Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 Emergent BioSolutions Incorporated Earnings Conference Call. My name is Ann and I’ll be your coordinator for today’s call. As a reminder this conference is being recorded for replay purposes. At this time all participants are in listen-only mode. (Operator Instructions) I’d like to turn the presentation over to Mr. Robert Burrows. Please proceed sir.

Thank you, Ann. Good afternoon ladies and gentlemen. Again, my name is Robert Burrows, I’m Vice President of Investor Relations for Emergent. Thank you for joining us today, as we discuss Emergent BioSolutions’ financial results for the third quarter and full nine months of 2011. 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 or 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 filings 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 who may be listening to the replay, this call was held and recorded on November 3, 2011. 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 Investors/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 our call today. During the third quarter, we continue to execute on our operating plan. We manufactured and delivered doses of doses of BioThrax in to the SNS. We advanced the development of our infectious disease, oncology, and autoimmune programs, and we made progress on Building 55 scale up. I am pleased to report that at the end of the quarter as expected, we received an award for the supply of BioThrax to the SNS over the next five years. This clearly underscores the government’s continued commitment to procure BioThrax as a critical medical countermeasure in the strategic national stockpile. In terms of our third quarter results, we achieved total revenues of approximately $59 million, which is within the $50 to $60 million guidance, we provided in our previous earnings call. We also realized net income of $1.5 million. In terms of the remainder of the year, we are reaffirming our full year 2011 guidance of total revenues of $270 to $290, and net income of $15 to $25 million. Turning now to the status of BioThrax manufacturing in the current year. During the quarter, we completed deliveries under the original 14.5 million dose contract and begun to make deliveries of the 3.5 million doses under the contract modification. We remained on track to complete deliveries of all 17.9 million doses under this modified contract by the end of the year. As discussed last quarter, we have been experiencing yields that puts us at the lower end of the historic 7 million dose to 9 million dose range. Over the course of the year, we have identified additional steps to our ongoing process optimization initiatives to further improve our – success rate. Some of these steps we…

Thank you, Fuad. Good afternoon, everyone. As Fuad mentioned, following the close of the markets today, we released our financial results for the third quarter of 2011. 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 with the SEC no later than the close of business tomorrow, Friday, November 4th. The 10-Q will also be available on our website. Now for a brief overview of our financial results. Total revenues for third quarter 2011 were $58.8 million as compared to $74 million for Q3 2010. Total revenues for the first nine months of 2011 were $165.4 million, compared to $182.9 million for the same period in 2010. As you know, total revenues are a combination of revenue from product sales and contracts and grants. Product sales revenues in the Q3 2011 were $43.7 million, a decrease of $23.6 million from the prior year. This decrease was due to a 38% decrease in the number of BioThrax doses delivered due to the lower production yield we experienced earlier in the year. Product sales revenues for the quarter consisted of BioThrax sales to HHS of $43.6 million, an aggregate international and other sales of $85,000. Product sales revenues for the first nine months of 2011 were $120.7 million and consisted of $119.4 million in BioThrax sales to HHS and aggregate international and other sales of 1.4 million. The decrease of $41.3 million from product sales revenue for the same period of 2010. The decrease resulted primarily from a 29% decrease in the number of BioThrax doses delivered due to the redeployment of our potency testing from BioThrax release testing. The qualification of replacement reference standards and other development testing during the first quarter…

(Operator Instructions). And our first question comes from the line of Karen Jay. Please proceed.

Hi, Karen Jay for (inaudible) thanks for taking my questions. I just have a couple, the first is, I want to make sure I understand from your prepared comments, it sounds as if you will need to do any bridging studies for Building 55, and if that’s the case, can you reconfirm the timeline that the timeline that the plants could be operational or online in 2013?

Thank you for joining us today Karen, this is what I am obviously it is good news that FDA was supported of a plan that wouldn’t include a clinical trial and a clinical is, we estimated would add between year-and-a-half or two years of timeline. This is, however, not the exact savings in time that we would – to do other comparability studies, non-clinical studies that may take a bit longer than expected. But overall, I would say that we may gain something around a year’s time due to this important development.

Okay great, that’s great news. Also just (inaudible) that the current extension contract will likely finished delivering in 4Q and you will start deliveries under the new contract in 2011?

Yes towards the end of 2011.

Okay. Just one more question, the changes that you’re implementing, the remaining set to increase yield, is that’s going to require any shutdown or slowdown in manufacturing?

We don’t anticipate that would require any shutdown or slowdown. It will take a while to these improvements to take effect, which we hope will happen during the first half of next year. So, we are optimistic that these additional steps will help us to get to the level of $8 million to $10 million rather than the $7 million to $9 million, which we have historically experienced. Now, again, even with a $8 million to $10 million range and even with those improvements there is still about variability in the manufacturing process so, the range, the higher range with the midpoint of $9 million is still $8 million to $10 million.

Great. Thank you very much, and congrats on the new contract.

Thank you. Thank you very much Karen.

