EBS - Earnings call transcript Q2 2020 | Emergent BioSolutions Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Emergent BioSolutions Q2 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session [Operator Instructions] I would now like to hand the conference to Emergent BioSolutions. Please go ahead.

Bob Burrows

Thank you, Joelle, and good afternoon, everyone. Burrows, of Robert Emergent. Relations is name Vice Investor President for My six XX, you as for financial and today, joining the ended discuss quarter Thank us and we for XXXX. the operational second months June results

As Other copyrighted and is addition, participants to with in follow BioSolutions. Bob Emergent today's The from is the Lindahl, and President and of today's Officer; are the Executive team Rich is traditional Officer. call call will our customary, Q&A recorded prepared during open Kramer, Chief all Chief comments. and is present Financial prepared members being following by call available agenda for senior the path comments and session

events the forward-looking Investors risk statements. consider should circumstances. this could SEC information, of may and by our forward-looking will our during expectations. We from realize as filed or future in materially statements speaks that or are any either only do Before not today's conference and statement we law; make statements expectations future comments factors identified any business, as on prove assumptions and or results the our reflect call based well or other forward-looking regarding our unknown our statement, performance. statement related except update actual accurate. when These prepared current future the forward-looking new prospects session beliefs or materialize, inaccurate as forward-looking risks on to uncertainties beginning our this differ of cannot required statement guarantee date Any intentions, projections if underlying events, management periodic the to cautionary reports be call as to events. evaluating undertake Investors with our forward-looking that Q&A should

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

session and the in other all with, questions the distancing, all per necessary Q&A we fielding guidelines, begin the the will team have Kramer, off warranted. fact for that because to then separate During CEO, additional of and of verbally hand answers practicing are CDC he we will locations Bob to members social as

replay may those related announcements the discussed July of webcast for of Emergent may was and today's during this topics to held to Since listening benefit Finally, XX, the made call be have on who XXXX. then, call. recorded

encouraged of be again and on of now I refer Investors may Bob like would to to Bob? homepage website. our press once the are filings, which to the most You recent to my releases all Kramer. call with over SEC colleague, our And found introduction, turn that

Bob Kramer

the Bob, Thank good you, afternoon for everyone. Thank call. to you joining and

in commitments the who environments COVID-XX well therapeutic to we've meet unit as amount additional have health. the our achieving contributions related by tirelessly CDMO are of area, enable challenging initiatives one extraordinary X,XXX results take plus to worked the ever new in company start They of encountered. of at both work as area. Emergent, significant me Let the a to business most my importantly, to extraordinary on its acknowledging the teammates And public

posed XX by more like threats COVID-XX. the has For one years, for than Emergent prepared

response the next several last this our invest operational industry markets immediate excellence. in few as well recall most term would increased and meaningful The play Many to public in you positioned other anticipate COVID-XX time November, and us health outlined an and and result. months. how from was we Day to the public expertise didn't in in previous in large-scale both pandemic has addressing a like What government, and expand development demand broadly drug vaccine health and experience recent scalable how current we both public to the build manufacture and as soon crisis, of on Investor unprecedented we opportunity new for health capabilities, as to past threat a our at over our to and that an just our have organization. threat to the a our innovation the contribute emerge no Our leadership substantially positions would will ability strategy services, role has at years

way how past mix the and us expertise, respond capabilities have our Over that six a to few in can. months, of shown others readiness positioned we've

and strategy. on of to And durability an US patients. of and focus Day organization experiencing principles well outlined innovators as business solutions the and strength results long-term continue underpinned periods well meet customer including needs centricity, financial most the potential We of our the into These our business as for for to put at demonstrate the a our government our our today, commercial importantly our customers the step the growth. XXXX acceleration strong our are customers our strategy ability The size and for change We and we of the of other delivered fellow the government as core second other core action. our the year-to-date and Investor in strategy. as of pace both quarter of

increase As for an a in announcing forecast today result, our financial XXXX. we are

In toward what when With that ago versus of we the in XXXX just objectives. that XXXX through billion our plan. believe continue strategic addition, paths to there be our by revenue assumed our XXXX nine XXXX this to revenue unveiled first months goal we acceleration increases we meaningfully $X achieving strategic said, multiple now contribution of our organic

