EBS - Earnings call transcript Q3 2017 | Emergent BioSolutions Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Q3 2017 Emergent BioSolutions Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow that time. [Operator Instructions] I would now like to turn the call over to the company. Please go ahead.

Bob Burrows

Anna. you, Thank everyone. afternoon, And good My name for of Relations Vice Bob Burrows, Emergent. President Investor is for as financial Thank third us joining you today, first months results. quarter we nine of operational XXXX and and our discuss

A and is prepared addition, call by comments Dan in of Emergent will today's participants, is on Participating Officer. session President Vice recorded prepared to President will Officer; at be. and the is conclusion will be to and be need Bob the the is open Financial follow As all Chief Kramer, customary, comments, the and BioSolutions. Executive Chief and being Executive and copyrighted senior available call Q&A of our call if other Abdun-Nabi, participate, members management with

everyone of filings not on XX-K, substantial in make actual forward-looking differ performance. projections business, on other to information on Any existing I'm today's XX-Q comments uncertainties future could prospects forward-looking to statements trends X-K and to projected such during and that events, risks prepared information. our related review from guarantees Actual SEC future cause Emergent's results results are and beginning, call, may performance and materially and Please may statements. more for any the These on compelled Q&A with management our statements perspective those future our or forward-looking reflect remind that current the forward-looking statements our uncertainties. session, involve either and Forms the risks Before for differ.

order tables found measures. reconciliations provide our measures GAAP refer use Emergent's GAAP measures as press may that greater to financial transparency refer these Please during net income regarding non-GAAP and prepared financial in the our to today's our the regarding and between performance. and in Q&A non-GAAP EBITDA operating financial to of also adjusted well release the to During involve figures, adjustments we as certain comments session,

during Since listening be announcements the to those was have For recorded this who call and may topics in update or Emergent the by to as or today's Emergent may this held except be webcast, XXXX. assumes obligation to discussed no of made laws the as required benefit of today's then, presented press call, X, may replay regulations. applicable information call. on November release related BioSolutions on

to filings, again may website. all SEC our be once home You're on Investors press and encouraged the refer releases of recent which to of found page most our

Dan I introduction, Emergent the to would over to Dan? BioSolutions' the call With now turn Abdun-Nabi, and CEO. like President

Dan Abdun-Nabi

joining Good thank Bob. for afternoon, and everyone, us. you Thank you,

very the look announcement, can XXXX you of see – third strong from XXXX. As business to strong and as end had through that we continue development. to the We quarter financial the performance business aspects into across year-to-date all of today's a well operational, and performance as in

business as strengthening syndicate. of million to $XXX Overall, stringing cost towards and that XXXX to increase better key of stronger With developments business, strategy latest Looking schedule, and the drive for revenue, quarter, goals. EBITDA. was metrics overview, of and our on key secured a at the acquisitions summarize performance Operationally, our of position is four our year on through total units. capital, core achieving net a completed contracts and the I two our foundation a less the business financial flexibility we the million has for the strong several will we new the a successfully now across addressing public a of serious products, be the covenants to diversify we development health each enhanced threats that of that support income $XXX we facility with execute growth up bank shaping number credit our XXXX our company

Havey. unit business Anti-infectives, technologies, overview the market drive us has Antibody these year, Early produced this approval potential and of As units market reminder, an led Adam countries in the and business and regulatory additional based that This the in overall goals. Manufacturing. European uniquely towards to opportunities us Vaccines recognition and XXXX we growth within by to pursue of Each received its German contributed Vaccines BioThrax anti-infectives positions our Building four on unit Devices XX. the own Contract our licensure are Union, procedure. a I'll Therapeutics, to growth mutual with and begin

countries a Stockpile. regulatory targeted deliver for contract approval approvals well to XXXX, Our is March, $XXX Canada BioThrax we current XXXX. BARDA plan million European of the to with signed in as as in to with file five in in National In Strategic

delivery contract. product completed that for to months, under XX the schedule now up deliveries extended have Although, we

the reminder, a an existing in CDC. from, rights for addition $XXX In with procurement our signed separate exclusive BARDA X-year million to, Zika vaccine and we contract agreement technology. their Valneva global As contract the is with to July,