And our next question comes from the line of Nicholas Bishop. Please proceed.

Hi, good afternoon. Thanks for taking my questions. I just wanted to follow up a little bit more on the Building 55 licensure pass. I was just wondering if you could elaborate a little bit more on exactly what the FDA has said you do or do not have to do and what issues remained to be cited and when those issues will become clear.

Well, we’ve had a very positive dialog with FDA recently and our comparability plan, which is pretty comprehensive and detailed, was commended on and we’re evaluating these comments. So, it’s really premature to tell you exactly the timeline impact. I tried to explain to Karen that we’re hoping that might have above eight years impact of pulling the timeline in, but we’re still working through the exact ramifications with respect to the timelines.

Okay, thanks. And then just one quick one on the mechanics of the new BioThrax contract and that as you mentioned that you could have yield of up to 10 million doses although expected to deliver in 2012, 8 million to 8.5 million, if you have a greater yield then, you expected is there any mechanism by which you could deliver more than that number on this contract?

Obviously irrespective of the yields that we were actually experiencing this year, which are within the range, historic range of $7 to 9 million and that will continue to fluctuate as we go forward. With the new award, which has an average of 9 million doses, we obviously are working towards shifting upward the range from the 7 to 9 million to 8 million to 10 million so that the average is about 9 million. Again, we may have year-to-year fluctuations and that’s fine because the award allows for includes terms that allows for the acceleration of delivery or the postponement of delivery into the next delivery years. So, there is flexibility. Our goal is to shift the paradigm, so that on average we can deliver 9 million a year, but I have reemphasize as I have always emphasize this is a biological manufacturing process with variability. So we are historically 7 to 9 million dose range. We hope to reach – achieve quite sometime next year this 8 to 10 million range. We’ve already seen and implemented some of the steps and they are looking promising and we were very excited about implementing the remaining steps.

Okay, just to be clear. I’m sorry.

No, no that’s fine.

Okay. Just to be clear, I’m talking about next year, if you have a yield of greater than 8.5 million for example, there would be some possibility of delivering those two (inaudible)?

Absolutely. Again under the terms of the award, we do retain the ability to monetize the timing of our delivers from year-to-year.

Okay, great. And then just one last financial one, both R&D and SG&A have been on a declining trend through the year. I’m wondering if you can give any guidance on whether that trend is expected to continue when they might flattening out or just what we should be thinking about there?

Don, why don’t you take that one?

Sure, happy to do that. Nick as far as a trend of decline, I really wouldn’t characterize it quite like that, as you take a look at and let me treat them somewhat separately SG&A that’s as evident in our notes and in the various filings. There have been a lot of one-time occurrences either last year or this year. I think once you normalize for those types of one-time occurrences and you take a look at the trends throughout the year, you’ll see SG&A is relatively steady throughout the year. With regards to R&D, of course that’s going to fluctuate with where a various product candidates are in their trials at any particular point in time. So you are going to see some volatility there. Again I think, certainly year over year you are going to see an increase in absolute R&D expenses as we picked up the Trubion product candidates and continue to drive those forward. So I would say that with respect to the trends in those relatively steady and SG&A and on an overall increase in R&D, but you are going to see up and down as one goes through the year. Is that answer to your question Nick.

It does thank you very much.

Thank you Nick.

And our next question comes from the line of Greg Wade. Please proceed.

Thanks and good afternoon. Wondering if we might just return to the Building 55 approval process, so our expectation was that there will be a package submitted to FDA at the end of this year and that we’d found out sometime in 2012 as to whether clinical studies would be required. Will that package still be submitted or do you require additional preclinical studies to be done before that can be submitted some time say some time in 2012 with an answer sometime in 2013.

Thanks for joining us Greg. I’m not sure that we ever expected to submit a package so to speak to FDA that is formally in a review, we did develop a plan and submitted the plan for a discussion purposes to the FDA. And we have had that dialog. So yes, in a sense we have had that discussion, and they commented that they agreed with our plan on that a clinical trial is not likely to be needed and but they made some comments as to kind of some of the engineering runs and comparability aspects of our plan that might need additional work. So you may save the time and effort that involved in the – not doing the clinical trial, but on the other hand, we might be doing a bit more on the non-clinical side, so but net-net we still believe that we can bring the timeline and net-net overall its less of an effort, so it’s good news.

Okay, I agree. I just like to understand the process, so you will complete this work and you will be filing for approval of Building 55, when do you expect to make for approval of Building 55?

Well, we expect again we are amending our plan right now to reflect some of the changes and I would look at potentially sometime in late 2013 early 14 that delay supplement could go in.

Okay great, thank you. And then I just wanted to follow that up, Don in terms of expected production in Q4 in order to if your guidance – will you be looking for something in the range of 3.5 million doses to deliver to the FNS?

I think you can back end into that, Greg as you know dose forecast per say. But taking a lookout at our full year forecast for revenue and backing out the first nine months. It’s easy to see where top line has to be – and you can do the math on the doses if you want.

