements_Detail
Fair value measurements (Details) (USD $) | 3 Months Ended | |||||||||||||||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | ||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Measurements, Recurring [Member] | |||||||||||
Fair Value, Inputs, Level 1 [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Inputs, Level 3 [Member] | |||||||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Investment in money market funds (1) | ' | ' | $23,293 | [1] | $37,701 | [1] | $23,293 | [1] | $37,701 | [1] | $0 | [1] | $0 | [1] | $0 | [1] | $0 | [1] |
Total assets | ' | ' | 23,293 | 37,701 | 23,293 | 37,701 | 0 | 0 | 0 | 0 | ||||||||
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Contingent purchase consideration | ' | ' | 22,320 | 16,619 | 0 | 0 | 0 | 0 | 22,320 | 16,619 | ||||||||
Total liabilities | ' | ' | 22,320 | 16,619 | 0 | 0 | 0 | 0 | 22,320 | 16,619 | ||||||||
Unobservable Input Reconciliation [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Balance, beginning of period | 16,619 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Expense (income) included in earnings | 412 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Settlements | -487 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Purchases, sales and issuances | 5,776 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Transfers in/(out) of Level 3 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Balance, end of period | 22,320 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Change in fair value of contingent obligations | $412 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
[1] | Included in cash and cash equivalents in accompanying consolidated balance sheets. |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventories [Abstract] | ' | ' |
Raw materials and supplies | $18,335 | $2,656 |
Work-in-process | 33,666 | 9,819 |
Finished goods | 19,267 | 2,168 |
Total inventories | $71,268 | $14,643 |
Intangible_assets_inprocess_re2
Intangible assets, in-process research and development and goodwill (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | $32,099,000 | ' |
Additions | 40,400,000 | ' |
Intangible Assets, Ending Balance | 72,499,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | -1,951,000 | ' |
Amortization | -1,620,000 | ' |
Accumulated Amortization, Ending Balance | -3,571,000 | ' |
Net book value of intangible assets | 68,928,000 | ' |
Goodwill, Cost Basis [Abstract] | ' | ' |
Goodwill, Beginning Balance | 13,954,000 | ' |
Goodwill, Additions | 33,234,000 | ' |
Goodwill, Ending Balance | 47,188,000 | ' |
Goodwill, net book value | 47,188,000 | 13,954,000 |
RSDL [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 28,621,000 | ' |
Additions | 0 | ' |
Intangible Assets, Ending Balance | 28,621,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | -1,468,000 | ' |
Amortization | -880,000 | ' |
Accumulated Amortization, Ending Balance | -2,348,000 | ' |
Net book value of intangible assets | 26,273,000 | ' |
Manufacturing Agreement [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 3,478,000 | ' |
Additions | 0 | ' |
Intangible Assets, Ending Balance | 3,478,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | -483,000 | ' |
Amortization | -290,000 | ' |
Accumulated Amortization, Ending Balance | -773,000 | ' |
Net book value of intangible assets | 2,705,000 | ' |
Corporate Tradename [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 0 | ' |
Additions | 2,800,000 | ' |
Intangible Assets, Ending Balance | 2,800,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | 0 | ' |
Amortization | -58,000 | ' |
Accumulated Amortization, Ending Balance | -58,000 | ' |
Net book value of intangible assets | 2,742,000 | ' |
Marketed Products [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 0 | ' |
Additions | 8,300,000 | ' |
Intangible Assets, Ending Balance | 8,300,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | 0 | ' |
Amortization | -87,000 | ' |
Accumulated Amortization, Ending Balance | -87,000 | ' |
