Emergent BioSolutions (EBS) 8-K Entry into a Material Definitive Agreement

EXHIBIT 99.3

Emergent BioSolutions Inc. and Subsidiaries

Unaudited Prof Forma Condensed Consolidated Financial Statements

On August 1, 2016, Emergent BioSolutions Inc. ("Emergent" or the "company") completed the previously announced distribution of 100% of the outstanding common stock of Aptevo Therapeutics Inc. ("Aptevo") to Emergent's shareholders (the "Distribution").

The following unaudited pro forma condensed consolidated statements of earnings of Baxter for the three months ended March 31, 2016 and for each of the years ended December 31, 2015, 2014, and 2013 are presented as if the Distribution had occurred on January 1, 2013. The following unaudited pro forma condensed consolidated balance sheet of Emergent as of March 31, 2016 is presented as if the Distribution and related events had occurred on March 31, 2016.

The statements have been derived from historical financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP"), are presented based on information currently available, are intended for informational purposes only, and do not purport to represent what Emergent's financial position and results of operations actually would have been had the Distribution and related events occurred on the dates indicated, or to project Emergent's financial performance for any future period. Specifically, the statements do not include adjustments related to special items, the effects of transition services arrangements between Emergent and Aptevo or the impact of any future action Emergent may take to align its cost structure with the remaining Emergent business. Beginning in the third quarter of 2016, Aptevo's historical financial results for periods prior to the Distribution will be reflected in Emergent's consolidated financial statements as discontinued operations.

The unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read in conjunction with (i) the audited consolidated GAAP financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Emergent's Form 10-K for the years ended December 31, 2015, 2014, and 2013 and (ii) the unaudited condensed consolidated GAAP financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Emergent's Form 10-Q for the three months ended March 31, 2016.

Emergent BioSolutions Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
Period ended March 31, 2016
(in thousands, except for per share data)
											Emergent
				Aptevo			Other				Continuing
	Historical (A)			Separation (B)			Adjustments		Notes		Pro Forma
Revenues:
Product sales	$	71,706		$	(7,948	)			$		$	63,758
Contract manufacturing		7,587			-			3,444		C		11,031
Contracts, grants and collaborations		31,709			(85	)		-				31,624
Total revenues		111,002			(8,033	)		3,444				106,413
Operating expense:
Cost of product sales and contract manufacturing		28,503			(4,504	)		2,841		C		26,840
Research and development		34,154			(8,033	)		-				26,121
Selling, general and administrative		39,784			(5,292	)		-				34,492
Income from operations		8,561			9,796			603				18,960
Other income (expense):
Interest income		186			-			-				186
Interest expense		(1,524	)		-			-				(1,524	)
Other income (expense), net		116			(81	)		-				35
Total other income (expense), net		(1,222	)		(81	)		-				(1,303	)
Income before provision for income taxes		7,339			9,715			603				17,657
Provision for income taxes		3,348			2,800			174		D		6,322
Net income	$	3,991		$	6,915		$	429			$	11,335
Net Income per share - basic	$	0.10									$	0.29
Net Income per share - dilutive	$	0.10									$	0.23
Weighted average number of shares-basic		39,543										39,543
Weighted average number of shares-dilutive		48,360										48,360

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Emergent BioSolutions Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
Year ended December 31, 2015
(in thousands, except for per share data)
											Emergent
				Aptevo			Other				Continuing
	Historical (A)			Separation (B)			Adjustments		Notes		Pro Forma
Revenues:
Product sales	$	356,916		$	(27,947	)	$	-			$	328,969
Contract manufacturing		42,968			-			14,845		C		57,813
Contracts, grants and collaborations		122,905			(5,511	)		-				117,394
Total revenues		522,789			(33,458	)		14,845				504,176
Operating expense:
Cost of product sales and contract manufacturing		124,295			(16,809	)		12,247		C		119,733
Research and development		153,997			(34,811	)		-				119,186
Selling, general and administrative		148,458			(23,816	)		-				124,642
Income from operations		96,039			41,978			2,598				140,615
Other income (expense):
Interest income		572			-			-				572
Interest expense		(6,523	)		-			-				(6,523	)
Other income (expense), net		(319	)		472			-				153
Total other income (expense), net		(6,270	)		472			-				(5,798	)
Income before provision for income taxes		89,769			42,450			2,598				134,817
Provision for income taxes		26,899			12,718			778		D		40,395
Net income	$	62,870		$	29,732		$	1,820			$	94,422
Net Income per share - basic	$	1.63									$	2.45
Net Income per share - dilutive	$	1.41									$	2.00
Weighted average number of shares-basic		38,595										38,595
Weighted average number of shares-dilutive		47,256										47,256