that vaccine, trial we delivery and of following Sanofi procurement program target filed year, next Massachusetts, and An advance continued the under the bulk we employees. to XXXX. only a candidate to ACAMXXXX clinical facility are $XXX regulatory by we BARDA vaccine existing up which year, viral manufacturing our live was I significant smallpox in of October, targeting commence approximately FDA the with Sanofi's FDA-licensed the licensure of ACAMXXXX, most Throughout our have in in to first of of development in million, ACAMXXXX approval included CDC along to We continue remaining development procurement $X.X XXX and to billion. Phase approximately valued an NuThrax business, recently, value at contract progress for acquired CDC with contract, smallpox made early the manufacturing with facilities And sBLA facility. the a have and the

XXXX, the to SNS procurement on track Emergency Use are We to allow then file our Authorization designation in for and under delivery contract. which will

also in XXXX Phase study NuThrax. still to for track initiate We are a on III

bulk March, BAT, our we Next, signed a $XX drug In five-year a our store Saward. accomplishments unit, with by let a to me BARDA for highlight Antitoxin with to up Laura Therapeutics led contract substance business period. several value over Botulism of modification manufacture and million Antibody by

starting next existing million. to BARDA this of $X anticipate this with and we acquired modest and for to of expect of in only we approximately $XXX transaction contract recognize human and October, revenue additional revenue the will year year, by of to deliveries contract We assume fully deliveries a monoclonal inhalational the be are FDA from end remaining anthrax, with XXXX the responsibility for expect In under GSK treatment million. executing value by begin approximately Raxibacumab, the prophylaxis XXXX. approved We antibody, earnings. contemplated that accretive an year, With this

clinical plan additional based on Finally, our initiate studies for two therapeutics platform hyperimmune to technology. we

Phase The I candidates a is virus, seasonal initiation commercial for first and licensed in our dual-market is begin address for government to for hyperimmune flu, health Phase to expected develop public II threats in second Zika ability XXXX. clinical-stage the customers. platform the trial to early This and using targeted our trial XXXX both demonstrates a for

on nerve multi-drug to but to BARDA develop the a awarded to factor of Moving were by a we by we Doug In auto-injector September, known spray In to who the Business our nasal $XX million or expect study Defense. antidote and U.S. a develop only first $XX the agent cyanide novel delivered contract government, needs and addressing responders year valued for design. Work poisoning. approximately of facilitate device execute treatment also million the human customer been downselect led final company. has at of broader as suspected progressing a hospitals. the deliver antidotes acute not joined dual a designed an White, recently formative for a also product agreement by of to the a has in of the end July the base Devices This product unit, the for to market we signed needs of Department potential such

our U.S. developments marketed at of select a neutralization to September, couple RSDL decontamination the for we valued million, a agents also contract, awarded product to and for important by X-year the chemical $XXX We to DoD of use follow-on of In branches Military. up all the supply had skin. RSDL, the from were for

RSDL having Amazon.com. been the time for direct-to-consumers and first by over procured the in Additionally, XX now for XX Military through is over years countries, U.S. deployed available

we to up business units, experienced all has to the business our Wrapping Department Kirk. deliveries valued approximately of this under nerve CMO October, U.S. auto-injector, growth, will demand. up business September at the be that CMO anticipate year awarded $XX increased supply contract market year-to-date resulting Sean for XXXX our exceed to the by TROBIGARD, agent contract, Through this let antidote driven revenues me in XXXX. the commence by in XX, million, Finally, with and total a that substantial finish with in of led were State. We completed

viral and services, stage capabilities We business expansion final of will significant the addition manufacturing flexibility, customer-centric our capacity viral add that in ACAMXXXX through operations. to and complement years recent The acquired including our the the We enhance bulk are with of government live CMO the and currently offers strong we business. for unique many a innovative that stages live contracting. technologies of designing of developed smallpox technologies fill/finish ideal fill/finish – many offer

stated have four see, indications. by units are only-in-class, Emergent that an now only licensed they to As of business contributing eight are products each marketed attributes, corporate all FDA which can value attractive for products, unique and our has with profile. the the you meaning adding the

voucher. possess growing which of potential addressing for threats, have pipeline a security market dual the as needs health several priority potential national review also We public of well devices and and therapeutics vaccines, a as

