Good day, ladies and gentlemen, and welcome to the first quarter 2008 Emergent BioSolutions Inc. earnings conference call. My name is Karen and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Robert Burrows. Please proceed.

Thank you, Karen, and good morning, ladies and gentlemen. Again, my apologies for the earlier comment. Thank you for joining us today as we discuss Emergent BioSolutions' financial results for the first quarter of 2008. As discussed our call today is open to all participants. In addition, the call is being webcast, conferenced and is copyrighted by Emergent BioSolutions. Joining me on the call this morning is Fuad El-Hibri, our Chairman and Chief Executive Officer and Don Elsey, Chief Financial Officer. Additionally, other members of senior management will be present on the call for purposes of Q&A. They include Dan Abdun-Nabi, President and Chief Operating Officer of the company; Dr. Jim Jackson, Chief Scientific Officer; Dr. Dr. Mike Langford, President of our BioDefense Product Development Group. The agenda for today's call will be, following my brief introduction, we will provide comments on the accomplishments in 1Q 2008 and key objectives for the remainder of 2008. Don will then discuss in detail the 1Q 2008 financials and comment on financial guidance for 2008. We will finish the call with the customary question-and-answer session. Please note that any statements about the company's prospects or future expectations are forward-looking statements. As you know, forward-looking statements involve natural risks and uncertainties and as a result may differ materially from expectations. Please refer to the press release issued earlier today and importantly to our filings with the SEC for more information on our risks and uncertainties that may cause actual results to differ. Also Emergent BioSolutions assumes no obligation to update the information in today's press release or as presented on this call except as may required by applicable laws or regulations. Today's press release could be found on our web site at www.emergentbiosolutions.com under investors/press release. With that, I would now like to turn the call over to Fuad El-Hibri, our Chairman and CEO. Fuad?

Thank you, Bob. Good morning everyone and thank you for joining us today. As you know, this morning we reported strong financial results for the first quarter of 2008. Our financial performance during the quarter reflects our continued strength of generating consistent cash flow through sales of BioThrax. We then reinvest that cash into the development of our pipeline of vaccines and therapeutics causing infectious diseases. As we continue to build Emergent into a leading force in the biopharmaceutical market, we believe this strategy will continue to be effective in building long-term value. During first quarter of 2008, we continued to achieve both financial and operational success. Operationally, we continued to sell more of our licensed product, BioThrax, and we accomplished key product development milestones. We advanced our manufacturing expansion program and we achieved various business development objectives. As we look towards the remainder of 2008 and beyond, I'm confident we will continue to achieve our financial, operational and corporate objectives. Let me begin with a brief word on our financial accomplishments during the first quarter of 2008. We reported significant year-over-year growth in revenue with total revenues up 62% over last year to almost $43 million. We also achieved a net income of around $7 million. A more detailed discussion of our financial results for the period will be provided by Don in a moment. As we have said before, our approach is to reinvest internally cash flow into our product pipeline of vaccines and therapeutics to address significant unmet or underserved medical needs. To that end, we invested $11.5 million in our development program while finishing the first quarter, with more than $90 million in cash. This cash balance positions us to pursue the acquisition of a late stage product candidate that broadens and deepens our commercial products…

Thank you, Fuad. Good morning everyone. As Fuad mentioned, we released our first quarter 2008 financial results this morning prior to the opening of the markets. Press release is available on our Web site. Later today, we will be filing our quarterly report on Form 10-Q with the SEC. The 10-Q will also be available on our Web site and on the SEC's Web site once it has been filed. As Fuad said, our financial performance during the first quarter of 2008 was very strong and we are very pleased with the results. During the quarter, we continued to execute against our $448 million multiyear contract with HHS, delivering doses of our licensed product BioThrax for inclusion in the SNS. We continued to invest in the development of our product pipeline and the advancement of our large-scale manufacturing capability in Lansing. At the same time, we vigorously managed our spending in manufacturing, development and in general and administrative areas and pursued efficiencies wherever possible. This enabled year-over-year improvements in almost all key financial metrics. Now I would like to give you a summary of our financial results for the first quarter of 2008 and I will start with product revenues. First quarter 2008 product sales increased by $15.1 million or 53% to $41.5 million up from $25.4 million for the comparable period of 2007. The increase in revenue was driven by a 68% increase in the number of doses of BioThrax. Product sales for Q1 2008 consist of primarily of BioThrax sales at HHS of $41.1 million. Turning to contracts and grants revenues; first quarter 2008 contracts and grants revenues increased by $200,000 or 21% to $1.2 million, up from $1 million for the comparable period of 2007. Contracts and grant revenues for Q1 2008 consisted of $800,000 from the…

