Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Emergent BioSolutions Inc. | |
Entity Central Index Key | 1,367,644 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 40,060,773 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 341,016 | $ 312,795 |
Accounts receivable, net | 69,560 | 120,767 |
Inventories | 88,200 | 76,936 |
Income tax receivable, net | 3,771 | 6,573 |
Prepaid expenses and other current assets | 25,613 | 20,339 |
Total current assets | 528,160 | 537,410 |
Property, plant and equipment, net | 342,083 | 331,856 |
In process research and development | 42,501 | 42,501 |
Intangible assets, net | 55,010 | 57,375 |
Goodwill | 54,902 | 54,902 |
Deferred tax assets, net | 11,124 | 11,286 |
Other assets | 2,117 | 2,154 |
Total assets | 1,035,897 | 1,037,484 |
Current liabilities: | ||
Accounts payable | 45,611 | 45,966 |
Accrued expenses and other current liabilities | 4,187 | 6,229 |
Accrued compensation | 26,528 | 34,683 |
Contingent consideration, current portion | 2,580 | 2,553 |
Provision for chargebacks | 1,960 | 2,238 |
Deferred revenue | 9,589 | 7,942 |
Total current liabilities | 90,455 | 99,611 |
Contingent consideration, net of current portion | 23,114 | 23,046 |
Long-term indebtedness | 247,192 | 246,892 |
Deferred revenue, net of current portion | 6,817 | 6,590 |
Other liabilities | 1,337 | 1,328 |
Total liabilities | 368,915 | 377,467 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 15,000,000 shares authorized, 0 shares issued and outstanding at both March 31, 2016 and December 31, 2015 | 0 | 0 |
Common stock, $0.001 par value; 100,000,000 shares authorized, 40,257,241 shares issued and 39,834,411 shares outstanding at March 31, 2016; 39,829,408 shares issued and 39,406,578 shares outstanding at December 31, 2015 | 40 | 40 |
Treasury stock, at cost, 422,830 common shares at March 31, 2016 and December 31, 2015 | (6,420) | (6,420) |
Additional paid-in capital | 322,384 | 317,971 |
Accumulated other comprehensive loss | (4,152) | (2,713) |
Retained earnings | 355,130 | 351,139 |
Total stockholders' equity | 666,982 | 660,017 |
Total liabilities and stockholders' equity | $ 1,035,897 | $ 1,037,484 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
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) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 40,257,241 | 39,829,408 |
Common stock, shares outstanding (in shares) | 39,834,411 | 39,406,578 |
Treasury stock ( in shares) | 422,830 | 422,830 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Product sales | $ 71,706 | $ 18,291 |
Contract manufacturing | 7,587 | 12,243 |
Contracts, grants and collaborations | 31,709 | 33,099 |
Total revenues | 111,002 | 63,633 |
Operating expenses: | ||
Cost of product sales and contract manufacturing | 28,503 | 18,748 |
Research and development | 34,154 | 38,702 |
Selling, general and administrative | 39,784 | 34,493 |
Income (loss) from operations | 8,561 | (28,310) |
Other income (expense): | ||
Interest income | 186 | 82 |
Interest expense | (1,524) | (1,661) |
Other income, net | 116 | 100 |
Total other expense, net | (1,222) | (1,479) |
Income (loss) before provision for (benefit from) income taxes | 7,339 | (29,789) |
Provision for (benefit from) income taxes | 3,348 | (8,269) |
Net income (loss) | $ 3,991 | $ (21,520) |
Net income (loss) per share - basic | $ 0.10 | $ (0.57) |
Net income (loss) per share-diluted | $ 0.10 | $ (0.57) |
Weighted-average number of shares - basic (in shares) | 39,542,656 | 37,949,358 |
Weighted-average number of shares - diluted (in shares) | 48,359,892 | 37,949,358 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) [Abstract] | ||
Net income (loss) | $ 3,991 | $ (21,520) |
Foreign currency translations, net of tax | (1,439) | (234) |
Comprehensive income (loss) | $ 2,552 | $ (21,754) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 3,991 | $ (21,520) |
Adjustments to reconcile to net cash provided by (used in) operating activities: | ||
Stock-based compensation expense | 5,197 | 3,798 |
Depreciation and amortization | 8,840 | 8,532 |
Income taxes | 2,964 | (7,261) |
Change in fair value of contingent consideration | 847 | 1,559 |
Excess tax benefits from stock-based compensation | (5,786) | (5,414) |
Other | 71 | 17 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 51,207 | (5,225) |
Inventories | (11,264) | (16,460) |
Income taxes | (4,376) | (12,160) |
Prepaid expenses and other assets | (5,555) | (249) |
Accounts payable | 385 | 1,102 |
Accrued expenses and other liabilities | (2,045) | (1,641) |
Accrued compensation | (8,277) | (10,883) |
