Good day, ladies and gentlemen, and welcome to the Emergent BioSolutions Incorporated first quarter 2010 financial results earnings conference call. (Operator Instructions) I would now like to turn the conference over to your host for today in the company. Please proceed.

Thank you, Jasmine. Good afternoon, ladies and gentlemen. My name is Robert Burrows. I’m Vice President of Investor Relations for Emergent. Thank you for joining us today as we discuss the Emergent BioSolutions financial results for the first quarter of 2010. As is customary, our call today is open to all participants. In addition the call is being recorded and is copyrighted by Emergent BioSolutions. Joining me on the call this afternoon with prepared comments will be Fuad El-Hibri, Our Chairman and Chief Executive Officer and Don Elsey, our Chief Financial Officer. Additional members of our senior management team will be present on the call for purposes of the Q&A session. Before we begin, I’m compelled to remind everyone that during the call, management may make projections and other forward-looking statements regarding future events and the Company’s prospects for future performance. These forward-looking statements reflect Emergent’s current perspective on existing trends and information. Any such forward-looking statements are not guarantees of future performance and involve substantial risks and uncertainties. Actual results may differ materially from those projected in any forward-looking statements. You are encouraged to review Emergent’s bonds with the SEC on Forms 10-K, 10-Q and 8-K for more information on the risks and uncertainties that could cause actual results to differ. For the benefit of those you may be listening to the replay, this call is held and recorded on May 5, 2010. Since then Emergent may have made announcements relating to topics discussed during today’s call, so again please reference our most recent press releases and SEC filings. Emergent BioSolutions assumes no obligation to update the information in today’s press release or as presented on this call except as may be required by applicable laws or regulations. Today's press release may be found on our website at www.emergentbiosolutions.com under Investor Relations/Press Releases. And with that introduction, I would now like to turn the call over to Fuad El-Hibri, Emergent Biosolutions Chairman and CEO. Fuad.

Thank you, Bob. Good afternoon everyone, and thank you for joining us on today's conference call. For my prepared comments, I will review our financial performance for the first quarter of 2010, provide a reaffirmation of our financial forecast, discuss updates regarding our business, and highlight key milestones for the year. To begin, let me review our financial results for the first quarter of 2010. Our revenues of $47 million and net income of $2.5 million include the scheduled deliveries of BioThrax to the SNS as well as progress payments under development contract for the first quarter. These financial results are in line with our projections for the year. As you all know, our quarter-to-quarter deliveries vary. I'm pleased to report that we successfully completed all of our scheduled deliveries for the first quarter, and remain on track to achieve our guidance for the year. We therefore reaffirm our 2010 forecast for total revenues of $235 million to $255 million, and net income of $20 million to $30 million. Let me now provide an update on our business. First, the development contract for BioThrax scale-up. We are in final contract negotiations with BARDA for the funding of the development, scale-up and licensure of BioThrax and Building 55. As you know, Building 55 is our new large-scale state-of-the-art manufacturing facility on our Lansing campus. We anticipate that this award will be a multi-year development contract with potential funding in excess of $100 million. The revenue impact from this development contract in 2010 is not reflected in our forecast. We remain optimistic of an award in the next few months. Second, the development contract for our rPA vaccine candidate. At the request of BARDA, we are in the process of submitting our final revisions for our proposal for an rPA contract award.…

Thank you, Fuad. Good afternoon everyone. As Fuad mentioned, following the close of the markets today, we released our financial results for the first quarter of 2010. I encourage everyone to take a look at the press release which is currently available on our website. We plan to file our quarterly report on Form 10-Q at the SEC by the close of business tomorrow, Thursday, May the 6th. The 10-A will also be available on our website. Now let me briefly discuss the financial results. For the first quarter of 2010, total revenues were $46.8 million, comprised of 38.8 million of product sales, and 7.9 million of grants and contracts revenue. Product sales revenue compares to revenue of 64.5 million in the first quarter 2009. Product revenues were 37% less than 2009 due to fewer doses being delivered in first quarter 2010 related to the timing of scheduled deliveries under our contract with HHS. Grants and contracts compared to revenue in first quarter 2009 of $2.8 million, an increase of 180% year-over-year. For first quarter 2010, net income was $2.5 million or $0.08 per share. This compares to net income of $11.1 million for first quarter 2009. The decline in net income was a direct consequence of the period revenue being less year-over-year. I want to recognize that these results are less than last year's comparable period as well as less than some of the analysts estimates. However the quarterly results are in line with our internal expectations. They support the annual guidance we are confirming, and again they provide an example of the limited value of looking at our quarterly results as an indicator of our overall annual performance. With that said, let me move to gross profit and gross profit margin. For the first quarter 2010, our gross…

(Operator Instructions) Your first question comes from the line of Eric Schmidt with Cowen. Eric Schmidt - Cowen & Company: Fuad, it seems like you have a fair bit of detail and greater certainty on that Building 55 expansion support that you might get from the government. I was wondering if you can share with us a bit more detail specifically at this $100 million in contract, what kind of profits you might be able have on that whether any of that $100 million would go towards funding work that you've already done etcetera?

