Emergent BioSolutions Inc

Emergent BioSolutions, Inc. (NYSE: EBS) is a life sciences company providing preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threats (PHTs). Its segments include Products Segment and Services Segment.

Recent Financial and Business Updates:

• Recent Corporate Developments:
  • CEO Transition: Following the retirement of Robert G. Kramer, the company announced the appointment of Haywood Miller as Interim CEO.
  • FDA Approval: The U.S. Food and Drug Administration (FDA) granted approval for CYFENDUS™ (formerly known as AV7909), a two-dose anthrax vaccine for post-exposure prophylaxis.
  • Sale of Travel Health Business: The company successfully concluded the sale of its travel health business to Bavarian Nordic, with total consideration reaching up to USD 380 million, including an upfront payment of USD 270 million. A minimum six-month Transition Services Agreement is in place to facilitate the asset transfer.
  • Credit Facilities Amendment: The company made significant amendments to its existing senior secured credit facilities, extending their maturity, thus enhancing financial flexibility.
  • Ebanga™ Contract: A substantial 10-year contract was secured with the Biomedical Advanced Research and Development Authority for the advanced development, manufacturing scale-up, and procurement of Ebanga™ (ansuvimab-zykl), a critical Ebola treatment.

• Product Sales:
  • Net Anthrax MCM: Q2 2023 reported a decrease of USD 74.6 million in revenues for Anthrax Medical Countermeasure (MCM) compared to Q2 2022. This reduction was primarily attributed to the sales timing of CYFENDUS and BioThrax, offset by increased Anthrasil sales.
  • NARCAN: Q2 2023 witnessed a significant increase of USD 32.3 million in NARCAN® (naloxone HCl) Nasal Spray revenues compared to Q2 2022, driven by higher branded NARCAN sales to U.S. public interest channels and increased Canadian retail sales. However, it was partially offset by reduced commercial retail sales in the U.S. following the termination of the Company's relationship with Sandoz.
  • Smallpox MCM: Q2 2023 revenues for Smallpox MCM surged by USD 107.9 million compared to Q2 2022, primarily due to the full delivery of a USD 120 million option exercised by the U.S. government to purchase ACAM2000. This increase was partially offset by lower VIG sales due to timing.
  • Other Products: Q2 2023 saw a decrease of USD 0.6 million in revenues from other product sales compared to Q2 2022, primarily attributed to lower BAT sales, although partially offset by higher RSDL sales.
• CDMO Services: Revenues from contract development and manufacturing services exhibited significant growth of USD 23.7 million in Q2 2023 compared to Q2 2022, driven by activities at the company's Canton facility for a CDMO customer and resolution of a customer's outstanding obligation.
• CDMO Leases: Revenues from contract development and manufacturing leases also increased by USD 7.2 million in Q2 2023 compared to Q2 2022, demonstrating positive performance at the company's Canton facility.
• Contracts and Grants: Q2 2023 reported a decrease of USD 0.7 million in revenues from contracts and grants compared to Q2 2022, reflecting specific operational dynamics.
• Equity Offering Program: The company initiated its "at-the-market" equity offering program (ATM Program) in Q2 2023, successfully selling 1.1 million shares of its common stock under the program, generating gross proceeds of USD 9.1 million with an average price of USD 8.22 per share, contributing to its financial strategy.
• Product Gross Margin: For the three months ended June 30, 2023, both Product gross margin and Product adjusted gross margin witnessed a significant increase of USD 21.1 million and USD 22.1 million, respectively, compared to the same period in 2022. However, the Product gross margin percentage decreased by 7 percentage points to 55% for the three months ended June 30, 2023, primarily due to increased shutdown-related costs and inventory write-offs, reflecting evolving cost dynamics.

Technical Observation (on the daily chart)

Presently, the stock has corrected by approximately 89.16% since reaching its highest point in the past 52 weeks, which occurred on October 26, 2022. The Relative Strength Index (RSI) over a 14-day period stands at 26.05 currently in the oversold zone, indicating a state of potential consolidation or a short-term upward momentum. Additionally, the stock's current positioning is below both the 21-day Simple Moving Average (SMA) and the 50-day SMA, which may serve as dynamic short-term resistance levels.  

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 18, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.