Emergent BioSolutions led a decline for biotech stocks on Wednesday as EBS stock crashed on declining sales and a delayed contract with the U.S. government.
On today's stock market, the SPDR S&P Biotech exchange-traded fund skidded 3.3%. The ETF is often used as a barometer for biotech stock performance. Meanwhile, Emergent stock plummeted 34.9% to 12.85.
For Emergent, the stock slide comes after two wide third-quarter misses. The company makes vaccines and treatments that tackle public health threats. That includes a vaccines protecting against smallpox and anthrax, as we as an anthrax treatment.
But third-quarter sales plunged 27% to $240 million and missed EBS stock analysts' forecast, according to FactSet. Emergent also reported a wider-than-expected adjusted loss of $1.27 per share. That more than tripled the losses Emergent reported in the year-earlier period, leading the biotech stock to crumble.
EBS Stock Dives On Guidance Cut
Emergent also lowered its expectations for full-year sales to $1.05 billion to $1.1 billion, dinging EBS stock. At the midpoint, the new guide is $12.5 million below Emergent's previous outlook. The guidance cut comes amid uncertainty for smallpox vaccine, ACAM2000.
"The company reported that the U.S. government has so far not exercised its procurement option for ACAM2000, which in prior years, has typically occurred in the second quarter or third quarter," Chardan Research analyst Keay Nakae said in a report.
He noted Emergent has a 10-year contract with the Biomedical Advanced Research and Development Authority for ACAM2000.
But Nakae kept his buy rating on EBS stock. He lowered his price target on the biotech stock by 10 to 55.
"We believe that Emergent remains the preferred supplier of biodefense vaccines and other products to the U.S. government under multiyear sales contracts," he said.
Other Biotech Stocks Mixed
Like EBS stock, shares of Xenon Pharmaceuticals also tumbled. Wedbush analyst Laura Chico noted the company's third-quarter revenue and per-share losses lagged expectations. But the stock decline likely stems from two key pipeline delays.
Xenon now expects to have the results of a study in major depressive disorder in the third quarter of 2023. Another study in children with a seizure disorder has been pushed out to 2024 due to slow enrollment. In response, the biotech stock slumped 6.6%, ending the regular session at 33.06.
Biotech stock Mirati Therapeutics reversed higher, paring earlier losses and closed 4.2% higher at 61.94. Mirati beat financial expectations for the third quarter with losses of $3.09 per share and $5.4 million in sales.
Meanwhile, Arcutis Biotherapeutics yo-yoed and ended the regular session with a fractional loss, at 18.62.
Arcutis offered a positive surprise for investors, announcing psoriasis cream Zoryve was added to a large formulary managed by a top pharmacy benefits manager and a large national plan, effective Nov. 1. This will help the company expand the number of patients who can access Zoryve.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