Let me start by giving you some update on where we stand in the process. We have now submitted our final scope in pricing to the government. We believe that has been accepted and we're in final contract negotiations. So we feel quite confident that very soon in the next few months the contract will be awarded to us. As I mentioned in my prepared remarks, we expect it to be in excess of $100 million. And let me highlight that. That is to build process development, some protection of clinical development work, so it's not brick and mortar, its development just like any of the rPA contract and any of the other government development contracts that we have. And that, as you know, usually has a profit margin allowance of anywhere from 6% to 10%, and it allows overheads to be allocated to the project. So what it translates into in terms of gross margin on the contract is a different issue and depends on how the project progresses. But it is profitable; it is expected to be profitable, and it is very similar to many of the other development contracts that we have.

The $100 million, does that cover the entirety of your costs needed to bring the facility to licensure?

We expect that it would, because typically the government doesn't reimburse or fund brick and mortar type of investments, which we've already done. So now we're talking about process development, clinical studies etcetera, which we believe the funding has pretty much accomplished.

Just a footnote to that. On your question, while the contract is still on negotiations, and there's a lot of details that we're not at liberty to discuss, the proposal as it's put together currently is a cost plus proposal as opposed to fixed price contracts that have been contemplated in the past.

Last question on the potential rPA contract. Just wondering if you can, given you again, seem to be making some progress here, perhaps we can just rewind the clock a little bit and you can talk about what happened last year to the best of your knowledge, and why you think this time around it's different?

So under project (Power Shield) or a procurement contract, procurement of unlicensed products, there is a provision that the government needs to feel reasonably confident that a developer can actually bring a vaccine candidate or a common measure to licensure within eight years. And it appears, and the government did state that that they believe that neither our competitors' candidate, with reasonable assurance could be licensed in eight years. That doesn't mean that they're not interested in continuing to develop an rPA vaccine, they in fact are. They've invited us and our competitor to continue to bid on the continuation of development of rPA, but under now a development contract or the procurement contract. So as I mentioned on our last call that originally, the rPa contract was having a procurement component and a development component to it. The development component to it all was estimated to be around 250, maybe $300 million. That part hasn't really changed. So that's why we anticipate that the development contract is indeed a five-year contract, would be around 250, maybe in excess of $250 million. Yes, we're making progress there. We remain confident that the contract will be awarded in the next few months.

And I assume you continue to think it will be a two-party development contract, and split roughly equally dollar value? I was thinking that maybe between the two parties that each would have about $250.

Yes, I mean, if the government would award our competitor a similar contract, and depending on their timelines and on their development cost, it would be of a similar magnitude we would expect.

Your next question comes from the line of Cory Kasimov with JPMorgan.

This is actually (Karen Jason Cory). First, could you give us an update on AIG and whether or not there's a potential for a development contract and timing? And secondly, an update on the litigation with Protein Sciences?

Sorry, (Karen), can you repeat the first question?

Yes, the first question; just an update on the AIG product and then the potential for the development contract there and the timing.

Let me start with the AIG question. We are in the process of completing our clinical trial for AIG. We anticipate that it will be completed by the end of this year. And so this program is advancing very nicely. And regarding PSC, I'm going to ask our acting general council to take that question and answer it.

Sure, this is (J. Riley) thanks for the question. As you know we've filed an action in Connecticut to foreclose on PSCs assets. PSC has moved to stay the action. The courts been fully briefed and we're waiting for a ruling. We expect it soon, but no matter what the outcome of the ruling is, we remain confident that we're going to recover everything that we (wrote), either through repayment or through foreclosure.

Your next question comes from the line of David Moskowitz with Madison Williams. Please proceed. David Moskowitz - Madison Williams & Company: Okay. Several questions, first of all, very, very high gross margin in this quarter. I think it's the highest I've seen other than when you guys got the additional payment from HHS. What drove that please?

Well, we continued to work on improving our operating system and even though the manufacturing costs are variable; anytime you deal with a biologic that overall we've hoped to see a trend upwards. So we can't speak quarter to quarter or even year to year, but the trend is something that we can't speak to. So we hope overtime that that margin will continue to rise.

