EBS - Earnings call transcript Q1 2021 | Emergent BioSolutions Inc.

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Operator

Thank you for standing by, and welcome to the Emergent BioSolutions First Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to Bob Burrows. Please go ahead.

Robert Burrows

Thank you, Cindy. everyone. afternoon, Good Bob is Relations for Officer My Burrows, BioSolutions. Emergent name Investor as joining the the XXXX. for you we first us of for Thank results today discuss financial operational quarter and

and is copyrighted is Emergent BioSolutions. to call recorded by today's customary, is being is all As participants the call and open

In today's there press is slides series of addition this webcast webcast participants. to accompanying available release, a to all

X X to and in the presentation. Slides Turning slide

events, to beliefs to our may we or forward-looking information, projections well other the our make call in reflect evaluating as periodic new These Investors update circumstances. business, this date related as statements Any our to future identified regarding of our and or During cautionary based filed today's as call, not of only reports events. conference any the forward-looking by except prospects statement forward-looking statement and statement events performance. and future required consider on statements law, speaks should future the our forward-looking with this are we factors current forward-looking expectations intentions, as statements. when risk undertake SEC do

press reconciliations our call, measures. between GAAP tables of figures transparency today's order adjusted to and measures adjustments that provide our and we GAAP to non-GAAP the refer non-GAAP performance. may involve certain During adjusted today's regarding financial to found greater net in and Please use operating regarding financial financial Emergent's to release refer margin in income, also adjusted gross EBITDA these measures the

current where Chief XQ who and who will speak Kramer, as well This Officer, present members forecast today's available state 'XX are will and the additional Bob for Officer, calendar session of needed. and agenda by followed as financials XXXX. the will a President executive the Chief for The team as Q&A the leadership X. on to will be for and company; Financial Executive Rich of the Slide call to Turning Lindahl, comment include

of on like those webcast, made benefit comments to with Bob, now call today's the I turn recorded with begin replay then, for of be call to topics related XX, announcements listening during over Emergent have April discussed the Since X. who would introduction, Finally, and that may call. And this the Bob? XXXX. held to Slide to the was may whose

Robert Kramer

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

the As press our news in and primarily the you lately, we've know, related manufacturing in been activities. COVID-XX to

and involvement the addressing and start we core business and pretty comments the been committed against team and As Department our committed a I'd make prepared of I'll with focus That work by urgent this executive state-of-the-art. in like day performance result open deck core to the our accompanying on that I role information and the to and as around operate U.S. Slide call. for Emergent The let much facility to Defense our the has Since itself. accurate manufacturing COVID-XX. FDA speak news battle the the communications. started providing in steadfastly you the XXXX, first management X ongoing business and it from in our in to planned, with to given summarized My my acquired continues Michigan quality. founding, remain remarks are

was were government site, to our with licensure site. and the a pandemic the commercial We've stepped a for that to vaccine facility as on development clinical and then single facility XXXX, last to million of production been Bayview being were from dedicated FDA develop life one a enhance capacity. along to daily. given manufacture to vaccines. vaccine Bayview. on we the and delivering facility preparing Herculean of Over There's transition to mission We hundreds of severity COVID-XX influenza remarkable global seek lives to hit. it originally been about a producing Thousands to U.S. partners to from happened operating the took lost of the accomplishment the the of products. protect the misinformation designed the We capable what two a Bayview circumstances, Prior increase necessary decades, millions doses progressing our our XX we've of lot of at of pandemic. our through ourselves quality This task one, but given a of a up,

responsibility issues upfront that do discuss quickly to I you we're want I to commitment resolve as details, we safely as Before full these and and my possible. have I the say going everything to take that can

serious, during such. But biologics and stages more and AstraZeneca challenging. contamination in why intricate We batch year, of as steps tests fail layers incredibly and loss of the implemented biologic you Johnson did occurs production loss of lessen FDA and & license of a the to reasons, other and products they manufacturing know, scale-up the variety repeatability which especially in Product resulting had the difficult complex, detailed as biologic In inherent and The the steps parallel required. a when well, a April the for cross are it checks, treated protocols early precautions facility. this function contamination. did virus extremely a to safes. many contaminated is We anticipated XB these cause As we Johnson those for processes the there of likely the of not are can risk of initiated be or believe is inspection as disinfection batch of for of was viral as suite. transmission product and a the that is of one with