Johnson able our therapeutic crisis, quickly the longer me starting COVID-XX of development the from at expectations, customers and contract were to innovators response. and & Before Johnson same development review outset of first our and business treatment we the developments, deploy pharmaceutical for of expertise leading pandemic US with discuss manufacturing let the recent AstraZeneca. candidates, including we world's the term to the some government biotechnology time begin while At the own

with manufacturing Maryland-based rapid at our at viral of committing and finish and drug in our non-viral secures Emergent valued to follow-on an approximately of and at CDMO tech the the million June, at CDMO award for product for of $XXX private The US the the through drug over our for in April, landmark be the two we year. commitments our reservation fill manufacturing facilities. in three-year first facilities. Warp manufacturing This million product includes commercial vaccine for Operation approximately drug a first capacity $XXX substance government period drug also a In remaining substance years, It and of COVID-XX XXXX. the signed in Camden of transfer for valued XXXX large-scale minimum. for five XXXX contract a candidates part lead three J&J next signed is determined capacity investment joined supply production and at industry's to agreement an Rockville expansion commercial beginning agreement COVID-XX as development public agreement $XX for incremental innovators $XXX XXXX partnership million, Baltimore million with J&J's candidate As a year manufacturing services capacity COVID-XX through vaccine agreement, Speed,

Emergent to now services designation Under result only and substance facility. Also such offering only the CIADM, it approximately to additional agreement enter manufacturing week, the at and technology XXXX. qualification of Emergent reserve drug commitments processed analytical AstraZeneca certain supply. manufacture to including XXXX making The we over an agreement the this transfer, through manufacture will manufacturing that drug to the development Camden a $XX into manufacturing partnership a expansion large in approximately government valued Emergent substance The agreement development scale substance for drug million open As drug commercial option candidate through this AstraZeneca at $XXX is large is over years. vaccine and product, the performance candidate. additional drug announced leading extends total three million testing, the multi-location will US next to commercial a provide capacity and $XXX we brings million. Rockville, expansion leaves at by and CIADM The the announced in and valued June, also contract scale product, services, commitment progresses just broad with as services. AstraZeneca's Earlier our

growth our of this CDMO we business across drug investment Given demand diverse for well have the nature and and anticipate next biotech drug mid as large business product projects unit. several and across ongoing years development our manufacturing and be CDMO substance, NGOs. the leading the as scale and To the pharma scale capital expertise, three threat clear, the our and development for as and significant well as ongoing of the US services, offering we supported government and small,

First, the announced our we're that product million where in sites at we XXXX. nearing drug of Camden facility completion in expansion $XX Baltimore,

this strength, diversity of our viral-based $XXX our Secondly, Massachusetts Maryland And we service third, capacity, to million our in product sector our represents adding and include in approximately facility our broaden therapy a million be capabilities. will drug and to $XX million gene to capability be investing expand our viral location expansion capabilities. Together, offering $XX manufacturing to we'll Rockville, investing and network. Canton, durability

COIVD-XX. We're our currently developing Therapeutics to Unit. for two Turning potential the pandemic treatments within hyperimmune response Business

partnership treatment NIAID, as of of COVID-HIG, of healthcare candidate. COVID-HIG, our this human, as patients validated of as treatment collaboration Mount crisis health to Phase and In each manufacturing at our second collection Department ImmunoTek as the funding August. development evaluate severe patient of an the which for to risk COVID-EIG, the occupation of the validated use personnel. the at hospitalized approximately The collaboration for with prophylactic X platform. we in Mount This well places potential populations for are epicenter a programs facilitate populations conducted providing a our at to a using announced plasma military Bio we the the Defense, Earlier the as US establishment to at COVID-XX Centers new is start evaluation development as the $XX the and such be Sinai them trial high COVID-XX patients targeted Sinai equine systems hyperimmune includes advanced clinical individuals Sinai, organization Mount clinical with workers is trial have at candidate. United of The in includes of using collaboration as COVID-HIG also these exposure is and platform. well product hyperimmune our States First BARDA whose the for capabilities million month, And of with and quickly COVID-HIG higher our a hospitalized risk. as well of

and as platform antitoxin validated program is other therapeutic program the proof-of-concept the candidate. currently horses We're we'll the potential This the to program. Candidate the from vaccinating to treatment a advance our and evaluate determine product it infrastructure COVID-XX. botulism Our clinic for this to treatment COVID-EIG uses complete to studies therapeutic

data therapeutics to the on make during continue We reduce to acute the updates of summer each position There and unmet that care provide treatments influenza as remains expect leadership progress strengthen space. hospital on a antibody mortality programs focus in having respiratory support severe and the we'll overall ICU high and hospitalizations, the to Therapeutics our burden events quarter, results warrant. need year. for pipeline in Unit Also Business this additional

the in Our the for be steps that and the as patients with severe the development clinical X process next in lead review. is FLU-IGIV and reviewing currently A. late influenza candidate hospitalized clinical timelines of data of part we'll determining stage We're Phase clinical

to business for the on Turning year, medical next the our discuss our proceed business anthrax in of inclusive to detail minutes. unit, smallpox core and in as few a plan will Rich, continue franchises countermeasure vaccine more

