Emergent's (EBS) Strong Vaccine Portfolio To Fuel Growth

On Apr 8, we issued an updated research report on Emergent BioSolutions Inc. (NYSE:EBS) .

Emergent’s key Biodefense product, BioThrax, is the sole vaccine to be marketed for the general use for both pre-exposure prophylaxis and post-exposure prophylaxis of anthrax disease. The United States government is the primary purchaser of the Biodefense products.

Notably, BioThrax enjoys an Orphan Drug status in the United States for the post-exposure setting. This designation makes it eligible to enjoy seven years of marketing exclusivity through Nov 2022.

Shares of Emergent have lost 10.9% so far this year against the industry’s rally of 11.9%.

Apart from BioThrax vaccine, Emergent markets smallpox vaccine, ACAM2000, and anthrax monoclonal antibody, raxibacumab, both of which were acquired in the fourth quarter of 2017 from Sanofi (NASDAQ:SNY) and GlaxoSmithKline (NYSE:GSK) , respectively.

Notably, last December, Emergent submitted an application to the FDA for the emergency use authorization of its anthrax vaccine candidate, NuThrax, following a public health emergency involving Bacillus anthracis. The regulatory agency will review the application and a decision is awaited in the first half of 2019.

In September 2016, Emergent secured a $1.6-billion worth multi-year contract with the Biomedical Advanced Research and Development Authority (BARDA) for the advanced development and delivery of NuThrax. We view this contract as a huge positive for the company.

Last month, Emergent initiated a phase III study to evaluate AV7909 for the post-exposure prophylaxis of anthrax disease. The development and delivery of AV7909 is being funded by BARDA.

Emergent is also developing Zika vaccine candidate, VLA1601, in partnership with European partner Valneva SE. Last November, both companies announced positive interim data from the phase I study on VLA1601. The program met the primary endpoint by achieving a favorable safety profile across all doses and schedules tested.

Meanwhile, Emergent has been active in pursuing deals and acquisitions. Last October 2018, Emergent completed the buyout of specialty vaccine company, PaxVax, for an all-cash consideration of $270 million. Upon closure, Emergent purchased two marketed vaccines, namely Vivotif (Typhoid Vaccine Live Oral Ty21a) and Vaxchora (Cholera Vaccine, Live, Oral).

During the same month, Emergent concluded the acquisition of Adapt Pharma, which added the latter’s Narcan nasal spray to its portfolio, thereby expanding the company’s presence in the public health threats market. Emergent expects that the Adapt and PaxVax operations will contribute combined revenues in the range of $270-$300 million in 2019.

Emergent derives majority of its revenues from the sales of BioThrax. Consequently, any hiccup in the vaccine’s production could severely hamper the company’s future growth prospects. Moreover, stiff rivalry from a number of companies with respect to Biodefense products also remains a headwind.

Emergent Biosolutions Inc. Price and Consensus

Zacks Rank & Key Pick

Emergent currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Kamada Ltd. (NASDAQ:KMDA) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kamada’s earnings estimates have moved 34.3% north for 2019 and 5% for 2020 over the past 60 days. The stock has gained 20.6% so far this year.

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