Small-Cap Sunday: The Stock that's Rocketing 261% YTD After Receiving $100 Million from Wells Fargo

Well friends, Emergent BioSolutions is absolutely crushing it—and by "crushing it" I mean rallying 24.83% in a week and casually stacking up a 261% YTD gain. Bigly.

(Source: Giphy) 

In short, this small-cap life sciences company that you probably didn’t know existed until five minutes ago is now pulling a full on “Kobe”, thanks to its latest shiny toy: a $100 million asset-based revolving loan facility (ABL). You know, because nothing says "we’re killing it" like borrowing more money.

(Source: Global Newswire) 

Interesting, more details please… 

Well, first off, this ABL (full credit to the king of slime themselves, Wells Fargo) which doesn’t come due until 2029—(lifestyle equivalent of throwing your problems six years in the future) —is simply part of Emergent’s multi-year transformation plan. And if you’re wondering what that plan is, here’s a hint: keep the lights on.

(Source: ABF Journal) 

Now if you’re thinking, “Wait, didn’t they just refinance their debt earlier in September?” Ding ding ding, we have a winner. Earlier in September, Emergent also refinanced its debt and secured a $250 million term loan from Oak Hill Advisors. That’s right, they’re rolling in debt like it’s 2008 and housing prices only go up. With another $250 million in cash and a fresh $100 million waiting to be tapped from the ABL, Emergent’s financial “stability” is looking strong in the short-term… but in the long-term? Ehhh not so much. But hey, at least they can tell their shareholders that they are “liquid”, amirite? 

(Source: Emergent) 

But, but, but… despite the looming catastrophe that could or could not happen when the debt comes due in six years, CEO Joe Papa (yes, that’s his real name, and yes, he sounds like someone who should be running a pizzeria instead of a biopharma company) couldn’t be more excited. 

(Source: Giphy) 

According to Papa Joe, this ABL is a “further evidence of Emergent’s strengthened balance sheet and financial position.” Translation: “We’re still here and somehow, we haven’t imploded yet.” Again, this is coming from a CEO whose company has plunged a blistering -82.73% over the past five years… so of course he’s happy. Especially since, again, the stock is up 27.73% in just the past week (and 261% YTD), which is the kind of growth that makes you wonder if anyone’s actually paying attention to what this company does. 

(Source: Yahoo Finance) 

You see, Emergent is the same company that’s been quietly toiling away for 25 years on vaccines and therapeutics for things we all hope never happen. You know, fun stuff like anthrax. They’ve been that kid in the back of the class, doing all the homework, waiting for the one moment everyone needs a last-minute vaccine.

And now? Well, they’re the kid who’s suddenly showing off their Lamborghini in the parking lot, and we’re all wondering how the hell that happened. Which is why their secret sauce (other than their newfound love of debt) all comes down to the fact they aren’t just dealing in vaccines for hypothetical doomsday scenarios. No sir. They've also been playing the contract pharma manufacturing game, making drugs for other companies who can’t be bothered to build their own factories. In fact, think of them like the UberEats of the pharmaceutical world: delivering life-saving treatments to your door, with a side of existential dread about why you need them in the first place.

(Source: Giphy) 

Of course, it wouldn’t be a true transformation story without some serious risks, and Emergent has plenty. Their entire “multi-year transformation” plan hinges on a series of financial moonshots that would make even Elon Musk nervous. Sure, they’ve got that fresh $100 million ABL and the $250 million term loan, but if they screw this up, well… let’s just say they’ll be on a one way ticket to a Chapter 11. 

Plus, this is biopharma we’re talking about - meaning, one PR disaster, one botched product launch, or one tiny little FDA slap on the wrist could have its YTD gains disappearing faster than a $17 Sweetgreen salad in a sad office cubicle.

(Source: Giphy) 

But hey, for now, Emergent is on top of the world—or at least on top of the small-cap life sciences heap. They’ve got cash, they’ve got credit, and they’ve got a CEO named Joe Papa (huge win in of itself) who’s determined to turn this ship around. Now whether they actually pull it off or crash and burn - that’s the million dollar question. 

Until then, Emergent’s shareholders are living on cloud 9 in 2024… all while I’m sitting here wondering if I should tell them about their pending doom in 2029 or not. Decisions, decisions.

In the meantime though, enjoy your amazing Sunday… and keep an eye on this small-cap stock going into tomorrow’s opening bell. As always, stay safe and stay frosty, friends! Until next time… 

P.S. Another winner! Friday morning's surprise alert ended the day with a nice 53% gain! Click here to upgrade to premium to make sure you don’t miss out on the next one.

Stocks.News holds in Uber as mentioned in the article.