Provision for chargebacks | (278) | (82) |
Deferred revenue | 1,874 | 14 |
Net cash provided by (used in) operating activities | 37,795 | (65,873) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (18,214) | (9,082) |
Net cash used in investing activities | (18,214) | (9,082) |
Cash flows from financing activities: | ||
Issuance of common stock upon exercise of stock options | 3,595 | 6,344 |
Excess tax benefits from stock-based compensation | 5,786 | 5,414 |
Contingent obligation payments | (752) | (762) |
Net cash provided by financing activities | 8,629 | 10,996 |
Effect of exchange rate changes on cash and cash equivalents | 11 | (25) |
Net increase (decrease) in cash and cash equivalents | 28,221 | (63,984) |
Cash and cash equivalents at beginning of period | 312,795 | 280,499 |
Cash and cash equivalents at end of period | $ 341,016 | $ 216,515 |
Summary of significant accounti
Summary of significant accounting policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of significant accounting policies [Abstract] | |
Summary of significant accounting policies | 1. Summary of significant accounting policies Basis of presentation and consolidation On August 6, 2015, Emergent BioSolutions Inc. (the "Company" or "Emergent"), announced its plan to separate into two independent publicly-traded companies, one a biotechnology company focused on novel oncology and hematology therapeutics to meaningfully improve patients' lives and the other a global specialty life sciences company focused on providing specialty products for civilian and military populations that address intentional and naturally emerging public health threats. In accordance with the separation plan, Emergent expects to spin off certain assets and liabilities of its biosciences business into Aptevo Therapeutics Inc. ("Aptevo") a wholly-owned subsidiary of Emergent that was incorporated in February 2016. In anticipation of the planned spin-off, the Company realigned certain components of its biosciences business to the new Aptevo segment to be consistent with how the Company's chief operating decision maker ("CODM") allocates resources and makes decisions about the operations of the Company. Effective January 1, 2016, the Company changed its segment presentation to reflect this new structure, and recast all prior periods presented to conform to the new presentation. Upon separation, the historical results of Aptevo will be reported as discontinued operations. The accompanying unaudited consolidated financial statements include the accounts of Emergent and its 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, 2015, 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, 2016; the results of operations and comprehensive income (loss) for the three months ended March 31, 2016 and 2015; and cash flows for the three months ended March 31, 2016 and 2015. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year. During the three months ended March 31, 2016, 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, 2015, as filed with the SEC. |
Fair value measurements
Fair value measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair value measurements [Abstract] | |
Fair value measurements | 2. 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: March 31, 2016 (in thousands) Level 1 Level 2 Level 3 Total Assets: Investment in money market funds (1) $ 234 $ - $ - $ 234 Total assets $ 234 $ - $ - $ 234 Liabilities: Contingent consideration $ - $ - $ 25,694 $ 25,694 Total liabilities $ - $ - $ 25,694 $ 25,694 December 31, 2015 (in thousands) Level 1 Level 2 Level 3 Total Assets: Investment in money market funds (1) $ 3,323 $ - $ - $ 3,323 Total assets $ 3,323 $ - $ - $ 3,323 Liabilities: Contingent consideration $ - $ - $ 25,599 $ 25,599 Total liabilities $ - $ - $ 25,599 $ 25,599 (1) Included in cash and cash equivalents in the accompanying consolidated balance sheets. During the three months ended March 31, 2016, the Company did not have any transfers between Level 1 and Level 2 assets or liabilities. The fair value of contingent consideration obligations are based on management's assessment of certain development and regulatory milestones, along with updates in the assumed achievement of potential future net sales for the EV-035 series of molecules and the broad spectrum antiviral platform program, which are inputs that have no observable market (Level 3). For the three months ended March 31, 2016 and 2015, the contingent consideration obligation increased by $0.1 million and $0.8 million, respectively. These changes