Investors wary of Emergent going into IPO
With government the only purchaser of anthrax vaccines, market size and cash flow are major comcerns; ongoing troubles with vaccines — for Emergent and VaxGen — suggests a bad long-term investment; company’s post-anthrax plans are uncertain
Investors take note. Industry analysts are increasingly bearish on Gaithersburg, Maryland-based Emergent Biosolutions’ forthcoming IPO. Expected to raise up to $92 million with an initial per share offering of $14-16, company officials hope the IPO will permit Emergent to expand manufacturing facilities in Frederick, Maryland and Michigan, as well as fund development of the next generation of anthrax vaccines. Outside observers, however, note that the company’s flagship product, the BioThrax anthrax vaccine, faces an extremely limited market, with all sales in the past and future expected to be to the government. For investors looking for consistent cash flow, this is not ideal. “That’s a tall trick because the money will come in lumps at best,” said John T. McCamant, editor of the Medical Technology Stock Letter.
As we have reported, Emergent has seen some recent successes, but these have mostly been due to the failures of its largest competitor, Brisbane, California-based VaxGen. That company had been charged under a $877 million Project BioShield contract with creating a safer alternative to BioThrax