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Emergent BioSolutions Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
Year ended December 31, 2014
(in thousands, except for per share data)
											Emergent
				Aptevo			Other				Continuing
	Historical (A)			Separation (B)			Adjustments		Notes		Pro Forma
Revenues:
Product sales	$	311,881		$	(30,036	)	$	-			$	281,845
Contract manufacturing		30,944			-			12,612		C		43,556
Contracts, grants and collaborations		107,313			(15,772	)		-				91,541
Total revenues		450,138			(45,808	)		12,612				416,942
Operating expense:
Cost of product sales and contract manufacturing		118,412			(16,449	)		10,405		C		112,368
Research and development		150,829			(46,204	)		-				104,625
Selling, general and administrative		122,841			(14,260	)		-				108,581
Income from operations		58,056			31,105			2,207				91,368
Other income (expense):
Interest income		320			-			-				320
Interest expense		(8,240	)		-			-				(8,240	)
Other income (expense), net		2,926			-			-				2,926
Total other income (expense), net		(4,994	)									(4,994	)
Income before provision for income taxes		53,062			31,105			2,207				86,374
Provision for income taxes		16,321			9,568			679		D		26,568
Net income	$	36,741		$	21,537		$	1,528			$	59,806
Net Income per share - basic	$	0.98									$	1.60
Net Income per share - dilutive	$	0.88									$	1.31
Weighted average number of shares-basic		37,345										37,345
Weighted average number of shares-dilutive		45,803										45,803

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Emergent BioSolutions Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
Year ended December 31, 2013
(in thousands, except for per share data)
						Emergent
			Aptevo			Continuing
	Historical (A)		Separation (B)			Pro Forma
Revenues:
Product sales	$	257,922	$	-		$	257,922
Contract manufacturing		-		-			-
Contracts, grants and collaborations		54,823		(170	)		54,653
Total revenues		312,745		(170	)		312,575
Operating expense:
Cost of product sales and contract manufacturing		62,127		-			62,127
Research and development		119,933		(38,049	)		81,884
Selling, general and administrative		87,883		(1,039	)		86,844
Income from operations		42,802		38,918			81,720
Other income (expense):
Interest income		139		-			139
Interest expense		-		-			-
Other income (expense), net		426		(18	)		408
Total other income (expense), net		565		(18	)		547
Income before provision for income taxes		43,367		38,900			82,267
Provision for income taxes		13,108		11,526			24,634
Net Income		30,259		27,374			57,633
Net loss attributable to noncontrolling interest		876		-			876
Net income attributable to Emergent BioSolutions Inc.	$	31,135	$	27,374		$	58,509
Net Income per share - basic	$	0.86				$	1.62
Net Income per share - dilutive	$	0.85				$	1.59
Weighted average number of shares-basic		36,201					36,201
Weighted average number of shares-dilutive		36,748					36,748

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Emergent BioSolutions Inc. and Subsidiaries
Consolidated Balance Sheets
As of March 31, 2016
(in thousands, except per share data)
													Emergent
				Aptevo			Other						Continuing
	Historical (A)			Seperation (E)			Adjustments			Notes			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	341,016		$	(3,072	)	$	(41,928	)			F	$	296,016
Accounts receivable, net		69,560			(3,458	)								66,102
Inventories		88,200			(20,035	)		5,287				G		73,452
Taxes receivable		3,771			-									3,771
Prepaid expenses and other current assets		25,613			(5,383	)								20,230
Total current assets		528,160			(31,948	)		(36,641	)		-			459,571
Property, plant and equipment, net		342,083			(4,508	)								337,575
In-process research and development		42,501			(41,800	)								701
Intangible assets, net		55,010			(16,096	)								38,914
Goodwill		54,902			(13,902	)								41,000
Deferred tax assets, long-term portion, net		11,124			-			-			-			11,124
Other assets		2,117			-			-			-			2,117
Total assets	$	1,035,897		$	(108,254	)	$	(36,641	)		-		$	891,002
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	45,611		$	(9,671	)				$			$	35,940
Accrued expenses and other current liabilities		4,187			(10	)								4,177
Accrued compensation		26,528			(1,727	)								24,801
Contingent consideration		2,580			(371	)								2,209
Provisions for chargebacks		1,960			(1,960	)								-
Promissory note		-			-			20,000				H		20,000
Deferred revenue, current portion		9,589			(2,118	)								7,471
Total current liabilities		90,455			(15,857	)		20,000			-			94,598
Deferred revenue, net of current portion		23,114			(3,468	)								19,646
Long-term indebtedness		247,192			-									247,192
Deferred income taxes		6,817			-									6,817
Other liabilities		1,337			(79	)								1,258
Total liabilities		368,915			(19,404	)		20,000			-			369,511
Commitments and contingencies
Stockholders' equity:
Preferred stock		-			-									-
Common stock		40			-									40
Treasury stock		(6,420	)		-									(6,420	)
Additional paid-in capital		322,384			(88,850	)		(56,641	)			I		176,893
Accumulated other comprehensive loss		(4,152	)		-									(4,152	)
Retained earnings		355,130			-									355,130
Total stockholders' equity		666,982			(88,850	)		(56,641	)		-			521,491
Total liabilities and stockholders' equity	$	1,035,897		$	(108,254	)	$	(36,641	)		-		$	891,002