are primarily due to the novation of the DTRA contract for the EV-035 series of molecules along with the estimated timing and probability of success for certain development and regulatory milestones and the estimated timing and volume of potential future sales of EV-035 series of molecules and the broad spectrum antiviral platform. For the three months ended March 31, 2016, $0.1 million of the adjustment was recorded in the Company's statement of operations as a charge to research and development expense. For the three months ended March 31, 2015, $0.3 million and $0.5 million of the adjustment was recorded in the Company's statement of operations as a charge to selling, general and administrative expense and research and development expense, respectively. The fair value of the RSDL and HepaGam contingent consideration obligations changed as a result of management's assessment of adjustments to the discount rates and updates in the assumed and actual achievement of future net sales, which are inputs that have no observable market (Level 3). For each of the three month periods ended March 31, 2016 and 2015, the contingent purchase consideration obligations increased by $0.8 million. The increases are primarily due to an adjustment to the actual and expected timing and volume of RSDL and HepaGam B sales. These changes are 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, 2016. (in thousands) Balance at December 31, 2015 $ 25,599 Expense included in earnings 847 Settlements (752 ) Purchases, sales and issuances - Transfers in/(out) of Level 3 - Balance at March 31, 2016 $ 25,694 Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. During the three months ended March 31, 2016 and 2015, the Company had no assets or liabilities that were measured at fair value on a nonrecurring basis. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Inventories [Abstract] | |
Inventories | 3. Inventories Inventories consisted of the following: March 31, December 31, (in thousands) 2016 2015 Raw materials and supplies $ 25,710 $ 23,099 Work-in-process 42,352 37,209 Finished goods 20,138 16,628 Total inventories $ 88,200 $ 76,936 |
Intangible assets, in-process r
Intangible assets, in-process research and development and goodwill | 3 Months Ended |
Mar. 31, 2016 | |
Intangible assets and in-process research and development [Abstract] | |
Intangible assets, in-process research and development and goodwill | 4. Intangible assets and in-process research and development As of March 31, 2016, $41.8 million of IPR&D assets related to the Company's otlertuzumab product candidate is included in the Aptevo segment. On April 29, 2015, the FDA approved IXINITY for the treatment of Hemophilia B. As a result of the approval, the $8.3 million IXINITY IPR&D asset Intangible assets consisted of the following: Biodefense Aptevo (in thousands) Segment Segment Total Cost basis Balance at December 31, 2015 $ 55,790 $ 20,809 $ 76,599 Additions - - - Balance at March 31, 2016 $ 55,790 $ 20,809 $ 76,599 Accumulated amortization Balance at December 31, 2015 $ (15,857 ) $ (3,368 ) $ (19,225 ) Amortization (1,779 ) (585 ) (2,364 ) Balance at March 31, 2016 $ (17,636 ) $ (3,953 ) $ (21,589 ) Net balance at March 31, 2016 $ 38,154 $ 16,856 $ 55,010 Amortization expense consisted of the following: Three Months Ended March 31, (in thousands) 2016 2015 Biodefense segment $ 1,779 $ 1,763 Aptevo segment 585 379 Total amortization expense $ 2,364 $ 2,142 As of March 31, 2016, the weighted average amortization period remaining for intangible assets in the Biodefense and Aptevo segments was 83 and 94 months, respectively. |
Equity awards
Equity awards | 3 Months Ended |
Mar. 31, 2016 | |
Equity awards [Abstract] | |
Equity awards | 6. Equity awards As of March 31, 2016, the Company had two stock-based employee compensation plans, the Third Amended and Restated Emergent BioSolutions Inc. 2006 Stock Incentive Plan (the "2006 Plan") and the Emergent BioSolutions Employee Stock Option Plan (the "2004 Plan"). The Company refers to both plans together as the "Emergent Plans". The following is a summary of stock option award activity under the Emergent Plans: 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, 2015 2,964,237 $ 22.73 29,699 $ 10.28 $ 52,119,607 Granted 391,158 $ 33.83 - $ - Exercised (178,124 ) $ 18.47 (29,699 ) $ 10.28 Forfeited (12,742 ) $ 25.48 - $ - Outstanding at March 31, 2016 3,164,529 $ 24.33 - $ - $ 38,049,150 Exercisable at March 31, 2016 1,951,044 $ 21.12 - $ - $ 29,719,065 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, 2015 889,004 $ 26.86 $ 35,569,048 Granted 427,592 $ 33.83 Vested (353,117 ) $ 24.70 Forfeited (9,599 ) $ 30.06 Outstanding at March 31, 2016 953,880 $ 30.75 $ 34,673,539 |