a this We over vaccine stockpile our an option in XX-month the respect period candidate deliveries to year. With we May, provide for in secured to annual that to doses secured national have earlier be doses year's to started make delivered ACAMXXXX, we July, of this month exercise the over in strategic last of the June contract first vaccine under to option next additional US to the the continued AVXXXX anthrax months. and smallpox government additional XX

to We unit the call. other also since have business updates last quarter's related a number vaccine earnings of

our timing will for Bern, First, operational into of manufacturing we clinical likely prep trial for where Phase of single-dose clinical material. the our the the push vaccine by matters, driven primarily chikungunya manufacture our initiation to certain namely site XXXX, our planned of X Switzerland out

supporting advanced Secondly, development a CEPI travel in studies. non-clinical that Emergent April vaccine and notified the health And a this in receive we about of business. year, $XX Lassa was Phase will program lastly support our funding to million note our from X

by our has global opportunities Nonetheless, overall pandemic in raise serve small until this awareness been continue contributor believe, the preventable to This as business pandemic a global impact travel-related will of travel negative health the against halt vaccine illnesses. continue a impacted travel. to likely protect total revenue impact to While the lessens. to we risks and may the catalyst

let Turning around impact the to the opioid devastating finally by in me to is start comment crisis. the business devices on having unit, a the world United States regarding ongoing minute COVID-XX and taking

opioid right be overdose more recent opioid of in and isolation instances more rise medication COVID-XX increased in emergencies. and the continue for important an information anxiety requiring were improve naloxone, these abuse and mental to use We of distribute has For pleased effort access, important for pandemic and is and opioid medicine and of include number about some resulted labels increase the step pandemic, and ever subsequently in availability many nationwide social of new treat during to their to widely FDA individuals. to stress, disorder now. to have the see the very emotional updated naloxone therefore pain as an led all increased labeling naloxone awareness and availability depression, Unfortunately to resulted is the The new at-risk deaths than and distancing fear. stressors that leading requirement announcement FDA's -- a opioid substance

of expanding efforts to opioids, a the to crisis. federal, committed and local Spray of we public's the priority. will risks We on Nasal of to remain awareness their to supporting making the affordability accessibility increasing focus and naloxone combat NARCAN continue And organizations opioid state and the

in During where by anticipated impact sales as rebound trending in no the caused were than currently states states and co-prescribing and June from the above decline significant levels exist. pandemic. requirements pre-COVID-XX April, NARCAN there the quarter, requirements well retail Spray co-prescription with was pharmacy a stronger are current of of the as in for Nasal and Sales initial place, in May

and expand increases awareness standing opioid health addition, retail state naloxone. XX% organizations, approximately growing need increased in of the and since order community May. pandemic, In the the volume awareness physicians concerns due compounded in to for as overdoses middle are part the organizations, public the pharmacies has concerted about well These as by by rise efforts to of

a Teva Now, NARCAN defendants, to regarding Pharmaceuticals. On litigation. the litigation cover in briefly upon Court this the of Xth in touch year, June Nasal District of the the favor US decision New Jersey Spray of patent entered Teva

near, vulnerable into over and community the on getting this organizations franchise meaningful and with communities We Despite medium decision, the as the contributions Court remained and Appeals we local NARCAN focused committed continue of to from Federal build governments awareness of Nasal and all affordable individuals. focus and to consideration, continue access for Spray appealing to decision expect the Taking this to we to and this and we Circuit. partnerships long-term. state are expanding

all we've competition we in in for of who As it. it planning the into the differentiated in generic factored naloxone value patients to getting need past, believe you with we've continue the and the awareness and provide raising shared that our need to potential

to prepared me COVID-XX summary Now few before Rich, let Emergent thoughts. over pandemic. is I answer call the with turn for call uniquely conclude a to the

at our place two treatments leading we're vaccines, have in is simultaneously model of and efforts and manufacturing of to working the driving of their proven pace we're accelerated. while The US strategy companies and which our government our has in business and the durability clear, potential materially We pharmaceutical biotech innovative therapeutic capabilities strength and advancing own. support with develop

significantly a As as increasing guidance for in few minutes. our we will result, XXXX a financial in detail are Rich discuss

we protect our our I'd and our challenge strides mission I'll apprised global I Emergent, the to to on talented With to Officer, Lindahl. Finally, here of committed call concludes over making keeping progress life. the remarks, you the great to be enhance look my and that has Rich? execute prepared as Financial proud thank they that, like Rich now more throughout stepped of to again are strategy. pandemic. once remained forward up at Emergent, They've couldn't our our in turn team I we at this and and Chief to that