measures more of go and is place. to fast viral these worked candidates. been quality never to made risk back substance has identifying one ensure the we is extremely bet time, in which fail stages contamination process development is to candidates done manufacture take and that same would the challenges us protocols keep they built early We control in had there company rapid remainder can get candidate account a to and that of learned to of viable most Everyone getting viral a We the COVID-XX many in facility. facility. second-guess we were using in our producing subsequently of as one partners or drug won't. faced single government quality put failing easy Cross government prepared to on why accurate us Emergent, which to this odds before. directed on our scale that the best candidate Much the for the plant, capacity is multiple well-known in AZ next rigorous so trust and a We're the It's products condensed safety manufacture an for this didn't and left when which health our public and to the important high, clinically how At for. U.S. But situation about vaccines the exactly was are why the ready takes that be get may government choice in never and ensure ability COVID-XX committed safes our it multiple product contamination other the could the successful. reserved What's way out to one at pandemic. and the public and because designed, the knew months. and have facility. Bayview should in vaccine manufacturing in that Importantly, the a pandemic a made mind years candidates public be has batch of our no J&J's of vaccine We been decisions was challenges disappointed into flinch We that took eroded crisis. deliver. that normally what been reported this this now that that's lessons we challenge health others in X

those differently, the sure do to dedicated our ultimate day care things frontline are team and and of available full the done acknowledge because we when our It's to messages to have I what within or Those - this, different accountability, encouragement that's issue I expected to vaccine in stuck greatly and involvement review. welcomed None health with criticism many We've company. but that about. exceed can of I they Baltimore team. for have their and team that days, for our as us rigorous to all that's have workers. XXX combat of no public than scientifically we from professionals people perfect be In our have and the for all is working really responsibility FDA my year of over make the us the a take are recognize is the and have issued and a night standards. For independent taken submit strength of to designed more to succeeds, bear They support should Bayview the challenge who have succeed comprehensive have the been with take their are a unfair rooting Emergent want been inspection literally who I response findings, to performance of this team and appreciated. public. meet leadership sent FDA's us us findings benefits, to pandemic

through work J&J are can support over I'll stop who we We for as propose, the comfortable results the is to we millions per ongoing forward. and If the dialogue the the I'm their quarter. soon this tens with with constructive FDA us month. to hopeful we the turn producing the that Rich? for of return appreciative of take doses call and approach Rich, path first will there

Richard Lindahl

on Good for Thank Slide start you call. afternoon, I'll thank and you, joining everyone, X. Bob. the

during As performance, solid you press consistent of release, XXXX, which was today's from quarter expectations. delivered our with can the first see earnings we financial

aspects by despite to the caused continued pandemic. all team COVID-XX challenges enterprise, Our of continuous the across execute

quarter growth the diversified evidenced and corresponding Our clearly significant by outcomes and of the our business, a revenue financial reflect strength profitability. in durability

sales product prior on supporting travel contribution versus timing of year. please to similar from quarter well XX, due versus durable $XXX $XXX that primarily revenues prior and $XX lower persistent having vaccine to With adjusted Our million, demand increase $XX for steadfast providing $X reduced versus vaccine year with continuing significant into the Despite the reflects first for reversal. recent include to the net Adjusted Nasal Spray product and to consistent threats. products partners and total prior aligned and and income opportunistic the of were as increase Breaking drug-device services our unwavering $XXX $XX EBITDA to to NARCAN with flexibility sales operations year. are year demand of were financial and global this our and to the growth of our $XXX prior for million million, turn in headwinds, Slide year sales XX% sales opioid historical government reflecting level at performance. response reduced of health remain the of and revenue quarterly to response our fund million combination of in to CDMO overdose reflecting the prior anthrax travel we investments. quarter. year and Other first let's Highlights services and financial the as $XXX we its the more were and increased with million, public million, than million, COVID-XX This condition impact the our components, norms certain the the sales performance details an prior global remains million. in as the revenues is innovator preparedness critical pandemic. that, increase million first $XX down health commitment an million, an of or strong, of pursue liquidity look