Long-term debt
Long-term debt | 3 Months Ended |
Mar. 31, 2016 | |
Long-term debt [Abstract] | |
Long-term debt | 5. Long-term debt In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30), which simplifies the presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset on the balance sheet. ASU 2015-03 is effective for interim and annual periods beginning after December 15, 2015. For the year ended December 31, 2015, the Company reclassified debt issuance costs of $1.2 million and $4.9 million from prepaid expenses and other current assets and other assets as a reduction to long-term debt, respectively. |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per share [Abstract] | |
Earnings per share | 7. Earnings per share The following table presents the calculation of basic and diluted net loss per share utilizing the if-converted method: Three Months Ended March 31, (in thousands, except share and per share data) 2016 2015 Numerator: Net income (loss) $ 3,991 $ (21,520 ) Interest expense, net of tax 716 - Amortization of debt issuance costs, net of tax 215 - Net income (loss), adjusted $ 4,922 $ (21,520 ) Denominator: Weighted-average number of shares—basic 39,542,656 37,949,358 Dilutive securities—equity awards 1,096,711 - Dilutive securities—convertible debt 7,720,525 - Weighted-average number of shares—diluted 48,359,892 37,949,358 Net income (loss) per share-basic $ 0.10 $ (0.57 ) Net income (loss) per share-diluted $ 0.10 $ (0.57 ) For the three months ended March 31, 2016, basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. For the three months ended March 31, 2016, diluted earnings per share is computed using the "if-converted" method by dividing the net income adjusted for interest expense and amortization of debt issuance cost, both net of tax, associated with the Company's 2.875 convertible Senior notes due 2021 (the "Notes") by the weighted average number of shares of common stock outstanding during the period. The weighted average number of shares is adjusted for the potential dilutive effect of the exercise of stock options and the vesting of restricted stock units along with the assumption of the conversion of the Notes, at the beginning of the period. For the three months ended March 31, 2015, basic and diluted earnings per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. 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, 2015, outstanding stock options to purchase approximately 5.1 million shares of common stock, along with 7.7 million shares related to the Company's convertible debt, were excluded from the calculation of diluted earnings per share. |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related party transactions [Abstract] | |
Related party transactions | 8. Related party transactions In November 2015, the Company entered into a consulting arrangement with a member of the Company's Board of Directors to provide assistance in connection with the planned spin-off of Aptevo. The maximum compensation under the agreement is $0.1 million per year. The consulting agreement will terminate with the completion of the spin-off, at which time the member of the Board of Directors is expected to become the CEO of Aptevo. |
Segment information
Segment information | 3 Months Ended |
Mar. 31, 2016 | |
Segment information [Abstract] | |
Segment information | 9. Segment information On August 6, 2015, Emergent BioSolutions Inc. (the "Company" or "Emergent"), announced its plan to separate into two independent publicly-traded companies, one a biotechnology company focused on novel oncology and hematology therapeutics to meaningfully improve patients' lives and the other a global specialty life sciences company focused on providing specialty products for civilian and military populations that address intentional and naturally emerging public health threats. In anticipation of the planned spin-off, the Company realigned certain components of its biosciences business to the new Aptevo segment. Effective January 1, 2016, the Company changed its segment presentation to reflect this new structure, and recast all prior periods presented to conform to the new presentation. For financial reporting purposes, the Company reports financial information for two business segments: Biodefense and Aptevo. The Company's two business segments, or divisions, engage in business activities for which discrete financial information is provided to and resources are allocated 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 offer different products, product candidates, manufacturing processes and services, development processes, sales and marketing processes, and are managed separately. The Biodefense division consists of three business units: vaccines and therapeutics, medical devices and contract manufacturing. 