Okay. And then just if I one last question, according to our math it looks like a significant uptick, obviously you have the benefit of October and you actually know exactly what’s going on a daily basis. So has the October production been to such a level that gives you great confidence then that this significant uptick is going to take place?

Well remember our production, I’m sorry (inaudible) remember our production cycle is such that our October production is really going to manifest itself in Q1, 2012. The shipments that we’re making in Q4 are basically completed going through their release testing et cetera, et cetera. If you take a look as I’ve suggested and drive the fourth quarter revenue off of our guidance and you compare it to the fourth quarter revenue of last year, you’re going to see there are quite similar. So as far as a significant uptick, the uptick is not a whole lot different than it was last year.

Great, that’s helpful. Thanks for taking my questions.

I think what might be helpful here is that in terms of sub-locked manufacturing for this year, it’s basically done. So we have a good idea we know exactly what’s sub-locked have been produced. So now it’s a question of filling and – testing et cetera. So obviously as we get closer to the end of the year, our confidence goes up in terms of meeting the guidance and today we’ve reaffirmed our guidance.

Thanks very much.

(Operator Instructions). And our next question comes from the line Jim Molloy. Please proceed.

Hey guys, thanks for taking my questions. I had (inaudible) timeline, again I apologize for beating on this one, but my understanding is consisting lot of manufacturing that’s wrapping up end of early next and then you complete validation and testing, and prior to this we had assume to bridging study year and year and a half in the second half 14, potentially getting Building 55 online. Now is the bridging study gone has consistently – consistency lot manufacturing extended or validation extended, or you’ve mentioned before perhaps late ‘13 or early ‘14 – Building 55, what’s filling the rest of that space?

Yes, thank you for joining us, Jim. It’s the non-clinical studies that we refer to earlier, which under the animal rule that right offence programs to show consistency one can also use animal results, test results to demonstrate comparability. So that’s what’s now we’re looking at potentially expanding that aspect that I mentioned of our total plan. So it’s a kind of a trade off. If we don’t bridge through a clinical trial, we’re bridging through enhanced non-clinical studies. And of course, we’re continuing to look at the engineering runs and preparation for the consistency lots, there we also received some comments which are of promising that we can get to consistency less relatively soon.

Okay, great. Then maybe could you walk through what exactly the current pricing per vial, any changes on that? And where there are vials – I have seen most of the vials made but not shipped from prior quarters that are going to keep going to growing up in the fourth quarter to get to the sort of the big bump in the fourth.

I didn’t quite get your question, can you come again please.

Yes sure, I mean where there lots made, but not shipped in prior quarters, that are now getting shipped at the door in the fourth quarter, and it seems like the numbers are going up the door, capacity exceed kind of production, maybe they don’t, production capacity in the quarter.

Yeah, I mean again the production cycles have variability from months-to-months. The delivery when CDC can and is prepared to deliver various scheduling as always – something that needs to be completed. So it can vary, well happen – it seems to be a pattern with us that the fourth quarter seems to be more substantial quarters in terms of delivery. So it just so happens, we try to get up the door with any lots as quickly as possible. So it’s not like that – there is no keeping an inventory and trying to manage quarter-to-quarter or add deliveries.

Okay, great. Maybe final question, still assuming on $28 per dose on the current contract, any thoughts on where that prices goes to for the next contract, and then can you talk any specifics on what were the yield improvements that will drive yield.

Okay. So the first question – we consider pricing something that we don’t disclose, but it is pretty straightforward. If we look at the 75 million doses, we have given you an indication that the five year premium that would kick in the latter half of the five year period, it is really not significant in amount, and giving you an idea of modest escalation. So, I think when you look at how many doses we have to deliver at a total contract price, you can’t be too far off in terms of what the price per dose is.

Okay, great. Then what exactly – where the sort of the hard moment that increased yields here in the most – or going forward of building from 7 to 8 and 8 to 10?

It’s when you have a manufacturing process as you know you have process parameters within which you manufacture tightening some of these process parameters and looking at some times shifting of course with approval of FDA. Everything has to be approved. We may improve the yields or the success rate of sub production. So, it’s a without getting too technical, and I don’t know that I would even want to share all that technical stuff that we’re doing. We feel that we have tremendous competency and fermentation manufacturing and this is on our strength. We are addressing those things that I’ve just discussed.

Okay. Thanks for taking the questions, guys.

Thank you, John.

Ladies and gentlemen, we have no further questions. This concludes our question and answer season. I would now like to turn the call over to Mr. Robert Burrows for closing remarks.

Thank you, Ann. Ladies and gentlemen, that concludes today’s call. We appreciate every ones participation. Please note that today’s call has been recorded and a replay will be available beginning later today through November 17th. Alternatively, there is available a webcast of today’s call, an archive version of which will be available later today accessible through the company’s website. Thank you again and we look forward to speaking to all of you in the future. Good bye.

Ladies and gentlemen, we thank you for your participation in today’s conference. This concludes the presentation, and you may now disconnect. Have a good day.