Looking product SG&A revenue, product as margin adjusted CDMO as or reflecting XX% gross our gross of of or basis expense mix, continued expense combined total services. XX%, the our development adjusted pipeline of of reflecting revenues, million, the units, to spend revenue, of impact on improved R&D of of million across $XX net include XX% an X also well beyond million CDMO commitment quarterly and overall investing $XX product business results focused of in from programs our $XX R&D and contribution

Turning to XX. Slide

CDMO key momentum reflecting our business, first metrics secured and of We follows. new quarter, In also the $XXX others. million provided initiatives with as our to updates we innovators marketing in

business figures impact this new the period. of the the funnel revenue include a X certain of XX. $XXX the to million. includes that still the seen offset during relatively would as success recognized to March build down business to the sequential As Having be events, recent including track was by during backlog these March vaccine over government's we continue trends U.S. on $X.XX by that at not quarter quarters, of made note COVID-XX opportunity shown the XX, I the XX, was decision will said ramp do the the that, the adjustments last of of production can billion and And new of second record for secured, reflect Emergent Bayview. AstraZeneca be as component Slide

Moving ended position liquidity the of flow. assets for over $XXX million resulting a quarter our liquid with $XXX review to million balance receivable, Slide of We million. in a and cash XX in cash and strong accounts current sheet of aggregate in $XXX

considerations. our to undrawn We debt and also EBITDA forecast was, of revolver position our less turn $XXX of XX Slides once and At ratio of and first XXXX quarter, for our key still XX-month million, net have of a again, trailing to XX the associated under debt capacity than just adjusted end was review Please net million. $XXX Xx. the

outlook release, $XXX primary ACAMXXXX unchanged, events vaccine financial to range of revenues revenues to commitment further well the not revenues range in bulk revised. adjusted primarily in as manufacturing of pending items $X.X these $XXX range $XXX $XXX driver to vaccine reduced Nasal million the items in incorporate following by EBITDA our million performance. initiate of due of million. $XXX with forecasted range $XXX range range adjusted detailed in The changes in press services has $X.X revised a to have of million, Beginning million million CDMO today's million our million, are anticipated services at of of Total income expected as the are and of that updating review a CDMO to to revenues on for hold $XXX certain revenue. billion, revenue is of Spray of been $XXX in impact substance to $XXX NARCAN services billion As $XXX XXXX to $XXX been million we million, The revenues to recent Bayview, million, COVID-XX a a anthrax million. The new FDA. the lots, $XXX outlook our to and net our CDMO of a drug

delay FDA assuming and/or manufacturing revenue. new we release concurrence expect Even to of the expected lots, in timing of reinitiate a

of BLA assumption lower revised including product assumption, that programs, raxibacumab one more starts now unchanged new or pipeline will prior least development one planned. principally awarded the our be other We key Phase XXXX expect at III include also than will our of X% competitive a with continued that one between the gross capital our anticipated approximately the the new appellate assumption, expenditures, from and to market GAAP remain and from filing, is market total the decision, no our generic court XXXX. market enter of naloxone and half a for entrant year-end, in later competitor XX% on contract revenue, previously due unchanged expected that prior to revenues, second by which of margin to progress across prior to basis, Other of XX% will net reimbursement, assumptions to X%

million midpoint patterns. our $XXX also XXXX at million, for are of XX% revenues for midpoint, providing comments. some To the turn represents historical XX approximately line to total at $XXX second with summary which Slide the XXXX of to quarter conclude, guidance revenue We in please total

We deliver the financial of first continued XXXX. to in strong quarter results

a to We health and response built capabilities, needed capacity deliver resilient with strength threats. to a wide solutions preparedness and business public have of financial robust and the range

hearts by dedicated and pandemic. have into employees souls crisis brought their the Our COVID-XX the put on confronting