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Emergent BioSolutions Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2015
(in thousands, except per share data)
													Emergent
				Aptevo			Other						Continuing
	Historical			Seperation			Adjustments			Notes			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	312,795		$	(4,492	)	$	(40,508	)			F	$	267,795
Accounts receivable, net		120,767			(6,431	)								114,336
Inventories		76,936			(19,707	)		5,741				G		62,970
Taxes receivable		6,573			-									6,573
Prepaid expenses and other current assets		20,339			(2,310	)								18,029
Total current assets		537,410			(32,940	)		(34,767	)		-			469,703
Property, plant and equipment, net		331,856			(4,046	)								327,810
In-process research and development		42,501			(41,800	)								701
Intangible assets, net		57,375			(16,617	)								40,758
Goodwill		54,902			(13,902	)								41,000
Deferred tax assets, long-term portion, net		11,286			-						-			11,286
Other assets		2,154			-						-			2,154
Total assets	$	1,037,484		$	(109,305	)	$	(34,767	)		-		$	893,412
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	45,966		$	(7,576	)				$			$	38,390
Accrued expenses and other current liabilities		6,229			(22	)								6,207
Accrued compensation		34,683			(2,684	)								31,999
Contingent consideration		2,553			(444	)								2,109
Provisions for chargebacks		2,238			(2,238	)								-
Promissory note		-			-			20,000				H		20,000
Deferred revenue, current portion		7,942			(3,964	)								3,978
Total current liabilities		99,611			(16,928	)		20,000			-			102,683
Deferred revenue, net of current portion		23,046			(3,163	)								19,883
Long-term indebtedness		246,892			-									246,892
Deferred income taxes		6,590			-									6,590
Other liabilities		1,328			(71	)								1,257
Total liabilities		377,467			(20,162	)		20,000			-			377,305
Commitments and contingencies
Stockholders' equity:
Preferred stock		-												-
Common stock		40												40
Treasury stock		(6,420	)											(6,420	)
Additional paid-in capital		317,971			(89,143	)		(54,767	)			I		174,061
Accumulated other comprehensive loss		(2,713	)											(2,713	)
Retained earnings		351,139												351,139
Total stockholders' equity		660,017			(89,143	)		(54,767	)		-			516,107
Total liabilities and stockholders' equity	$	1,037,484		$	(109,305	)	$	(34,767	)		-		$	893,412

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

Emergent BioSolutions Inc. and Subsidiaries

Notes to the Pro Forma Condensed Consolidated Financial Statements

(A) Reflects Emergent's historical GAAP financial statements and does not reflect any adjustments related to the Distribution.

(B) Reflects the revenues and expenses directly associated with the results of operations of Aptevo and was derived from the annual and interim combined GAAP financial statements included in Aptevo's Registration Statement on Form 10 (File No. 001-37746) (the "Form 10"), adjusted to exclude previously allocated corporate overhead costs.

(C) Reflects the estimated revenue received and expenses incurred by Emergent under the Manufacturing Services Agreement executed between Emergent and Aptevo at distribution.

(D) Reflects the tax effect of (C). The tax rates were based off Emergent's estimated effective tax rate of 28.8% for the three months ended March 31, 2016 along with the annual effective tax rates of 30.0%, 30.8% and 29.6% for the years ended December 31, 2015, 2014 and 2013, respectively.

(E) Reflects the assets and liabilities of Aptevo and was derived from the unaudited combined GAAP balance sheet included in the Form 10, adjusted for certain assets and liabilities to give effect to the Distribution.

(F) Reflects the effect of the $45 million cash contribution from Emergent to Aptevo upon separation.

(G) Reflects raw materials and work-in-process inventory balances for Aptevo products remaining with Emergent. Emergent is expected to manufacture certain of the Aptevo commercial products and sell the finished products to Aptevo. Finished goods inventory on Aptevo's balance sheet will remain with Aptevo.

(H) Reflects the planned capital contribution via issuance of a non-negotiable, unsecured promissory note of $20 million upon separation. This promissory note from Emergent is payable to Aptevo within six to 12 months following the separation date.

(I) Reflects the net effect of (F), (G) and (H).