Investing in Counteracting Biological and Chemical Agents

Cyanokit had been available in the U.S. since 2006 (although sales figures are unavailable), but was only recently recommended for European approval by the Committee for Medical Products for Human Use — the scientific committee of the European Medicines Agency — opening up international markets across the EU for the drug. Cyanokit is used in response to smoke inhalation, which is responsible for 80% of all fire-related deaths in the U.S.

However, sales for EpiPen do point to a fast-growing market: Global sales for Epipen in 2012 amounted to $729 million in 2012 — a 45% gain on 2011 sales of $503 million, with the latter representing a 35% jump on 2010 sales. Mylan’s specialty segment sales of $800 million for 2012 amounted to a 46% jump year-on-year and were “principally the result of higher sales of the Epipen.”

While Emergent Biosciences has no comparable product to Cyanokit or Epipen, its acquisition of Bracco Diagnostics suggests a willingness to look at companies providing first response treatments, and in the future may consider further acquisitions to expand their business into higher growth segments.

Future
International sales remain the untapped resource. In the short term, Emergent Biosciences would be best served by meeting the demands of its existing CDC contract, but there are opportunities for similar contracts in Europe.

July saw the approval of BioThrax in Germany, offering a foothold for wider approval within the EU. Although when pressed further on international sales, the company was cool on such opportunities. President and CEO Daniel J. Abdun-Nabi stated in the Q2 earnings call, “we don’t see the international market as large as the U.S. market” and left it at that.

Summary
Emergent Biosciences’ BioThrax revenues has enabled it to diversify beyond a single product. Its acquisition of Bracco Diagnostics shows intent to think beyond vaccine treatments, while RDSL offers another strand of revenue for the company. The company was keen to point out its “Building 55” will have the capability to produce a number of products, suggesting it may already have designs on new revenue opportunities with a more commercial angle than it currently has.

The article Investing in Counteracting Biological and Chemical Agents originally appeared on Fool.com and is written by Declan Fallon.

Declan Fallon has no position in any stocks mentioned. The Motley Fool recommends Emergent BioSolutions.

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