(Operator instructions) And your first question comes from the line of Richard Smith with JP Morgan. Please proceed. Richard Smith – JP Morgan: Yes, good morning everyone.

Good morning.

Good morning Rich. Richard Smith – JP Morgan: Good morning. Just a quick questions; So with respect to – how many doses was delivered to HSS in the first quarter, do you have the number?

Sorry, you were breaking up a bit. Could you repeat your question please? Richard Smith – JP Morgan: How many doses were delivered to HHS in the first quarter?

We delivered approximately 1.8 million doses, Richard. Normally, we don't give specific dose information deliveries at HHS but it's in that ballpark. Richard Smith – JP Morgan: Okay, thank you. And with respect to the acquisition of the rPA102, could you just provide some details of how it compares to the pharmacy (inaudible) rPA vaccine that's in development?

Mike, maybe you can kind of address how –?

Sure. Some of the differences I guess that's maybe why we are more focused are the expression systems that we use. So the expression system for the product we acquired, rPA102, is (inaudible) as we used to produce our current licensed vaccine. We see some of the advantages of that – of the way it expresses the protein. It expresses the full length protein in a soluble form versus the (inaudible) inclusion bodies, which require breaking up of the cell for the purification and resultant truncated protein and we see that as a potentially more effective vaccine in terms of the fact that it has all of the (inaudible). We think that's one of the significant advantages. We also think that VaxGen prior to our acquisition related substantially increased the stability of this product. We know that there are stability issues with rPA in general from our previous work with this. Although I can't speak directly to the pharmacy products, we do believe we probably have a superior product in terms of stability. So we have the expertise for production. We believe the product produced is superior in terms of recombinant products and we believe the stability that we are going to see is going to be superior to other products. Richard Smith – JP Morgan: With respect to the RFP that is out there for the second generation, are there any attributes that you still need to work on to fulfill that RFP requirement?

We believe that we are well positioned to submit a strong bid under the existing RFP, Richard. Richard Smith – JP Morgan: All right, thank you.

And your next question comes from the line of Eric Smith with Cohen & Co.. Please proceed. Eric Smith – Cohen & Co.: Good morning, thanks for all the updates. On the DoD side, Fuad I think you mentioned that the Department of Justice would require additional supply of BioThrax in 2008 if it were to continue with this ongoing program. Can you talk a little bit more in detail about your updated discussions with them, when a contract might occur, whether that contract wouldn't be through HHS and maybe what kind of size order would be required for the continued program?

I can tell you that we have been informed that DoD and HHS have come to an agreement with respect to fulfilling the DoD requirements and that HHS is currently evaluating to what extent that will result in a modification to the existing contract because the intent was and still is that every dose requirement by DoD will translate into additional purchases by HHS or (inaudible) the government procurement process takes time. We still are confident that this year, we will receive a modification to accommodate DoD's requirements. As to the amount, I can only point back to history where – over the last ten years, the requirements was anywhere between 1.5 million to 2 million doses per year and there was nothing looking into the future that would suggest that the requirement would change in any major way. Eric Smith – Cohen & Co.: And you still think that those doses would be in excess of the 18.75 million.

Yes, I do. Eric Smith – Cohen & Co.: And since you are in the mood, I guess to give out those information on this call, can you tell us how many doses are under the 18.75 million contract?

I can help you with that, Eric. The 18.75 million doses are almost evenly planned to be delivered around 6 million in '07, we plan to deliver around 6 million this year, and then around 6 million next year. Does that help a bit? Eric Smith – Cohen & Co.: Very much. Next question is on your production capacity. You said you were now up to about 8 million doses in '08 versus maybe 7 million or so last year. Can you talk about what exactly happened there and whether you are confident you will use all that capacity, sell out that capacity?