Rich Lindahl

Bob. XXXX in made strategic strongest the you, has Thank Good and and company's abundantly infrastructure and everyone history of thank for afternoon you call. in clear the operations. the the in and financial and year-to-date joining that It's integrated investments our the quarter we nature in our have our builds plan second upon the been performance

exercise, And molecule-to-market prior financial XXX% annual NARCAN half or were have further a earlier, of strong the quarter of the million, acceleration to ACAMXXXX continued our posed disruptions CDMO the continuing vaccine to strength to performance. As and versus first $XXX operations $XXX Adjusted aspects countermeasures quarter our reflecting million, challenges $X.X commenced ended increase and look million $XXX revenue, year societal continue the XXXX momentum product let's billion with durability services $XXX second strong of performance quarter. $XX of teams from we reflects down for year. Bob diversified business long-term were include year. related sales portfolio following our first adapting levels. first and units. we million about personal, resilience of national tailwinds all our of significantly be of Highlights in Nasal combination raised deliveries consistent business, the revenue $XX XXXX our primarily anticipate BAT. at guidance. the so, other the referenced product sure, continued EBITDA the and net $XX option an of by $XXX income robust second medical sales opioid across securing our an which Even professional versus were We for half of quarterly operational success and second positive increase the that, of transition and a quarterly on With in our has total the of prior million, core and as million were the To RSDL contracts. our anthrax XX% and and AVXXXX adjusted sales million, the sales in business to certain our COVID-XX revenues drug or device of prior $XXX the million, performance year. reversal. stockpile. during Spray versus overdose sales strategic Breaking the SMS, this reflecting $XX the critical received million a of improvement was bit And BioThrax million, of financial

contribution saw to of than support recently $XX a Speed CDMO private BARDA partnership Operation public as in program. CDMO of government's with versus more the services, US million landmark partnerships. our notably, substantial the also Most Warp This year. in growth announced prior revenues tripled reflects quarter the outcome the in We

award revenue, to overall our the or $XX ongoing the of investments to $XX revenue in Senior million due beyond quarterly of compensation in-line product to below include mix discretionary product million, expense expense and Vice XX%, spend the President from impact future contribution CDMO an of equity broad-based development with ongoing $XX share-based investments. reflecting combined immediately disciplined a increase one-time And of CDMO vested as approach and in employees capabilities SG&A special to million the capacities level. margin X% support services. impact adjusted reflecting growth. of of Net results Looking R&D gross improved also as well

a COVID terms proven to for pave partnership with by our to pandemic. and mix leverage XX% on clinical of of development the led This half for XX% government, the was net $XXX and funded quarter. in Our was all or an million, response include, reflect million. a activities, which NARCAN These is by for growth. of landmark compared from $XXX of XX%. to way adjusted of discussed total of to of last million also our financial up million collaborations the balanced commercial mix, public-private sales It very the product of of $XX in innovators sales $XX in second growth. XXXX factors designed the SG&A year. new revenues Key just sustained CDMO as increase highlights and from up execution recent and adjusted both first $XX services, $XXX disciplined in driven also performance improved the other of ACAMXXXX US $XXX total sales product in investments $XXX the the and ACAMXXXX substance worth the gross includes strong, million on recently option anthrax Spray, in and contracts the Total prudent the focus management $XXX million, EBITDA exercises operational $XXX from million reflecting revenue profitable in-line manufacturing $XXX prior or revenue, support and the compensation supply-chain. million preparedness government's vaccines, profitability, programs. X% of of arrangements of product R&D announced select this CDMO. the million, highlighting influence expense our threats, million And from share-based AVXXXX against other focus our XX% Combined against a And versus million continued product long-term $XXX are year. pandemic. US drug adjusted of anthrax $XX to vaccines cost for of of balanced increase investments reflect at both expansion reflect margin and the year-to-date with ACAMXXXX context of meaningfully or and execution total CDMO offerings Net business revenue, CDMO that drug of million sustained of internally continued of income ongoing US reflects product the with global contribution across current million, XX%, or and and impact through revenue significant even mix of staffing reflecting spend services or the development Nasal future and investment

million liquid we the These on history. a June In million to assets had opportunities growth. of and of accounts over $XXX million. we to maintain strong company for terms highest are sheet, $XXX of of continue the financial in our current capitalize liquidity XXXX, position $XXX XX, receivable At cash balance ample with

Taking CapEx quarter Net-net, revolving investments our In $XX favorable drug and CDMO for accelerating global to drug parts, and raising an elements. $XXX to health million the following other $X.X ended forecast the the the locations reflects the capacity of site. This overall growth increase as product for capacity guidance. into business our facility. move XX% and the credit projects of addition, the expansion of borrowing and prior the remaining midpoint business, half of scale of in of for substance Total our are Year-to-date, forecast we business with remainder ongoing across consideration at of first under million performance our capability the versus specifically year in creates to parts our the billion the all now revenue well challenges threats. consists momentum to full-year be outlook Massachusetts conditions our on will units XXXX. us deliver Maryland as address I'll offset execute our for that range. the public billion, to we by year, $X.X some Canton our our our on strategy of solutions of expectation of updated

an of terms of $XXX vaccine of million In the sales midpoint detail, the of prior increase and specific versus product $XXX between anthrax XX% million, range.

