Emergent BioSolutions plans to split in two, spinning out its cancer pipeline

Emergent BioSolutions ($EBS) is plotting to break up its business, keeping its banner work in biodefense under the old name and forming a new company to run with its immuno-oncology candidates.

Emergent CEO Daniel Abdun-Nabi

The plan is to launch a new publicly traded entity through a tax-free distribution of shares among Emergent's existing shareholders, much as Baxter ($BAX) did with Baxalta ($BXLT) last month. Emergent expects to complete the spinoff in the middle of next year, launching an as-yet-unnamed company devoted to advancing its biosciences pipeline.

Leaving anthrax vaccines and other biodefense projects to Emergent, the new company will press forward with a proprietary R&D platform designed to churn out bi-specific antibodies for a range of cancers. Leading the way is ES414, a MorphoSys-partnered treatment for prostate cancer now in Phase I, followed by some early-stage projects in immuno-oncology. The biosciences spinout will also hold the rights to Emergent's commercial pharma products, including treatments for bleeding, hepatitis B and chicken pox.

Emergent is committing between $50 million and $70 million in cash to get the spinout off the ground, tapping longtime board member Marvin White to serve as CEO.

"The proposed spin-off recognizes that our two operating divisions have evolved into distinct business and investment opportunities," Emergent CEO Daniel Abdun-Nabi said in a statement. "The biosciences spin-off establishes each as a pure-play company with a focused strategy and enables each company to target investors attracted to its business profile."

- read the statement