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 Aptevo division consists of one business unit: the discovery, development, commercialization and sale of novel oncology and hematology therapeutics. 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 Aptevo. Reportable Segments (in thousands) Biodefense Aptevo Total Three Months Ended March 31, 2016 External revenue $ 102,969 $ 8,033 $ 111,002 Intersegment revenue (expense) 574 (574 ) - Income (loss) from operations 23,016 (14,455 ) 8,561 Total assets 925,125 110,772 1,035,897 Three Months Ended March 31, 2015 External revenue $ 52,147 $ 11,486 $ 63,633 Intersegment revenue (expense) 104 (104 ) - Income (loss) from operations (18,496 ) (9,814 ) (28,310 ) Total assets 799,017 118,828 917,845 |
Summary of significant accoun16
Summary of significant accounting policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of significant accounting policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation On August 6, 2015, Emergent BioSolutions Inc. (the "Company" or "Emergent"), announced its plan to separate into two independent publicly-traded companies, one a biotechnology company focused on novel oncology and hematology therapeutics to meaningfully improve patients' lives and the other a global specialty life sciences company focused on providing specialty products for civilian and military populations that address intentional and naturally emerging public health threats. In accordance with the separation plan, Emergent expects to spin off certain assets and liabilities of its biosciences business into Aptevo Therapeutics Inc. ("Aptevo") a wholly-owned subsidiary of Emergent that was incorporated in February 2016. In anticipation of the planned spin-off, the Company realigned certain components of its biosciences business to the new Aptevo segment to be consistent with how the Company's chief operating decision maker ("CODM") allocates resources and makes decisions about the operations of the Company. Effective January 1, 2016, the Company changed its segment presentation to reflect this new structure, and recast all prior periods presented to conform to the new presentation. Upon separation, the historical results of Aptevo will be reported as discontinued operations. The accompanying unaudited consolidated financial statements include the accounts of Emergent and its 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, 2015, 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, 2016; the results of operations and comprehensive income (loss) for the three months ended March 31, 2016 and 2015; and cash flows for the three months ended March 31, 2016 and 2015. Interim results are not necessarily indicative of results that may be expected for any other interim period or for an entire year. During the three months ended March 31, 2016, 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, 2015, as filed with the SEC. |
Fair value measurements (Tables
Fair value measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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: March 31, 2016 (in thousands) Level 1 Level 2 Level 3 Total Assets: Investment in money market funds (1) $ 234 $ - $ - $ 234 Total assets $ 234 $ - $ - $ 234 Liabilities: Contingent consideration $ - $ - $ 25,694 $ 25,694 Total liabilities $ - $ - $ 25,694 $ 25,694 December 31, 2015 (in thousands) Level 1 Level 2 Level 3 Total Assets: Investment in money market funds (1) $ 3,323 $ - $ - $ 3,323 Total assets $ 3,323 $ - $ - $ 3,323 Liabilities: Contingent consideration $ - $ - $ 25,599 $ 25,599 Total liabilities $ - $ - $ 25,599 $ 25,599 (1) Included in cash and cash equivalents in the 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, 2016. (in thousands) Balance at December 31, 2015 $ 25,599 Expense included in earnings 847 Settlements (752 ) Purchases, sales and issuances - Transfers in/(out) of Level 3 - Balance at March 31, 2016 $ 25,694 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventories [Abstract] | |
Inventories | Inventories consisted of the following: March 31, December 31, (in thousands) 2016 2015 Raw materials and supplies $ 25,710 $ 23,099 Work-in-process 42,352 37,209 Finished goods 20,138 16,628 Total inventories $ 88,200 $ 76,936 |