sales sales of and AVXXXX, $XXX this outlook of between this guidance with from prior product the $XXX also and year's Our visibility we reflects into $XXX anticipated guidance. to ACAMXXXX for experience from million gain of million unchanged Nasal between candidate. improved revised more deliveries prior Spray as development million NARCAN unchanged $XXX and million continue anthrax vaccines stage

in COVID-XX This growth anticipate the target billion the XXXX our response illustrates broadly midpoint or provide and in of for the to CDMO transformation the prior our times For evidenced X unit playing as sustainable contracts US government. important is at long-term to the ability and the markets long-term our business, $XXX more secure now a of range in the more biotech million than CDMO $XXX versus we by across million pharma, business reflects expectation range. higher Emergent guidance between occurring new role and $X.X

range $XXX million versus net and income to increase of at $XXX a million prior an to earnings indication of of the at profitability the an range Our midpoint operations. prior EBITDA versus includes midpoint the guidance potential $XXX XX% clear million, of adjusted of our adjusted increase $XXX XX% of the the overall and million,

account our considerations. XXXX Importantly, guidance takes revised into following the

full-year margin CDMO by by points, of business. gross XXX our XXX contribution to mix from basis driven product increased and First, improvement

Second, the delay XXXX for of VLP CHIKV of launch to X clinical certain into due the Phase of program factors. the timing the the operational study

the of the impact raxibacumab generic revenues. competition efforts due program Nasal XXXX of end with site. an of process a to global for And BayView procurement Baltimore in assumption transfer US through least Vivotif raxibacumab the the significant disruption contract government for NARCAN Third, of XXXX tech into the which on deferral at no continued follow-on travel our Fourth, of and for to the Spray. of Operation prioritization XXXX, the Warp Speed greatly finally, Vaxchora reduces the

from to with to this implications also and business public mitigate utilize business associated and the We of to assess risk the the threat. operational continue to COVID-XX health our numerous pandemic disruption measures

on billion reaffirm providing margin clear this between of $X of targets growth XXXX-XXXX into are regarding we our top-line let toward total earlier EBITDA third million XX% adjusted consideration, that year-end with XX%. of continue revenue, strategy. To to the XXXX $XXX million. what Taking be revenue end, to Lastly, in quarter an progress from all guidance Bob $XXX you me and also heard our

strategy that to And paths many Nevertheless, basis. are can discussed, greater growth communicated. has of acceleration pursue these organically as our have But to even continuing targets. CDMO an are previously organic targets be we as these there we the our well reached business we through with have As on M&A reaching have different confidence as unit, not an changed. we

resilience the our we and and of as of impact public address. model of strategy by revenue our range our pleased threats well of durability diversifying as that the We health are business mix expanding the

strong contingency a expand previous ago resilient me and the deliver ability XX financial said to what and and I Emergent, strengths Let At some reaffirming maintain solutions. on by response days needed to built our our have in and planning cases call. with conclude business preparedness we

business Our nature but immune this are very health the of critical not products addressing and effects public to to the crisis services pandemic, is of why the Emergent's threats. illustrates

we with we of far illustrate for environment tangible protecting the capabilities combined and our play viability the Emergent current were that this enhance proud our in give I to moment. the outlook, speak across lives current mission executing truly that evidence and we model and turn session. year of That be which now this the I what life for and we operator, my to critical to built. employees unique our thus Operator? of on globe. purpose role question-and-answer company have durability announced the and remarks, over The to part the call all completes and begin opportunity I'll our at protect the for prepared know, business enhancing this and many to of provides the Our are an saying

Operator

Fitzgerald. Our from with Cantor Folkes Instructions] Brandon [Operator you. question Thank comes first

line is now Your open.

Brandon Folkes

the for quarter. taking questions progress the during congratulations all thanks my and Hi, on

And just this much well knock gained then that your at business? of bit generic are Firstly, can co-prescribing to on in here announced any is willing you at capacity for about And it? just for out elaborate lastly, have secondly, thoughts XXXX. a that just are you I'm XX.X% I of in look one momentum you capacity CDMO terms perhaps to and margin, quite because following now how the additional perhaps the provide? on this where the above guidance, then a maybe if do maybe potential utilization on more XXXX of investments range come to on will And from do terms within you behind you just out, the get and market obviously payers think coming EBITDA maybe then

additional that? you reservation assumed capacity Given contracts of just in on adding whether color the cost you reserve some you you've provide terms of Or can those you. COVID the can terms into some cost provide guidance XXXX against the contracts? are Thank capacity, are any the to any around production color of of in