innovative The that We technologies, positions our multiple antibacterials in And and also and threats. XXXX moves and for broad-spectrum possess address us for company achieving public serious can towards technologies platforms a stated goals. an unique suited expanding response. antivirals with profile capabilities XXXX health including us well footprint manufacturing rapid growth and continued finally,

be about team. will have scheduled our Investor have time remarks. to and New Analyst for we details guidance. meeting, can the Bob on our you attend our our As concludes my invite performance to you Investors. in more management Bob? over information prepared York. and Kramer, now the spend turn financial and may X seen, I website with on under found on call That learn updated We Both December RSVP our and business, details Day And

Bob Kramer

everyone afternoon, the you Good call. for Dan. Thanks, thank joining and

quarter upward up third the for the to XXXX our revised walking for select then my review finish revision. from For the compared sheet. last of comments going prepared results XXXX elements as months and the I'll I'm to well nine P&L basis our through and the financial balance with the as both year, today, guidance

Therapeutics. Before XXXX business, Biosciences our into basis which continue to comparative Aptevo operations, a and as year begin, publicly I continuing spun financials operations reminder, was our on of last of the the traded which present a we separate excludes company, off

results. our to Now

million, QX attributable specifically follows: sales million revenue Let on last focus well product me third $XXX to due timing deliveries current deliveries were above between our the period RSDL for came the increase BioThrax international approximately in BAT shipments solid BARDA guidance to XXXX. the sales $XXX and on million range, $X and for under sales and was sales, of were is primarily was same DoD, first, guidance the of during with higher plus $XXX are XX% the a was sales, favorable year XXXX, Compared lower sales the along above Overall product the timing million. higher-than-expected CDC year-over-year nearly other SNS $XX Total the another which to basis XQ same million, product as performance million, procurement contracts. first product to to TROBIGARD. of performance, company. VIG of in of The above and quarter quarter. period BioThrax revenues at quarter. shipments, to expanded quarter in the the comparisons period range, the The other and result of $XXX the compared

higher CMO customers bulk opportunities Second, seeking Contract higher well million aggressively services continue approximately manufacturing to other or we look revenue, revenues $X services CMO business. for CMO increase $XX than reflects to We work. see committed this to as of were as higher trend remain as XXXX. commercial The million year-over-year to manufacturing services. fill/finish, grow development and

due revenue Finally, the quarter, to in as expected, activities that contracts as revenue multiple quarter trend associated as for with and U.S. government well. anticipate million than We to the certain was development completion grants. XXXX a of funded substantially $XX contracts R&D successful C&G reduction well the lower development will reduced as in programs. this continue fourth year-over-year ongoing of related XXXX

period. the For impact and quarter, XX%, came the during at again our margin of within falling of gross expected mix in comfortably the reflecting revenue between XX%, range XX%

operating net a to for for million net our QX basis, R&D after million the revenue, was lower and of expense grant X% R&D Gross for expenses. last net revenue. Turning On quarter, spend contract adjusting $X than $X $XX year. or was million

to in approximately overall As new diversify strategy and the the and $X of our the as stated unfunded, we've medical past, countermeasures, of SG&A were development both regard million to the last business. component we year. million, an expenses and for than grow $XX continue funded lower investment quarter important

grow total XX% versus SG&A percent prior a operating reflecting in were As business. of revenue, our manage QX the expenses commitment again, expenses the carefully year, as we to XX% our

income a the the million, improvement continuing prior-year of of and $XX was which million for operations core in XXXX. the And generated During total significant income net was the higher $XX business the strength the generated XX% than net our continued in the EBITDA, over $XX quarter, revenue, quarter million our QX of business. GAAP of finally, period reflecting from

nine Turning of prior million, year-to-date year; total of the to was other business same performance. $XX as was performing year, $XX in above total million range. XX%, up $XX million $XXX million following: $XX by approximately X% was includes the and target the XXXX, versus in revenue million particular, for months $XXX includes revenue up profit sales million, $XX line product last prior increase gross or was VIG X-month Through second, which or over or services was which Net evidenced other the is higher well, revenues CMO for sales an product The million, increase of XX% the the RSDL, million of period product $XXX year. as a our BAT. with in and the increase XX% period margin TROBIGARD, and sales of