If you just do the math, we are looking at selling around 6 million doses to HHS and then DoD will come in at about 1.5 million to 2 million doses with the (inaudible) meeting our full output for '08 plus our international efforts are getting even further traction. As I mentioned before, we did have another sale and we continue to sell additional doses over the next three quarters of this year. So, yes, increasing the capacity from 7 million to 8 million translates into potentially having a million doses addition therapy. Eric Smith – Cohen & Co.: And what drove of the capacity expansion is?

We drove some continuous minor – and I say minor since we have already dealt with the low hanging in terms of optimizing the manufacturing process given the current 100 meter scale process. We are tweaking the last bit and plus we are also adding additional shifts so that we utilize it 24/7. Eric Smith – Cohen & Co.: Okay. Last question, in your preliminary comments, you mentioned that your cash on hand and your cash flow allows you to pursue late stage product acquisition to broaden or deepen your portfolio. Could you help us understand a little bit more what you are looking for there?

We are looking for a late stage vaccine or therapeutic in biologics of course and late stage will mean either Phase II or a Phase III product. It maybe any infectious diseases that – where we will focus but it would be outside infectious diseases and all I can tell you is that that's one of our main strategic objectives. We are making progress and it will be great pleasure to announce the deal once it is – when we reach that point. Eric Smith – Cohen & Co.: What's your willingness to take on earnings dilution associated with such a transaction?

It really depends on the size of the transaction, Eric, because obviously we want to maintain a healthy cash buffer. We have some cash we believe that we can use towards an acquisition either a company or for us to the extent that there is a requirements for further considerations certainly as it is coming off. Eric Smith – Cohen & Co.: Okay, great, thanks so much.

And your next question comes from the line of Daniel Mallin with WBB Securities. Please proceed. Daniel Mallin – WBB Securities: Yeah, hi guys, congratulations on the quarter as well as the interesting strategic acquisitions. My question is having to do with the number of doses or total sales, most specifically, I know that this most recent contract signed with HHS has an order smoothing so as – where in previous years, quarter-over-quarter sales to HHS was very lumpy mostly loaded in the back end of the year. The delivery schedule on this business on track, it's going to be more consistent quarter-over-quarter. Not knowing the details of that, is there any insight in terms of the total revenue relative to the expected revenue to suggest that this was maybe more than expected or about as much as expected relative to that contract?

Daniel Mallin – WBB Securities: So, interpreted slightly differently, the real story is in the full year sales, not in the quarter-over-quarter.

Yes, that's absolutely correct, Dan and this is what I keep repeating to our investors is that it's very important to understand that this is an annual business and when you work with government contracting and defense we look at it year-over-year and try to smoothen out quarterly performance as we can but it's a year-over-year story. Daniel Mallin – WBB Securities: And lastly, on the acquisition of the rPA candidate, I know there is an existing RFP out there for this next stage. I don't know what the submission deadline is but considering – call it Rocky history of a particular program, are you guys confident that you will be able to put together a strong submission for this outstanding RFP for the HHS?

Yeah, let me answer your question very thoroughly. Absolutely, we feel that this rPA candidate with the stability issues apparently resolved to our credit match; we believe is a very strong candidate and VaxGen development program was always the most advanced one historically. We just ran into a difficult when – as for their second Phase II trial as there were some stability issues with the formulation but since then, VaxGen has, we believe, solved their stability problem and that's partially the reason why we completed that acquisition and we believe that it's a strong candidate. We believe we are well positioned and we believe we have a good chance. Daniel Mallin – WBB Securities: Okay, that's all I have. Thank you and congratulations again on the quarter.

Thank you.

Thank you.

(Operator instructions) There are no additional questions at this time. I would like to turn your call over to Mr. Robert Burrows for closing remarks.

Thank you Karin. Ladies and gentlemen, that concludes today's call. Thank you for your participation. Please note that today's call has been recorded and replay will be available beginning later today through May 21. Alternatively, there is available a webcast of today's call, an archive version of which will be available later today, accessible through our web site at www.emergentbiosolutions.com and clicking on the Investors tab. Thank you again and we look forward to speaking to you all in the future.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.