Emergent BioSolutions plans spinoff of biosciences business
Emergent BioSolutions has authorized management to pursue a tax-free spinoff of the company’s biosciences business into a separate, stand-alone, publicly traded company. The spinoff is expected to create two independent public companies with distinct strategic plans, growth strategies, and operational and development priorities.
The new biosciences company, to be named at a later date, will focus on providing novel oncology and hematology therapeutics to meaningfully improve patients’ lives. The core technology of the biosciences company will be its ADAPTIR platform applied to immuno-oncology. Emergent BioSolutions will continue to operate as a global specialty biopharmaceutical company whose core business is focused on providing specialty products for civilian and military populations that address intentional and naturally emerging public health threats.
“The proposed spinoff recognizes that our two operating divisions have evolved into distinct business and investment opportunities. The biosciences spinoff establishes each as a pure play company with a focused strategy and enables each company to target investors attracted to its business profile,” said Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions. “This transaction will allow us to accelerate our growth strategy while enabling the new biosciences company to invest in novel therapeutics in the highly attractive immuno-oncology field. We expect the spinoff to enhance business focus, better align resources to achieve strategic priorities, and unlock significant value for both companies.”
Emergent expects to provide the biosciences company with a fixed cash contribution of $50 million to $70 million. Additional sources of cash to support R&D investment will include commercial product sales and partnership funding.
Emergent will retain the biodefense marketed products and development programs, platform technologies and manufacturing infrastructure. Emergent will maintain headquarters in Gaithersburg, Md., biodefense product development facilities in Maryland and Germany; cGMP manufacturing facilities in Michigan, Mississippi and Canada; and CMO fill/finish operations in Baltimore.
Emergent’s Bayview Campus, also in Baltimore, will continue to operate as an HHS-designated Center for Innovation in Advanced Development and Manufacturing. Emergent’s Winnipeg manufacturing facility is expected to serve as primary CMO for some products of the biosciences company under an arm’s length, long-term manufacturing agreement.
As stand-alone public companies, Emergent and the new biosciences company will have separate management teams and boards of directors. Daniel J. Abdun-Nabi will remain president and chief executive officer and Robert G. Kramer will remain executive vice president and chief financial officer of Emergent. Fuad El-Hibri will remain executive chairman of the board of directors.
Upon completion of the spinoff, Marvin L. White will serve as president and chief executive officer of the new biosciences Biosciences company. White currently is a member of Emergent’s board of directors. He is the former chief financial officer of St. Vincent’s Health, a $2.8 billion multi-hospital health system. White previously was executive director and CFO of Lilly USA, a subsidiary of Eli Lilly, and held other positions in corporate finance at Eli Lilly.
Emergent expects to incur transaction-related expenses of $2 million to $4 million in 2015, which are included in its reaffirmed 2015 financial guidance. The company expects additional costs in 2016 leading up to completion of the spinoff.
Emergent may, at any time and for any reason until the proposed spinoff is complete, abandon the spinoff or modify its terms and conditions.