Intangible assets, in-process19
Intangible assets, in-process research and development and goodwill (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Intangible assets and in-process research and development [Abstract] | |
Intangible Assets | Intangible assets consisted of the following: Biodefense Aptevo (in thousands) Segment Segment Total Cost basis Balance at December 31, 2015 $ 55,790 $ 20,809 $ 76,599 Additions - - - Balance at March 31, 2016 $ 55,790 $ 20,809 $ 76,599 Accumulated amortization Balance at December 31, 2015 $ (15,857 ) $ (3,368 ) $ (19,225 ) Amortization (1,779 ) (585 ) (2,364 ) Balance at March 31, 2016 $ (17,636 ) $ (3,953 ) $ (21,589 ) Net balance at March 31, 2016 $ 38,154 $ 16,856 $ 55,010 |
Finite-lived Intangible Assets Amortization Expense | Amortization expense consisted of the following: Three Months Ended March 31, (in thousands) 2016 2015 Biodefense segment $ 1,779 $ 1,763 Aptevo segment 585 379 Total amortization expense $ 2,364 $ 2,142 As of March 31, 2016, the weighted average amortization period remaining for intangible assets in the Biodefense and Aptevo segments was 83 and 94 months, respectively. |
Equity awards (Tables)
Equity awards (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity awards [Abstract] | |
Option Award Activity | The following is a summary of stock option award activity under the Emergent Plans: 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, 2015 2,964,237 $ 22.73 29,699 $ 10.28 $ 52,119,607 Granted 391,158 $ 33.83 - $ - Exercised (178,124 ) $ 18.47 (29,699 ) $ 10.28 Forfeited (12,742 ) $ 25.48 - $ - Outstanding at March 31, 2016 3,164,529 $ 24.33 - $ - $ 38,049,150 Exercisable at March 31, 2016 1,951,044 $ 21.12 - $ - $ 29,719,065 |
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, 2015 889,004 $ 26.86 $ 35,569,048 Granted 427,592 $ 33.83 Vested (353,117 ) $ 24.70 Forfeited (9,599 ) $ 30.06 Outstanding at March 31, 2016 953,880 $ 30.75 $ 34,673,539 |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per share [Abstract] | |
Summary of Basic and Diluted Net Income (Loss) per Share | The following table presents the calculation of basic and diluted net loss per share utilizing the if-converted method: Three Months Ended March 31, (in thousands, except share and per share data) 2016 2015 Numerator: Net income (loss) $ 3,991 $ (21,520 ) Interest expense, net of tax 716 - Amortization of debt issuance costs, net of tax 215 - Net income (loss), adjusted $ 4,922 $ (21,520 ) Denominator: Weighted-average number of shares—basic 39,542,656 37,949,358 Dilutive securities—equity awards 1,096,711 - Dilutive securities—convertible debt 7,720,525 - Weighted-average number of shares—diluted 48,359,892 37,949,358 Net income (loss) per share-basic $ 0.10 $ (0.57 ) Net income (loss) per share-diluted $ 0.10 $ (0.57 ) |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment information [Abstract] | |
Segment Information | Reportable Segments (in thousands) Biodefense Aptevo Total Three Months Ended March 31, 2016 External revenue $ 102,969 $ 8,033 $ 111,002 Intersegment revenue (expense) 574 (574 ) - Income (loss) from operations 23,016 (14,455 ) 8,561 Total assets 925,125 110,772 1,035,897 Three Months Ended March 31, 2015 External revenue $ 52,147 $ 11,486 $ 63,633 Intersegment revenue (expense) 104 (104 ) - Income (loss) from operations (18,496 ) (9,814 ) (28,310 ) Total assets 799,017 118,828 917,845 |
Fair value measurements (Detail
Fair value measurements (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | ||
Unobservable Input Reconciliation [Roll Forward] | ||||
Balance, beginning of period | $ 25,599,000 | |||
Expense included in earnings | 847,000 | |||
Settlements | (752,000) | |||
Purchases, sales and issuances | 0 | |||
Transfers in/(out) of Level 3 | 0 | |||
Balance, end of period | 25,694,000 | |||
Evolva Holding SA 035 & Broad Spectrum Antiviral Platform [Member] | ||||
Unobservable Input Reconciliation [Roll Forward] | ||||
Change in fair value of contingent obligations | 100,000 | $ 800,000 | ||
EV-035 & Broad Spectrum Antiviral Platform Research and Development [Member] | ||||
Unobservable Input Reconciliation [Roll Forward] | ||||
Change in fair value of contingent obligations | 100,000 | 500,000 | ||
EV-035&Broad Spectrum Antiviral Platform Selling, General and Administrative Member [Member] | ||||
Unobservable Input Reconciliation [Roll Forward] | ||||
Change in fair value of contingent obligations | 300,000 | |||
RSDL and HepaGam [Member] | ||||