Net book value of intangible assets | 8,213,000 | ' |
Licensed Products [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 0 | ' |
Additions | 3,300,000 | ' |
Intangible Assets, Ending Balance | 3,300,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | 0 | ' |
Amortization | -34,000 | ' |
Accumulated Amortization, Ending Balance | -34,000 | ' |
Net book value of intangible assets | 3,266,000 | ' |
Biodefense Products [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 0 | ' |
Additions | 20,400,000 | ' |
Intangible Assets, Ending Balance | 20,400,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | 0 | ' |
Amortization | -213,000 | ' |
Accumulated Amortization, Ending Balance | -213,000 | ' |
Net book value of intangible assets | 20,187,000 | ' |
Contract Manufacturing [Member] | ' | ' |
Cost Basis [Abstract] | ' | ' |
Intangible Assets, Beginning Balance | 0 | ' |
Additions | 5,600,000 | ' |
Intangible Assets, Ending Balance | 5,600,000 | ' |
Accumulated Amortization [Abstract] | ' | ' |
Accumulated Amortization, Beginning Balance | 0 | ' |
Amortization | -58,000 | ' |
Accumulated Amortization, Ending Balance | -58,000 | ' |
Net book value of intangible assets | 5,542,000 | ' |
Biosciences [Member] | Biosciences Therapeutics [Member] | ' | ' |
Accumulated Amortization [Abstract] | ' | ' |
Net book value of intangible assets | 50,300,000 | ' |
Biosciences [Member] | Otlertuzumab [Member] | ' | ' |
Accumulated Amortization [Abstract] | ' | ' |
Net book value of intangible assets | 41,800,000 | ' |
Biosciences [Member] | IXinity product candidates [Member] | ' | ' |
Accumulated Amortization [Abstract] | ' | ' |
Net book value of intangible assets | $8,500,000 | ' |
Longterm_debt_Details
Long-term debt (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Jan. 29, 2014 | Mar. 31, 2014 | Jan. 31, 2014 | |
BAML Revolving Credit Facility [Member] | BAML Revolving Credit Facility [Member] | Credit Agreement [Member] | Credit Agreement [Member] | Credit Agreement [Member] | 2.875% Convertible Senior Notes Due 2021 [Member] | BAML Term Loan [Member] | State of Maryland and Montgomery County [Member] | |||
Institution | ||||||||||
Long-Term Debt [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Face amount of debt instrument | ' | ' | ' | ' | ' | ' | ' | $250,000,000 | ' | $1,000,000 |
Interest rate, stated percentage (in hundredths) | ' | ' | ' | ' | ' | ' | ' | 2.88% | ' | ' |
Maturity date | ' | ' | 11-Dec-18 | ' | ' | ' | ' | 15-Jan-21 | 11-Dec-18 | ' |
Conversion rate of notes per $1,000 principal amount (in shares) | ' | ' | ' | ' | ' | ' | ' | 30.8821 | ' | ' |
Conversion price per share (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $32.38 | ' | ' |
Debt issuance costs | ' | ' | ' | ' | ' | ' | ' | 8,300,000 | ' | ' |
Number of lending institutions | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | 125,000,000 | ' |
Proceeds from borrowings on long-term indebtedness | ' | ' | ' | 62,000,000 | ' | ' | ' | ' | ' | ' |
Payments on borrowings on long-term indebtedness | 62,000,000 | 1,117,000 | 62,000,000 | ' | ' | ' | ' | ' | ' | ' |
Debt covenant, consolidated debt service coverage ratio, minimum | ' | ' | ' | ' | 2.5 | ' | ' | ' | ' | ' |
Debt covenant, leverage ratio, maximum | ' | ' | ' | ' | 3.5 | 4 | 3.75 | ' | ' | ' |
Debt Instrument, covenant, senior leverage ratio, maximum | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' |
Debt covenant, minimum cash and liquid investments balance | ' | ' | ' | ' | 50,000,000 | ' | ' | ' | ' | ' |
Project costs to be expended at Montgomery County Site | ' | ' | ' | ' | ' | ' | ' | ' | ' | $15,000,000 |
Equity_awards_Details
Equity awards (Details) (USD $) | 3 Months Ended | 3 Months Ended | |||
Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | |
Restricted Stock Units (RSUs) [Member] | Stock Options Member [Member] | Stock Options Member [Member] | 2006 Plan [Member] | 2004 Plan [Member] | |
Stock Options Member [Member] | Stock Options Member [Member] | ||||
Options outstanding [Roll Forward] | ' | ' | ' | ' | ' |