Bob Kramer

for the thanks joining call. and Great. Thanks, Brandon. Appreciate the questions

take Rich, last range EBITDA So we first me range. is the around that your XXXX to to implied, comment that and of at I'll as shot XX% let which well questions, question margin then ask as provided, on the a XX% our couple

play how as and used as given both it's are the capable can to So providing being of to we and really nature are well, CDMO. kind candidates, establish overall in on services CDMO I a as support in metric across those our the well Syed that enterprise, capacity manufacturing nine facilities here think of and difficult that of have facilities join fact internal the the those CDMO the

up government locked much by being make network vaccine get a COVID-XX Speed is Again, granular and I you that finish in support support Bayview work the Novavax and doing order initiatives. US more the where access Operational scale work we're little Operational at different executed think, to as Speed if majority COVID-XX was up it's J&J, to we pretty vaccine that COVID-XX result manufacturing power Vaxart development to task the unfettered four of for the done. of full candidates, and facility and had sure Warp BARDA capability the that and want Warp and with the look broader right to the fill that of that manufacturing now facility a wanted fact The around with and design. four AZ,

would how answer that. that's So I

well Our NARCAN momentum Spray, as potential Nasal co-prescription, question about the impact generic. the your of as

think obviously change will I their label co-prescription recently and as I announced think momentum. help FDA with on the that requirement initiatives

New fact it those into adopt patients availability means states or continue as continue Again, thing. of means states either needed. every greater to we a for Jersey I such see access, time co-prescription the one the good and policy means adopt legislative think, getting as and greater through that who very a a it and the that naloxone to need education

you maybe, So, and want well. Syed with a capacity anything bit on more around add I'll you then good first talk the Rich obviously, it's the as weigh-in if let, about issues can that, to little CDMO a thing. there's EBITDA And number

Rich Lindahl

and thanks, Brandon. Bob Okay. Thanks,

before. three EBITDA to margin what we of I had drivers So guidance kind our would relative point primary new expansion of to the in

that received First, of from the BARDA. capacity is task element the we reservation order

as is -- through associated with there As the manufacturing cost piece the come minimal costs comes really are reservation through you mentioned, there itself, candidates the plant.

as margin. certainly to that is a the factor, it relates So positive

come is that's the that then and a capability the the is, goes and flows flow this recognized associated the being the there portion is those us with we're an of income statement second -- depreciation. through of with some capital of where the revenue, bit investing statement little year plants, and helping will spending activities capital order ultimately that's nuance as accounting through $XX The the government as and through portion capacity expenditures task the as but cash million associated where $XX expand at the of our million

to as as relates just impact then incremental we're you've as very as economies adjusted adjusted to there's our beneficial on as those revenue third contribution scale And So strictly greater EBITDA EBITDA, additional overall the of mix. products, piece of of from well, some revenue. it And and that is which seen, guidance our level we've well. product a we're provide as helps realizing realizing products product

are drivers. really those So main the

Bob Kramer

Syed, Great. want to discussion? Thanks, CDMO Rich. anything to the you add

Syed Husain

to Bob. Yes. add there that just I thing a would you, Bob in -- The what things addition of referenced. couple Thank

our continuous color it's support. that's capacities I collaborations or whether From clinical and commercial each to think back have And available capacities of note more network on just step it's take that or a to our it's general, non-COVID expertise, important support bit of a against look COVID related of little capacity in at opportunities. work standpoint, of the match specific whether the scope of expansion that strive entire and have related, you work, of an we to we scope opportunities our and add to to has capabilities, that and put to when one we have a specific funnel opportunity business, do tied that.

our clinical is the liter which X,XXX capability supply scale, viral therapy up vector to Massachusetts within in commercial product investment Camden, to And and for market. growing from that and there site clinical will also then investment and support to And drug fill and viral capacity within the and commercial standpoint drug for non-viral is So commercial gene the product going finally, Canton, add expansion the supply. to ideal the supply. that spot sweet support double site Maryland finish a Rockville, capacity that will for clinical double

portfolio the have with the opportunities for away then we've as paving to these So we secure, we're that as well to additional able as mix capacity up well. very then expansions, matching portfolio grow and well our that been

Bob Kramer

Thanks, Syed.

with an Brandon, the the companies, is a material really our the think, with comfort in and we've have shared that or CDMO. fall unit around diverse speaks signed that last clinical a I business size that to as J&J The sustainability confidence need agreements whether we commercial he to and durability in everyone service that, Syed's now of they have and for attractive offering very all like and interest AstraZeneca. supply fact

coming grow think the capability product will continue to quickly unique years. unit our that been scale has business that and us I network offering over growing to gives and really confidence brought

Brandon Folkes

I Great, it. thank you appreciate you. comprehensive very much very answers. everyone, Thank

Bob Kramer

Sure.