And for that particular quarter, David this is Don, as I said in my comments, we expect gross profit margins to continue to remain between 70% and 80%. And most of the fluctuation is going to be due to the fluctuation in yields that are experienced in any particular quarter and as I'm sure you are all aware, what actually goes out the door could be that the product that was produced one quarter previous, it could contain some product from even the quarter prior to that. So yes this was particularly strong gross profit margin and a lot of it was due to some very nice manufacturing yields we were experiencing. David Moskowitz - Madison Williams & Company: So just to be clear, this 70% up to 80% are pretty wide margin. So are you on the higher end of that 70% to 80% when it comes to your guidance?

We don't normally guide on this, I would tell you that, no. I'd say no other range. David Moskowitz - Madison Williams & Company: Okay. I see, and in terms of the new contract you expect in third quarter for BioThrax, given that there could be the capacity expansion being funded by the government. Should we expect that that new contract could extend into the years when capacity expands? And I guess the other question is, would we expect another price increase as we've seen in all the other previous contracts?

Are you talking about the follow-on contract? Procurement contract, yes. First of all, it wouldn't be 3Q, we anticipate that by the end of this year we would have finalized an agreement with CDC on that, and we expect that to be, as mentioned earlier, through 2014; so three year contract at a minimum. And P&L would be similar to the last two contracts that we've secured in the last three-four years.

Okay, thanks, I appreciate that. The SG&A pattern that we've seen, I guess for last three quarters of last year we had some litigation expense on protein sciences. In this quarter we're seeing back down the way we saw in the first quarter of last year, not $60 million. What is the rough rate on a quarterly basis, I imagine it should be free study.

This is (Jay) again. We obviously can't predict specific numbers, but last summer we had a particularly active piece of litigation in the bankruptcy court in Delaware, it was a one time event, we don't anticipate a similar activity in the near future.

Yes, back to the point. Generally speaking on SG&A overall, clearly there are things that are going to influence and I think if you look over the past quarters, you're going to see that the number has grown relatively, modestly across quarters. Except for some extraordinary items, deal expenses for deals that did include PSC, litigation, non-cash write off of some of the engineering expenses associated with the credit facility. So if you go back through all of our filings and take a look at that what are our going rate is I think you can determine pretty closely a pattern. Is it going to be 1% year-over-year for every quarter, I'm not going to say that we're going to be that successful on managing SG&A, but we're clearly focused on it and we wish to keep it at a fairly slow brow. So I think if you go back to the past and you get rid of some of the extraordinary items you'll be able to see a pretty good trend.

So somewhere in the neighborhood of cause inflationary type growth year-over-year off the base?

I'd say that it's generally fair that we're going to try and keep the growth to a minimum. Now as you heard, we've got some rather significant contracts that could be let. We've certainly talked about M&A in the future, things along that line, and as those things occur, you may see quarter-over-quarter jumps in SG&A as we have transaction expenses or advisory expenses, or even growth in infrastructure if in fact these contracts are so big that it generally grows the business.

And two last questions. Number one, you've come in below expectations this quarter. It looks like if you stretch it out on an annual basis, it's a like quarter. And we know that businesses won't be based deliveries if taken by the government. So, won't you suggest that there's some sale that didn't happen this quarter that could happen in subsequent quarters? And my second question, of course a different subject related to the deals on the Building 55 funding and potential rPA funding. Are those going to be capitalized on the balance sheet and not run through the P&L as we thought with the original rPA deal? So in other words, should we expect this to come in as cash, as it comes in, but not get disbursed through the P&L until you actually have a product or operating facility? Thanks.

If you take our statement that we're reaffirming annual guidance, and take a look at your model, or anybody's taking a look at their models, and first quarter was lighter than what was in the models. I think you can safely assume that the math says that, we are going to have sales, 2Q through 4Q that may exceed your models. So that's about the best I can do. We don't get quarterly guidance for that very reason, but we are expressing confidence in the guidance that we gave for the top-line. And so I think you can say that the balance has to be made up in the next three quarters. As you take a look at the rPA contracts and the Building 55 contract, again, they are not signed, they are not executed yet. But given the form of the contract, as we understand it today, and being cost plus, those would run through the income statements in a much more normal fashion than what we anticipated with the rPA procurement contract that was earlier being discussed where it would be capitalized, and had some rather unusual accounting treatments surrounding it. So I think this one's much more standard.

So from an accounting point of view, actually a development contract is much easier and flows through the income statement for a procurement contract. Maybe a little trick here?

This you should see in much easier form, and that's why I highlighted earlier that really the scale up contract for bob tracks would be a development contract too. So, that one would also go through the income statement. It's not a capital expenditure type reimbursement.

Excellent, well it looks like some good things ahead, appreciate the answers, thanks.

(Operator Instructions) Your next question comes from the line of Jim Molloy with Caris & Company. Please proceed. Jim Molloy - Caris & Company: Hey guys thanks for taking the question. Right now, you're selling everything you can make to the U.S. government, what confidence do you have that when Building 55 comes online, how that will be going up (to the) US government as well? And is that an answer we would get with the next contract to come in, as it obviously has in there? Language about having deliveries you can only make if building 55 comes online?