Outstanding, beginning of period (in shares) | ' | ' | ' | 3,639,995 | 53,156 |
Granted (in shares) | ' | ' | ' | 1,013,221 | 0 |
Exercised (in shares) | ' | ' | ' | -483,569 | 0 |
Forfeited (in shares) | ' | ' | ' | -32,721 | 0 |
Outstanding, end of period (in shares) | ' | ' | ' | 4,136,926 | 53,156 |
Exercisable, end of period (in shares) | ' | ' | ' | 2,164,933 | 53,156 |
Weighted-Average Exercise Price [Roll Forward] | ' | ' | ' | ' | ' |
Outstanding, beginning of period (in dollars per share) | ' | ' | ' | $17.01 | $8.86 |
Granted (in dollars per share) | ' | ' | ' | $28.09 | $0 |
Exercised (in dollars per share) | ' | ' | ' | $16.82 | $0 |
Forfeited (in dollars per share) | ' | ' | ' | $15.93 | $0 |
Outstanding, end of period (in dollars per share) | ' | ' | ' | $19.76 | $8.86 |
Exercisable, end of period (in dollars per share) | ' | ' | ' | $17.66 | $8.86 |
Aggregate Intrinsic Value [Abstract] | ' | ' | ' | ' | ' |
Outstanding, beginning of period | ' | $26,541,184 | $23,148,738 | ' | ' |
Outstanding, end of period | ' | 26,541,184 | 23,148,738 | ' | ' |
Exercisable, end of period | ' | 17,357,967 | ' | ' | ' |
Restricted stock unit award activity [Roll Forward] | ' | ' | ' | ' | ' |
Outstanding, beginning of period (in shares) | 792,626 | ' | ' | ' | ' |
Granted (in shares) | 506,612 | ' | ' | ' | ' |
Vested (in shares) | -298,489 | ' | ' | ' | ' |
Forfeited (in shares) | -15,462 | ' | ' | ' | ' |
Outstanding, end of period (in shares) | 985,287 | ' | ' | ' | ' |
Weighted-Average Grant Price [Roll Forward] | ' | ' | ' | ' | ' |
Outstanding, beginning of period (in dollars per share) | $16.53 | ' | ' | ' | ' |
Granted (in dollars per share) | $28.09 | ' | ' | ' | ' |
Vested (in dollars per share) | $27.51 | ' | ' | ' | ' |
Forfeited (in dollars per share) | $15.74 | ' | ' | ' | ' |
Outstanding, end of period (in dollars per share) | $22.10 | ' | ' | ' | ' |
Aggregate intrinsic value [Abstract] | ' | ' | ' | ' | ' |
Outstanding, beginning of period | 18,246,611 | ' | ' | ' | ' |
Outstanding, end of period | $24,898,202 | ' | ' | ' | ' |
Variable_interest_entities_Det
Variable interest entities (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Variable Interest Entity [Line Items] | ' |
Adjustment to noncontrolling interest | $453,000 |
Earnings_per_share_Details
Earnings per share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Numerator: | ' | ' |
Net loss | ($20,236) | ($8,062) |
Interest expense applicable to convertible debt, net of tax | 0 | 0 |
Amortization of debt issuance costs, net of tax | 0 | 0 |
Adjusted net loss | ($20,236) | ($8,062) |
Denominator: | ' | ' |
Weighted-average number of shares-basic (in shares) | 36,854,370 | 35,968,064 |
Dilutive securities-equity awards (in shares) | 0 | 0 |
Weighted-average number of shares-diluted (in shares) | 36,854,370 | 35,968,064 |
Income per share-basic (in dollars per share) | ($0.55) | ($0.22) |
Income per share-diluted (in dollars per share) | ($0.55) | ($0.22) |
Stock Options [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive shares excluded from calculation (in shares) | 5,200,000 | 5,000,000 |
Convertible debt [Member] | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' |
Antidilutive shares excluded from calculation (in shares) | 8,100,000 | ' |
Segment_information_Details
Segment information (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
BusinessUnit | ||
Segment | ||
Segment Reporting Information [Line Items] | ' | ' |
Number of business segments | 2 | ' |
Number of business units | 2 | ' |
External revenue | $53,884 | $43,100 |
Net income (loss) | -20,236 | -8,062 |
Biodefense [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
External revenue | 47,439 | 42,159 |
Net income (loss) | 1,412 | 4,610 |
Biosciences [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
External revenue | 6,445 | 941 |
Net income (loss) | -19,510 | -11,372 |
All Other [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
External revenue | 0 | 0 |
Net income (loss) | ($2,138) | ($1,300) |