I'll turn model some future we Kramer, And Bob we are now comments business, remarks, completes growth. the important prepared in and back remain call across That globe. make. face confident critically in lives while final there protecting to Our plays the my and who our current Bob? durable business has to role challenges enhancing a across our

Robert Kramer

Thanks, Rich.

announce. Before we a I personnel to move have updates of to couple Q&A, I want

leadership has all, joining also roles she my XX of quality, us, years of and with a her positions day. strength years Lachman and Consulting also Glaxo Senior Vice She's the our at well as observations. member report us who President joining been talent of has leading in will been Quality, of team. improving Mary become to First quality. Oates regulatory XX and operations spent Mary Since affairs. November, of experience operations our multiple Oates, to me the able Emergent, Dr. Dr. professionals at experienced manufacturing Bayview to of team now Prior management held biopharmaceutical Global as has who XXX in build holding Services. quality every organization joined to are directly in Mary Pfizer, executive the response our

a Technical Manufacturing personal Kirk, absence. leave and taking Secondly, Sean EVP Operations is of our of

XX years, on multiple the success. to in operations the functions For has than helm every nearly year. contributed to has role track a our fighting happened. been at all he of and his greatly We across Since expected our opposite multiple rigorous has to roles unfortunately, but the of transition beginning in day record laser-focused less a that now, schedule, proven he of hoped COVID-XX begins Sean's manufacturing and by pandemic, hour growth that every for more

the has forward his and Given leave public important great pace. a more return to him to balanced aside personal XX the need, months, over address look Sean last using and we matters those matters to set several

for Third, in and our know the of part been member almost working has of Business Adam coordination been years. XX manufacturing valuable remediation of Adam including Emergent Havey, and He's my a our Operations, Bayview past. Mary interacted team you of EVP executive Many assume plan. with responsibility for have in will full with management on

many his pursue unit unit, serve now a to business Hanley the strong Finally, contributions. CDMO to the a put talented will like of him opportunity. We've and turn the that as Catherine replacement. the to operator Head thank that, Syed's With question-and-answer we the and while you leaving notify for CDMO of over group Operator? strategy be want his asked leadership, we team Husain, has place to strong Emergent session. Syed I Interim I'd on Head recruit another our to call in business actively to of begin the Syed

Operator

Brandon [Operator Instructions]. Folkes.

Your is open. now line

Brandon Folkes

appreciate work. your have about number and I questions. comments do the of I your frankness Bob, a echo

are context - And in you Similar the in great all funnel, to how maybe So in causes the say $XXX terms it Any million, can contract? CMDO losses can firstly, again, April? was, return what in Any there? to in guidance may you of the to performance side service rolling for what was customer the contemplating in of terms to terms production? the just your that, the see in. impacted a of J&J and think you impact business of it it, win. opportunity I be April the And other then that it HHS

Any just there you those color Are So that as context they give around any well. related? can COVID wins? us

Robert Kramer

Sure, question. Brandon, the thanks for

there. of a You covered lot territory

So couple. let me on focus a

response and First comfortable XXX get we of as of can to can. we all, as make and quickly one to to do now fully of the production priority respond their our do the that feels in is to we've observations said that and sure FDA, review everything our we resume everything FDA we the over, support number right over document as that can

for So much strengthening the one needed furtherance goal, J&J's and chain our stabilizing in goal. that's vaccine. this number number all supply of It's one

of the things. CDMO of terms a say impact and I'll services couple In losses,

knowledge, not to experienced in losses we've all, of base. the current my customer any First

do. this into mean what that way, I response think way, big jumped a over pandemic I XX how people in unusual built that's we business we but we that's years. understand this

about, supporting offering as strength Those across in sites. development as well of are X still includes talked network X I a services, the development as of see business. And service substance. the itself different drug technologies very think core X manufacturing and manufacturing platform sites we we've capable drug broad product,

terms very going after. business high of the they we're strong, bones the in very base diversity that demand So of in that and of customer are the are

be to So to that QX, contracts in time. in continued that place to I'm comment in put strength QX pleased the able business we're the in on able see with we'll and new

Operator

Dana Flanders.