Unobservable Input Reconciliation [Roll Forward] | ||||
Change in fair value of contingent obligations | 789,000 | $ 800,000 | ||
Fair Value, Measurements, Recurring [Member] | ||||
Assets: | ||||
Investment in money market funds (1) | [1] | 234,000 | $ 3,323,000 | |
Total assets | 234,000 | 3,323,000 | ||
Liabilities: | ||||
Contingent consideration | 25,694,000 | 25,599,000 | ||
Total liabilities | 25,694,000 | 25,599,000 | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Assets: | ||||
Investment in money market funds (1) | [1] | 234,000 | 3,323,000 | |
Total assets | 234,000 | 3,323,000 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||||
Assets: | ||||
Investment in money market funds (1) | [1] | 0 | 0 | |
Total assets | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Assets: | ||||
Investment in money market funds (1) | [1] | 0 | 0 | |
Total assets | 0 | 0 | ||
Liabilities: | ||||
Contingent consideration | 25,694,000 | 25,599,000 | ||
Total liabilities | $ 25,694,000 | $ 25,599,000 | ||
[1] | Included in cash and cash equivalents in accompanying consolidated balance sheets |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Inventories [Abstract] | ||
Raw materials and supplies | $ 25,710 | $ 23,099 |
Work-in-process | 42,352 | 37,209 |
Finished goods | 20,138 | 16,628 |
Total inventories | $ 88,200 | $ 76,936 |
Intangible assets, in-process25
Intangible assets, in-process research and development and goodwill (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cost Basis [Abstract] | ||
Intangible Assets, Beginning Balance | $ 76,599,000 | |
Additions | 0 | |
Intangible Assets, Ending Balance | 76,599,000 | |
Accumulated Amortization [Abstract] | ||
Accumulated Amortization, Beginning Balance | (19,225,000) | |
Amortization | 2,364,000 | $ 2,142,000 |
Accumulated Amortization, Ending Balance | (21,589,000) | |
Net book value of intangible assets | 55,010,000 | |
Biodefense [Member] | ||
Cost Basis [Abstract] | ||
Intangible Assets, Beginning Balance | 55,790,000 | |
Additions | 0 | |
Intangible Assets, Ending Balance | 55,790,000 | |
Accumulated Amortization [Abstract] | ||
Accumulated Amortization, Beginning Balance | (15,857,000) | |
Amortization | 1,779,000 | 1,763,000 |
Accumulated Amortization, Ending Balance | $ (17,636,000) | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 83 months | |
Net book value of intangible assets | $ 38,154,000 | |
Aptevo [Member] | ||
Cost Basis [Abstract] | ||
Intangible Assets, Beginning Balance | 20,809,000 | |
Additions | 0 | |
Intangible Assets, Ending Balance | 20,809,000 | |
Accumulated Amortization [Abstract] | ||
Accumulated Amortization, Beginning Balance | (3,368,000) | |
Amortization | 585,000 | 379,000 |
Accumulated Amortization, Ending Balance | $ (3,953,000) | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 94 months | |
Net book value of intangible assets | $ 16,856,000 | |
Aptevo [Member] | Otlertuzumab [Member] | ||
Accumulated Amortization [Abstract] | ||
Net book value of intangible assets | $ 41,800,000 | |
Aptevo [Member] | IXINITY product candidates [Member] | ||
Accumulated Amortization [Abstract] | ||
Net book value of intangible assets | $ 8,300,000 |
Equity awards (Details)
Equity awards (Details) | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Stock Options Member [Member] | |
Aggregate Intrinsic Value [Abstract] | |
Outstanding, beginning of period | $ | $ 52,119,607 |
Outstanding, end of period | $ | 38,049,150 |
Exercisable, end of period | $ | $ 29,719,065 |
2006 Plan [Member] | Restricted Stock Units (RSUs) [Member] | |
Restricted stock unit award activity [Roll Forward] | |
Outstanding, beginning of period (in shares) | shares | 889,004 |
Granted (in shares) | shares | 427,592 |
Vested (in shares) | shares | (353,117) |
Forfeited (in shares) | shares | (9,599) |
Outstanding, end of period (in shares) | shares | 953,880 |
Weighted-Average Grant Price [Roll Forward] | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 26.86 |
Granted (in dollars per share) | $ / shares | 33.83 |
Vested (in dollars per share) | $ / shares | 24.70 |
Forfeited (in dollars per share) | $ / shares | 30.06 |
Outstanding, end of period (in dollars per share) | $ / shares | $ 30.75 |
Aggregate intrinsic value [Abstract] | |
Outstanding, beginning of period | $ | $ 35,569,048 |
Outstanding, end of period | $ | $ 34,673,539 |
2006 Plan [Member] | Stock Options Member [Member] | |
Options outstanding [Roll Forward] | |
Outstanding, beginning of period (in shares) | shares | 2,964,237 |
Granted (in shares) | shares | 391,158 |