Hi, Jim, thank you for asking this question. Jim, the follow on contract is something that I think will bridge the time between now and when actually licensed products will come out from building 55, which I've said earlier we expect to be in about three years. So, I doubt, and again, it's all subject to negotiations and maybe the government is willing to give us a longer term contract. But at this stage, we're looking to bridge until building 55 is producing the licensed larger scale BioThrax product. And what's your second question, sir? Jim Molloy - Caris & Comapany: Well, you're selling everything you make right now to the U.S. government, and obviously they won't ask to sign a contract they know you wouldn't make.

So again, once we come, with the current scale of production, the government has been purchasing our full capacity and I think will continue to purchase our full capacity. Now with respect to building 55, which is beyond potentially this follow on contract, that might be a subsequent one. We then have to negotiate, pricing, how many doses? We hope to be able then to supply up to 25 months of doses to such facility, it's less labor-intensive and at a much larger scale. We anticipate that the price per dose is also going to go up. So, it's going to be a negotiation process. It's really too early to give any views as to whether the government's going to take all the production or not. I anticipate, given the 75 million dose requirement that stand that they will try to get doses in as quickly as possible. So in addition, we continue to work in the international arena, and over the next three years we do believe that there will be some foreign countries that are going to step up their requirements in terms of building a national stockpile to work out of Building 55. We may have the extra capacity to address that demand.

Yes, I'm just looking at your slide in the tele-conference where in 2013 obviously you get 25 million doses. So I guess we'll see here at the end of the year when the contract comes in, if the US government keeps coming along at 7 to 8 million doses per year, then in 2013 you'll need to find another buyer for the remaining capacity, and that'll be when you look at US. Is that a fair statement?

Not really, because we've been delivering at capacity from several years now, and don't forget that doses expire, and the current level is somewhere between 20 and 25 million doses in the strategic stockpile. So at 7 million, you don't ever and a year with three to four year's product expiring, and some of it is used by the DoD by the way, you don't get to 75 million in the foreseeable future unless you buy larger quantities. And so there are many moving pieces. Is 75 million just initial requirement? Could there be more? Second, how quickly can we get to the 25 million dose requirement? Third, what is the pricing, because if the pricing is attractive the government might buy the 25 million doses. So there are many questions. One last talk I want to leave you with is that it gives us a lot of comfort that the government is willing to fund over $100 million worth of costs associated in bringing the Building 55 to licensure because that indicates to us that they're committed to the product and are interested in what that facility offers in terms of capacity.

Okay, just last question then. I guess it seems pretty clear that at this juncture you anticipate the government will keep buying as much as you guys could make in the 2013-2014 to get to the 75 million they would continue to do so. Should the SNS get filled, and you are able to sell excess capacity for US, any restrictions you can see for selling BioThrax or US government might put them away?

Outside the US government, we see a growing market, realize that there is national policy development needs to be considered, stockpile management needs to be considered. Governments who usually come out with a tender will now be assured that there is product to be delivered, and that quite frankly has been a little tricky at times because they know that we're delivering basically everything to the US government. So, yes once we have added capacity, we believe that the international demand is going to increase and take some of that capacity. And remember again, coming back to the 75 million dose stockpile requirement. Right now we have a four year dated product. When the scaled-up product comes out of the facility it maybe at three years, maybe at four years, we will have to see how it performs. But if you take 75 million, it's very rough math and say that a third of the dose expire, you could basically see how the government will take 25 million doses a year. And if it is four years, you take 75 million divided by four and it's almost 20 million doses a year. So, no matter how you cut it, for that stockpile to be brought up to it's required level and then to maintain it speaks to our full capacity. And then next question might be, well when does rPA potentially come into play? Well first of all, it's still an experimental vaccine, we don't know if it's ever going to get licensed. Second, the government has already admitted that it might take more than eight years to get rPA licensed. We're certainly confident in our candidate; we anticipate that we can take it through licensure. But it is quite far out, eight years.

Faud, thank you very much for taking the question here.

At this time there are no further questions, I would now like to turn the call over to Mr. Robert Burrows for closing remarks, please proceed.

Thank you, Jasmine. Ladies and gentlemen, that concludes today's call, thank you, everyone for your participation. Please not that today's call has been recorded and a replay will be available beginning later today through May 19. Alternatively there is available a webcast of today's call, an entire version of which will be available later today, accessible through the company's website at www.emergentbiosolutions.com and clicking on the investors tab. Thank you again and look forward to speaking to all of you in the future, goodbye.

Ladies and gentlemen, that concludes today's conference. You may now disconnect. Have a great day.