Operator

you. Thank

Jacob Hughes next Fargo. with Our Wells comes question from

is open. line Your now

Jacob Hughes

Hi, good afternoon.

some from of that beyond growth, of so grow then And just you're base what about pricing these that appeal? these theoretically a you Just might also generic? off with follow-up come versus think will contracts or options for on down does And the expire COVID approaching you how CDMO sort can potential -- 'XX, on do Thanks. have you talk levels? NARCAN, the you a could

Bob Kramer

Sure. the for Thanks questions, the call. Thanks joining for Jack.

both So as as the share competition market. we of fully expected to on product and well prior from as we into a diligence branded ago, my Adapt I question, generic prepared back the coming during to the NARCAN comments that the did acquiring work years eventually the number going modeled and

comfort in about naloxone. awareness talk think who gives what is a think unaware and that earlier announcement and is the And need or either I education and product is again, the every to fact underserved viability significant about of continued change as us the the patient label I some get of sustainability there for population we FDA access about naloxone. that cannot further call, the optimism supporting will

grow. to continues So that market

that unique added or we high the patients. We market are compete have value share, that or branded Nasal of market, prepared we long-haul public in interest in whether at think NARCAN it's needs space. it's market market in and retail we're a product to for very the the this the generic for whether the space the And Spray in meets differentiated

contribute it meaningfully the about to excited again and expect that we're going to for revenue forward. So future product

make of in whether and the billion vaccine continued mean, aggregate question whether is your value of of value, of say I'd realize million not -- used that sustainability of we On CDMO, billion think to a referred the period. whether after more to two post expect market candidates to Syed it's services to look COVID-XX be that, start Warp next the support order but and to to an at the the has question contemplated. after CDMO put capacity mean, And the just if with when be to just majority support are to you $X.X actively drop-off which place over if the the in space. the agreement, COVID-XX XXXX, number AZ $XXX say contracts we we'll that the going market on out its J&J market wait I and as last comes example, capability we or we've the first thing those that valued value I we're to whether for other or described have it's see, in fall, addressable $XX and that this significant is commercial after and years $X.X five term. sell revenue XXXX year J&J expect guess, AZ supply in traditional J&J billion anticipating we Speed, whether leveraged or and the task in Syed I loud, at, again, XXXX you expect described Rich, drop-off And kind and fire your XX-month or that as the to power BARDA/Operation that vaccine terms getting is look I it any there contracts XXXX. that around that up at be that

Jacob Hughes

are are looking how what Great, sort you of does on thanks. pipeline And follow-up, what just one just And guys, you M&A, look active like? assets the at?

Bob Kramer

Yes.

by units of evaluating. think literally anything, XXXX to point, and can greater across getting create that think fact that more we segments out did I our the way we of thoughts it's opportunities to we're billion different through revenue market with to $X probably Again, the Jake. it investors shared that organic win, are all of use still number there and a to number populated public probability we in. little change gotten of fall. the words busy looks business to we at our our build where assets about doesn't upon a positions a in and leadership think unique last that we Rich's health have that in that four are bring we landscape our there best are are positioned assets sources engaged there So only in we threat the looking There highly opportunistic interested If when view and

Jacob Hughes

Great. Thanks, guys. Appreciate it.

Bob Kramer

Sure.

Operator

Thank our Dana from Flanders with you. And Guggenheim Partners. question next comes

is line now Your open.

Devin Geiman

congrats on Thank quarter. the on for Devin the Flanders. is you Geiman Dana questions this for Hi, and

the that. one guidance procured little forecast million higher And a kind is $XXX XXXX, for which and I initially. they've your and across how CDMO, you perhaps COVID Just balanced the broadly through your for to-date walk than surprisingly after follow-up of have million had contracts XXXX? Thank Could a recognition on $XXX XXXX we to first revenue us you.

Bob Kramer

Sure.

want Rich, So, tackle to you that one.

Rich Lindahl

Sure.

look basis, against related million this year progress components, not task a is basis of awarded which the reservation, on to So we order recognized but broken to a the are recognizing on XXXX. of mid-May straight-line two monthly was straight-line is when at $XXX the you The up piece million the related million in component capital $XX the more December project. capital through from when $XXX capacity into

come revenue arrangements the different remainder aspects the then place. that programs and delivery in milestones, is XXXX into have of to certain a So that are achievement of the we XXXX. of of will And related the the other recognition into portion just

Devin Geiman

a question Okay, And then on great. just NARCAN.

comfortable what ongoing XXXX, this? Have Your generic in appeals sight had on assuming do the Teva? not launch that launch of no within will assumes What have with process? early conversations of line guidance makes cycle the you Teva you you guys

Bob Kramer

Yes.

may to have, in Devin will later obviously, expected decision be do second that very prior the in XXXX assurance they they year. in XXXX, well clear, not, the So no or appeal we the just half that to of

to prepared deal decide and We it. whatever to they are whenever will counter or with now do to be do they decide to

as assuming right indicates Our that's fine. and said, are do them now Rich knowledge but if not best we that we're too, expecting they

guidance for our we'll in year. product our XXXX maintaining and NARCAN for guidance XXXX next talk probably when provide we about January we're So around more our of expectations

Devin Geiman

you. thank Okay,

Bob Kramer

Sure.