Exercised (in shares) | shares | (178,124) |
Forfeited (in shares) | shares | (12,742) |
Outstanding, end of period (in shares) | shares | 3,164,529 |
Exercisable, end of period (in shares) | shares | 1,951,044 |
Weighted-Average Exercise Price [Roll Forward] | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 22.73 |
Granted (in dollars per share) | $ / shares | 33.83 |
Exercised (in dollars per share) | $ / shares | 18.47 |
Forfeited (in dollars per share) | $ / shares | 25.48 |
Outstanding, end of period (in dollars per share) | $ / shares | 24.33 |
Exercisable, end of period (in dollars per share) | $ / shares | $ 21.12 |
2004 Plan [Member] | Stock Options Member [Member] | |
Options outstanding [Roll Forward] | |
Outstanding, beginning of period (in shares) | shares | 29,699 |
Granted (in shares) | shares | 0 |
Exercised (in shares) | shares | (29,699) |
Forfeited (in shares) | shares | 0 |
Outstanding, end of period (in shares) | shares | 0 |
Exercisable, end of period (in shares) | shares | 0 |
Weighted-Average Exercise Price [Roll Forward] | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 10.28 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised (in dollars per share) | $ / shares | 10.28 |
Forfeited (in dollars per share) | $ / shares | 0 |
Outstanding, end of period (in dollars per share) | $ / shares | 0 |
Exercisable, end of period (in dollars per share) | $ / shares | $ 0 |
Long-term debt (Details)
Long-term debt (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Amount of debt issuance costs in other assets, netted against long term debt [Member] | |
Long-Term Debt [Line Items] | |
Debt issuance costs | $ 4.9 |
Amount of debt issuance costs in prepaid and other current assets, netted against long term debt [Member] | |
Long-Term Debt [Line Items] | |
Debt issuance costs | $ 1.2 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Numerator: | ||
Net income (loss) | $ 3,991 | $ (21,520) |
Interest expense applicable to convertible debt, net of tax | 716 | 0 |
Amortization of debt issuance costs, net of tax | 215 | 0 |
Adjusted net income (loss) | $ 4,922 | $ (21,520) |
Denominator: | ||
Weighted-average number of shares-basic (in shares) | 39,542,656 | 37,949,358 |
Dilutive securities-equity awards (in shares) | 1,096,711 | 0 |
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities | 7,720,525 | 0 |
Weighted-average number of shares-diluted (in shares) | 48,359,892 | 37,949,358 |
Net income (loss) per share - basic | $ 0.10 | $ (0.57) |
Adjusted net (loss) income per share-diluted | $ 0.10 | $ (0.57) |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares excluded from calculation (in shares) | 5,100,000 | |
Convertible debt [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares excluded from calculation (in shares) | 7,700,000 |
Related party transactions (Det
Related party transactions (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Related Party Transaction [Line Items] | |
Costs incurred from services rendered under marketing/consulting agreement | $ 0.1 |
Segment information (Details)
Segment information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016USD ($)SegmentBusinessUnit | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of business segments | Segment | 2 | ||
External revenue | $ 111,002 | $ 63,633 | |
Income (loss) from operations | 3,991 | (21,520) | |
Total assets | 1,035,897 | 917,845 | $ 1,037,484 |
Intersegment Eliminations [Member] | |||
Segment Reporting Information [Line Items] | |||
External revenue | 0 | 0 | |
Operating Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | $ 8,561 | (28,310) | |
Biodefense [Member] | |||
Segment Reporting Information [Line Items] | |||
Number of business units | BusinessUnit | 3 | ||
External revenue | $ 102,969 | 52,147 | |
Total assets | 925,125 | 799,017 | |
Biodefense [Member] | Intersegment Eliminations [Member] | |||
Segment Reporting Information [Line Items] | |||
External revenue | 574 | 104 | |
Biodefense [Member] | Operating Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | $ 23,016 | (18,496) | |
Aptevo [Member] | |||
Segment Reporting Information [Line Items] | |||
Number of business units | BusinessUnit | 1 | ||
External revenue | $ 8,033 | 11,486 | |
Total assets | 110,772 | 118,828 | |
Aptevo [Member] | Intersegment Eliminations [Member] | |||
Segment Reporting Information [Line Items] | |||
External revenue | (574) | (104) | |
Aptevo [Member] | Operating Segments [Member] | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | $ (14,455) | $ (9,814) |