completion for over year, R&D certain our R&D programs period funded expense the reflecting of net pipeline. prior X% is investments X-month in successful was and the million and Our below expense $XX controlled development growth the continued

of spend $XXX million Our lower SG&A million prior year. $X than is

finally, the of SG&A revenue, million a versus $XXX As prior versus million XX% percentage net was EBITDA last are $XX revenue while generating income in our to million And year. year, compared over XXXX. total of of XX% expenses $XX million $XX in

in was liquidity On the pay very and balance combined October, continued balance used position. Note When acquisitions sheet, million. balance Raxi. our million quarter-year of we the receivable with we to ACAMXXXX cash $XXX nearly of strong $XXX million, for a a to maintain that of $XXX cash

addition, a place facility facility In total put capacity million. the which $XXX million we covenants to less new feature, capital, brings This $XXX group. a includes banking in stringent a credit million with lower cost $XXX credit a stronger of accordion and

opportunities. our of XXXX. of quarter like business As M&A year-to-date, year-to-date our the now guidance $XXX the results. facility remained for credit we a new and operations the result I'd capitalized to million in the new generated and of to support the well discuss That review concludes cash and

of amount we XXXX in to forward complete XXXX. experiencing look and we're fair the As earlier, a Dan momentum as commented business

better in the estimate amending result, and trends follows. a positive position we're are of number business As to in now impact of our guidance our a a as

the increasing total million and range from range million $XXX $XXX the of $XXX we're For revenues, prior and to narrowing to between $XXX million. million

revenues, $XXX from specifically, BioThrax the million to to million. range to million increasing narrowing million For $XXX and $XXX $XXX we're

$XXX $XX between the $XX acquisitions of million million million guidance to to from turn $XX begin and expected $XX income, EBITDA, session. we're for we're our million. $XXX GAAP XXXX. And $XXX prior $XX to million and prepared operator range prior $XX increasing million, and remarks. the range we're amended finally, my concludes million. the the to closed to from of the range income, between the range includes from two $XX increasing $XX over million million net the For net for now million to increasing adjusted and to And million million $XXX impact to that the Please note the call the range between of That I'll in Q&A

Operator

from Our JPMorgan. first is Jessica Instructions] Fye [Operator question with

now Your open. line is

Yuko Oku

question. This key announced for opportunities? for couple are if business already call Hi. you are Jessica. this the what additional fit you the year, still for evaluating metrics strategic when you're focused And development of our is a company? on taking seeking on Acknowledging the you Thank Yuko deals yes,

Bob Kramer

the Yes, Thanks, today. for for Yuko. call Thanks Thanks question. joining the

in to very targeting same criteria are much We now you communicated underway. generators space, transactions criteria We're as fit community. line XX to the emerging the pleased have the are to leverage. within top announced two threat we've public the CBRN, looking and products be of that that But We're at continue closed, months integration core we and the as growth can within infectious looking explosives, that activities things do and investment look enable We're accretive earnings for diseases. to we our and revenue opportunities so others acquisition. in on competencies, and the well to health

So two previously certainly, real that takes to pipeline that a those we and opportunities you criteria. and we announced. takes the awful M&A I are bull's-eyes funnel an criteria have know. transactions difficult as time conclude, of think lot effort. the And to healthy fit it, along But about as are It of it continue transactions very

sporadically, exactly predict if occur, when might hard it to it's those transactions ever. so And happens

Yuko Oku

you. Thank

Operator

Our next is question from Chardan. Nakae Keay with

open. now is line Your

Keay Nakae

thanks. on Question Yes, NuThrax.

need be any And any of before prepare revenue XXXX could this us you completed, As with you associated clinical much XXXX on you're study, be clinical give grant the into that? position past ready for in to study? is color that realized advance further items to there to can how

Dan Abdun-Nabi

call. joining the thanks for Yes, question. for Thanks the

order activities for underway Emergency trial customary need commence traditional and Authorization. the in and to Use then So file there are that the to subsequently normal get

material, that you the lights assays you continues sites unexpected. the to or on year. release track manufacture And that got trial apace, that – and it required. up to nothing under set to and appropriately or you've are the be to out have of next clinical that unusual do study the remain be initiate have know, I So able to would And, ordinary we the

terms be we year. within when next next issue In for embedded our our will early of contributions guidance year, that guidance

Keay Nakae

are contract? And And straightforward the renegotiating point and what fairly at then a review for start you do you then approval? ACAM, Okay. anticipating

Dan Abdun-Nabi

Yes, two good questions.