Bob Burrows

Is there? the you you there are apologize never has a any this message. question, gentlemen other Hello, I'm Joelle. occurred. Joelle, Joelle for We ladies and Well are sending interruption sec there? one

Bob Kramer

you hear can us. Rich,

make alive? the is still to sure call Just if

Rich Lindahl

can. I Yes,

Bob Kramer

you. thank Right,

Operator

our comes with question And you. from Thank next Nakae Chardan.

line now open. Your is

Keay Nakae

where to are versus else's? further Hi, respect you with launches to questions differentiate where respect your the -- with your to anybody product thank again NARCAN first, enhancement differentiation product are you. Two

Bob Kramer

devices. single by-dose or use will naloxone offer users different day at product, device in the formulations nasal patients a that the as of opposed end or thanks improvements question the or the enhancements the for for the life-cycle Keay to about Thanks, the product we've talked of assume referring one call. that twin-dose I Yes. you're joining to X-milligram of delivered to two having and is

the going develop a to to be you'd around we're more that continuing helpful. will not But that twin-dose of So White, I something or status the and if call, you're color little to in that, would It's on provide come by-dose. development market think XXXX. like the Doug to that be evaluate

Doug White

extension things, an if did Sure. send that's XX-months. term to Thanks, to one dating XX-months of nearer improvement will life-cycle is for of Bob. the and you A there or data -- from FDA couple we expansion our

year and So dose NARCAN existing Nasal for small we the would approval Spray. this anticipate that's that

submitting FDA development. that would we multi-dose of the anticipate product, the in XXXX. product to is On in application an And

Keay Nakae

great. Okay,

gross CDMO And point extent improvement question the margin? for Second to many business? you new basis over the have higher negotiated how contracts prior what if so,

Bob Kramer

CDMO referring you just vaccine a just COVID-XX Keay, contract? to are clarification So the

Keay Nakae

Yes. Bob. Yes,

Bob Kramer

Yes.

those contracts commercial of a and which it's AZ both some there well described HHS And has well place. are term, CDMO combination So reservation Wrap agreements, then, BARDA with transfer initial nature are as longer Rich, capacity with the traditional as the contracts as Speed. tech are and based that Operation supply is as as, of J&J more in

of commercial by favorable described, of work. structure Rich agreements because gross by CDMO the the more perspective The design the that standard more contracts nature flavor of the gross margin as nature profile, are are from margin because work. those a of supply of first typical of So, a and

because contracts. clearly, So contracts at in of XXXX first that's category will longer mature a of and how normalize experiencing replaced we when XXXX, bit And CDMO look in are of those are I and term would profile, those an uplift our traditional margin that with that. more

Keay Nakae

Okay, you. thank helpful. That's

Bob Kramer

Sure.

Operator

Singular [Operator Thank Our you. Instructions] next question from Lisa comes Springer with Research.

Your line is now

Lisa Springer

we a locked-in other might the vaccine are you developers with, I manufacturing year? still lot that out vaccine of there ask, capacity you've wanted see more Obviously, be there. contracts some this discussions just might manufacturing you. Thank coronavirus to in

Bob Kramer

you thank and for the you thank Yes. the Lisa, joining call. for question

XX being some vaccine an be there the of forward, the clinical candidates of to the the are candidates any Warp I by promise government players. Warp show by you've big one Operation level comment, They're and such the a endpoints Speed There the folks probably that think if with supported and are nine is meet substitution. the heard, going top as in prioritized described fail development. or likely to COVID-XX at five HHS other their government of tier and Operation tier that has we five to additional as Speed top

important So has substitute contracts can candidates. in spoken is basically Warp I been of Speed Operation with capacity understand that such Speed our what's the nature HHS about that Warp for think different our to Operation

we a will continue discussion dependent. broader be and expanded with fact entirely locations, possible invest And developers fact have we it's for earlier, be platform to substitute, broader business. continuing in we all of innovators in capabilities point number the may a to that So are but other that any of to services across Syed's that

it's So continuing a process.

Lisa Springer

Okay. Thank explanation. you the for

Bob Kramer

Sure.

Operator

Thank you. at like not to to showing I'm remarks. further the over back any turn call Burrows Bob I time. questions closing for this would now

Bob Burrows

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

Operator

Ladies and you conference gentlemen, this Thank for concludes today's participating. call.

disconnect. now may You

Emergent BioSolutions (EBS) 30 Jul 202020 Q2 Earnings call transcript