Emergent Shares Fall Despite Profit Report

Emergent BioSolutions, the Rockville biotech that is supplying the U.S. government with 18.75 million doses of anthrax vaccine, has had its share of successes and setbacks in the last few years.

Yesterday, it experienced both. The company reported a second-quarter profit thanks to high sales of BioThrax, the only anthrax vaccine approved by the Food and Drug Administration. Then its shares fell almost 24 percent, closing at $10.64.

Stephen G. Brozak, president of WBB Securities, said investors weren't reacting to the quarter's results, but rather a herd instinct to sell.

"You're looking at a few people who got in at the beginning of the year and made a lot of money," he said. "And the unfortunate part is that Wall Street distorts things."

Anthrax has been in the news in the last week with an intensity unseen since the 2001 anthrax attacks because of the apparent suicide of Bruce E. Ivins, an Army biodefense researcher whom the FBI asserts was responsible for those attacks.

Ivins was one of the developers of a genetically modified anthrax vaccine that Emergent bought in May from VaxGen, a South San Francisco, Calif., biotech that landed an $877 million anthrax vaccine contract in the wake of the 2001 attacks. The company eventually lost the award for the delivery of 75 million doses because of concerns about the vaccine's stability in storage.

In 2000, when Emergent was a Michigan firm known as BioPort, Ivins worked to revive the company's anthrax vaccine. BioPort had stopped production under a federal order because of manufacturing problems. In June correspondence that year, Ivins fretted that if BioPort's vaccine failed a potency test, "the program will come to a halt. That's bad for everyone concerned, including us."

Analysts said yesterday that the accusations against Ivins would have no effect on Emergent.

Robert G. Kramer, president of Emergent's biodefense operations in Lansing, Mich., concurred, saying the company's biodefense business would not be affected.

"That's our expertise," Kramer said, "and that's what we'll continue to focus on."

Yesterday, the controversy surrounding Ivins and the anthrax attacks was not mentioned in a conference call with investors. Instead, the company focused on its attempts to expand its anthrax franchise by developing treatments for both anthrax prevention and infection.

Emergent earned $1.8 million (6 cents per share) for the quarter ended June 30, compared to its loss of $5 million (17 cents) in the corresponding period a year earlier. Revenue jumped 88 percent, to $43.5 million from $23.2 million.