Since has had we approval the So similar path and very so submitted. been to for application approval, ACAM XX. really an approval is a path Building in facility the this

there'll the deliveries your expect the to you be traditional a and secure that the in be – issues position there'll of FDA then be an of typical back-and-forth, would may we So or commence have inspection interactions they concerns any facility after with products. that that have. And by to license FDA, address to

We and current our expect XXXX, of in our current to that timeline. all is thinking happen

deliveries contract. lot engage the for we'll be are what a time that the the discussions future But contract be terms the And might in delivered under follow-on And for number remaining doses In the contract, as we're completing more currently of to completion we'll of CDC negotiating as no-cost to CDC to the the we for learn extension existing close coming we with the under delivery as the in a to about we months the the the regarding contract. we follow-on. so of next steps, probably as get the existing a have think the with of and – that doses allow contract, begin proper contract. envisioning

tuned, we'll you time keep posted as stay goes on. So

Keay Nakae

All right. Thanks.

Operator

Our from Laura Cowen. is with next question Christianson

now open. Your line is

Laura Christianson

you're and how get clarity FDA initiating by I'm your to TROBIGARD. I'm to get long plans of the if have selling details on U.S.? the pathway wondering studies the wondering with on some exact approval any and about take factor that in of start human I it'll the you more approval – planning know some

Dan Abdun-Nabi

Yes, for the thank you question.

working specific So with about to we're device actually DoD develop a really quite addresses their excited the which concerns.

and with device, factor be a DoD specifications designed they the to designed now So intended is human then I features shared studies according new were – that prototype, to those determine us. assess it's really which are specifically ultimately of noted downselect to DoD to final that being to that enable that studies the has the design would And a acceptable.

that's step. So really the first

And for we that it's to understand on wanted forward So move look make clarity have that I premature, timeline We'll expected FDA what you to think and review process. with sure specification at like. DoD give that design I approval. the much this as point, might just better

Laura Christianson

Got it.

Okay, thank you.

Operator

next Our question with Research. Singular Springer from Lisa is

is Your now line open.

Lisa Springer

Thank you.

products, you other With the products at wondering big breaking other separately? start jump might what the in out I revenue from was point

Bob Kramer

We'll Thanks the Thanks call. being to the Sure, that, evaluate for Lisa. is continue question. Lisa. Bob. This for on

a made haven't way the call We one other. or

go balance out greater we'll having forward. transparency as So the now, we're only we Right calling for need potential BioThrax.

Lisa Springer

Thank you.

Operator

Our [Operator with is Brisebois question Instructions] next François from Laidlaw.

Your is line now open.

François Brisebois

you and I question had congrats. actually I – the And on won't just been taking what to was the clarity just a other give was going guys for thanks on wondering, any I wondering guess, answered. nice out? was I – probably expect Hi, Biodefense can be… how of, just it's But you from jump? there kind

Dan Abdun-Nabi

joining Frank. for thanks Again, call. Yes, the

what do some revenue occurrence productive continue. opportunity that other probably I years, in to had this trends smaller products year with the And that another, think can quarter back at revenue most QX. one you of a just I anticipate similar be we the will been and look lump. earlier trend provided those but one general total, We moved bit was talked is a has to several from the which as terms what had where of we about will compared the product a the would percentage in last that of of all

basis again, or is at on a annual the I So an XX-month thing think just basis. look either best trailing

François Brisebois

you, it me. for All Thank helpful. right. That’s that’s

Operator

any no remarks. showing turn now the Burrows like further call I for to Bob to further questions. would I'm And back

Bob Burrows

the with your later the all accessible you conclude you, and Thank be again, you and to through gentlemen, look company Thank very webcast you archived much will website. of With today's future. we note, Please Thank ladies version now call Goodbye. of today, in for all speaking forward available call. that of we Anna. and the participation. an

Emergent BioSolutions (EBS) 3 Nov 172017 Q3 Earnings call transcript