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Caris & Co Start Coverage on Emergent BioSolutions (EBS); Shares Recover Despite Termination Notice From Abbott (ABT)

December 29, 2011 11:22 AM EST
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Price: $2.53 -2.32%

Rating Summary:
    10 Buy, 5 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Shares of Emergent BioSolutions, Inc. (NYSE: EBS) fell ~3.5% yesterday after the company announced receipt of a notice from Abbott (NYSE: ABT) that it was terminating a co-development and co-commercialization agreement.

Abbott's decision was a result of the company's portfolio prioritization process. TRU-016, Emergent's humanized anti-CD37 mono-specific protein therapeutic, recently commenced a Phase 2 clinical study for chronic lymphocytic leukemia (CLL) and is currently in the middle of Phase 1b clinical evaluation in non-Hodgkin’s lymphoma (NHL). These studies will be completed, and final study data will be available by 1H 2013.

However, following the termination of the agreement, Emergent announced it would retain the worldwide rights for development and commercialization of TRU-016, and Abbott will be obligated to provide certain forms of transition assistance to Emergent for a certain period of time. Emergent does not expect that termination of the Abbott agreement will have a material impact on its planned R&D expenditures for 2012.

Emergent also announced the initiation of patient dosing in the Phase 2 study (protocol 16201) of TRU-016 in combination with bendamustine for patients with relapsed CLL. The initiation of this clinical trial triggered a $6 million milestone payment to Emergent by Abbott.

This morning, Caris & Company resumed coverage on EBS with a Buy rating and $24 price target. The shares are getting a boost, currently trading at $17.11, $0.58 higher (+3.51%)


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