|Shares Out. (in M):||20||P/E||0||0|
|Market Cap (in $M):||45||P/FCF||0||0|
|Net Debt (in $M):||-65||EBIT||0||0|
Partnering agreements in 2017
|Subject||Emergent BioSolutions Guidance|
|Entry||12/31/2016 08:37 PM|
Thanks for the write-up. We were investors in Emergent BioSolutions post the spin-off for a quick play on the re-contracting of BioThrax / awarding of NuThrax contract. Was wondering if you had any thoughts on Emergent as a standalone at the current levels (we sold out completely after the Company issued guidance in early December).
Interestingly in this guidance update (12/08/16), Emergent actually guided for Aptevo's operations as well, implying $30m in EBITDA for FY'16 (and Aptevo stand-alone has not made similar estimates yet to our knowledge). https://www.bamsec.com/filing/136764416000084?cik=1367644
We had cash burn for Aptevo in our model for EBS at around $45m (which was on the conservative side to underwrite an investment in EBS, APVO standalone estimates are more around $50-55m range). Based on the numbers provided, it seems EBS has given investors a hint into a significant bump-up in APVO operations in Q4 (since YTD revenues for APVO whole-co are only around $30m). Do you have any thoughts here? Clearly $30m of EBITDA would be incremental to EBS and not indicative of stand-alone APVO profitability, but given the diminutive actual revenues from Aptevo, this $30m of purported incremental EBITDA seemed fairly significant as a data point.
We also like Aptevo and agree with the overall points made in the write-up. We are surprised that partnerships have not yet been announced (and by the lack of purchases by El-Hibri among other EBS insiders).
|Subject||Re: Emergent BioSolutions Guidance|
|Entry||01/01/2017 01:17 PM|
Maybe I am reading this wrong but don't you mean negative 30m? Combined is 90-100 (including apvo) and continuing is 120-130 (excluding apvo).
|Subject||Re: Re: Emergent BioSolutions Guidance|
|Entry||01/01/2017 02:08 PM|
Yes thanks for the clarification, I mean negative $30m ebitda attributable to Emergent from the Aptevo operations on a combined basis. Granted there will be some additional SG&A expense for Aptevo on a standalone basis (we had about $15m incremental opex in our model for APVO stand-alone), the delta they were showing in EBITDA on a combined vs ongoing basis for Emergent seemed too small for the 2016 guidance (given 2015 ebitda for APVO was ~-$58m and YTD 2016 -$38.5m for stand-alone APVO). Run-rating the current ebitda for 2016 would indicate around -$50m in ebitda for Aptevo stand-alone (or -$35m ebitda attributable to EBS on a combined basis if you use our $15m incremental SG&A stand-alone costs for Aptevo (which we believe are on the high end). We focused more on Emergent, but on these quick numbers, it would seem the Company is expecting a $5m pickup in Q4 (either on the cost side which is not likely or a bump-up in revenue by $5m for Q4, which would be fairly significant on a current ~$10m revenue per quarter).
Just another data point here, EBS originally estimated the ebitda pickup post spin to be around $40-50m (which was for FY15 which would explain the discrepency against the $30m ebitda delta shown in the 12/08/16 guidance – either way though this is indicative of improving operations at Aptevo). Seems like either way you look at this, managmenet expects an uptick in Q4. Maybe we are reading too much into this, but wanted to know thoughts from someone more tuned into Aptevo than us.
|Subject||Re: Re: Re: Emergent BioSolutions Guidance|
|Entry||01/02/2017 11:40 AM|
I'd expect that the Ixinity problems will drive costs unusually high in the fourth quarter as they try to resolve this serious problem. And soon after, if not in the fourth quarter, Ixinity going out of production will hurt revenues. Ixinity sales were ramping up through the year and is the only reason I can see that they would have anticipated a stronger fourth quarter than the prior ones. Now it's turning into a problem.
I didn't follow Emergent BioSolutions and only dug into it enough to see that the company has been a financial success. That was important to me as El-Hibri remains chairman of Aptevo as well.
|Subject||Re: Re: Re: Re: Emergent BioSolutions Guidance|
|Entry||01/04/2017 10:30 AM|
Ixinity bulk production problems are resolved and the drug should be available again in the second quarter. Good news as sales were ramping well last year and hopefully will begin to ramp well again.
|Subject||Re: Re: Re: Re: Re: Re: Emergent BioSolutions Guidance|
|Entry||02/01/2017 10:59 PM|
The stock wanders around up and down without any reason as far as I can tell.
Ixinity is a hemophilia clotting factor that has competition. It has to take market share from other clotting factors. Until the production problems, sales were picking up steadily and management noted that patients seemed to prefer it to the competitive drugs. So I'd expect it will start ramping again maybe in the 3rd quarter and depending on what share it takes might eventually ramp as high as 35 or 40 million.
|Subject||CEO purchased 100K shares this week|
|Entry||03/22/2018 10:36 AM|
CEO Marvin White purchased 100K shares on the open market this week.
Aptevo has a very good setup from our perch. Management executed $75mm ($65mm up front) of non-dilutive financing from the sale of its hyperimmune commercial products (WinRho, HepaGam B and VARIZIG) last September for 2x revenue. The company still retains its recombinant factor IX product, XINITY, which is in early launch stages generating $11mm of revenue in 2017 with a path to grow that figure significantly as drug manufacturing issues are behind them. Pfizer's competing product, Benefix, did $604mm of revenue in 2017. IXINITY is non-core to the company and we expect them to sell it once sales ramp up. The company still trades for less than cash and is focused on its large pipeline of bispecific antibody oncology therapies generated from its ADAPTIR drug discovery platform. APVO will spend the bulk of its cash on R&D this year, though they expect to achieve a number of clinical milestones including a phase 2 data read out of otlertuzimab in PTCL, a phase 1 read out in APVO414 mCRPC, and the advancement of APVO210 and APVO436 into the clinic. The company also has one executive solely dedicated to seeking partnership deals for its preclinical pipeline. There are a number of ways for APVO to generate value and the CEO has put meaningful skin in the game.
|Subject||Re: Re: IXINITY sales ramping nicely|
|Entry||08/16/2018 11:34 AM|
The current market cap about equals their cash and the value of Ixinity. The Adaptir platform and their several drug candidates headed for phase 1 trials are now valued at about zero (rather than negative value).
To a laymen, it looks like they are getting some promising bispecifics. Partnering them out might validate that someone else thinks they're promising too. I'm no help in quantifying what partnerships might be worth, however.
I'm still holding my shares as the money spent on Adaptir getting to where they are is about $12 a share and the market values it at zero. There's significant insider ownership here so I don't think they're just burning cash for fun. Still, this could wind up a zero.