Your is now line open.

Dana Flanders

very with a you much U.S. and of a you right up. a would which questions. government now Thank coming needs you've and the relationship congressional the lately, Great. hearing dialogue the Bob, discussed you've lot for new contract how your anthrax and vaccine working have news know been characterize kind soon, counterparts. just I in your

strong? can wondering just of you if kind So of And the next year this how still and contract why if the investors I'm wondering delayed question. there's raxi contract then that's there's you any read-through comfort that second that, color give of early to and later kind my kind any of related on upcoming give year. kind or relationship being then anthrax is negotiations

Robert Kramer

of take I'll over talk those to contract to regarding discussions couple and a then Thanks, the about the perhaps it Rich renewals. Dana. turn upcoming

XX relationship, we at open, circumstances. So a in be well ourselves and for current this the last transparent as relationships, first government company. We pride all, the as been of on the the as we've U.S. found on that XX years years case to

So transparent the way in a HHS working of those we factions very BARDA and within government, all and with others. are

ACAM relationships assumption - and that and Rich, the remain the those where can the of both to are we turn exactly options renewal. wise up are AVXXXX you And maybe, for So kind strong. intact for

Richard Lindahl

thanks, do And Sure. that. for question. Dana, Happy to your

to in this as time assuming are exercised year. ACAMXXXX, it making will we quarter to is of in that the for the relates second So us be deliveries option what begin

some being of expect the quarter of a result in full that guidance So full we the to that of option year ACAM exercised. through the comes revenue and see amount second amount as

year relates will in half year. option And for next exercise into to guidance by our process the to AVXXXX, anticipate and quarter Secondly, approximately we contemplated would quarter point would this that assumed came and that the deliveries year. begin in next I'm occur bidding fourth the to occur raxi, that's year, guidance third time happen as then this as against basically, the at the in the the much it in also it RFP looks to the ACAM third relates earlier of time. relates and our - than we sorry, come deliveries that of we option it's it to like of going when that And in

expectation that push on later, and based happen is into can that, that it's that's revenue we XXXX. likely where So to are, that, our going

Operator

Fye. Jessica

Your line open. is now

Jessica Fye

following Just up Dana's AVXXXX elaborate we us question, on for you the with contract. can stand where just

I base end might to the coming be think the period an coming in months.

guess, there of the explain I So next possible base options contract exercised? many contract? on period means we the government you how Is the which soon? should the what buy example, doses for be what and end the expect limit can by with those it start doesn't negotiating remaining For mean? options current to any are must And time you to the

Robert Kramer

the thanks for Jess, question. Yes,

think exercise next part renewed and middle covered the just government, to it through with year. contract expect of a I I has period that go your for performance but the of back So the the Rich the bit, option discussing answer, at goes for that annual the to of this of be we current AVXXXX, period. current option the believe

what's the guidance be negotiations we're And first happen some built half what we certainly of will back the XXXX our have going in So for looking at those of of of outcome for expectations XXXX. XXXX. and to half the

the now, think outcome of that discussions that. we that's other government are than can around already all say the I right we with in

Adam Havey

other contract, the approval kind here. and established X was the to Hi Havey of Adam that Jess, licensure, procurement. development the we had it might When I add the product just it, and piece. major was one second first the of BLA essentially it's pieces

period through we regulatory how think that to we contract we'll on and XXXX. get get still development as approval, Once And the transition. like get years. the with government, to we you plan, about performance expand. and the or we assume approval, that's with that that then is will I the talk on that remember, so government we transition And the active. - if that did core We're move that could work process, the once on talk we'll about will But on earlier how BioThrax into work, work in target, about of

Jessica Fye

Great. be about a you couple EUA? before Will talked getting Bayview, just following I days? reinspection needed ask coming Okay. within regarding the XXX to the back Can the a that FDA remediation about

Robert Kramer

Yes.

deliver corrective Jess, And possibility. outcome. not a of - But very actions wholesome to questions have we we document. to they any get expecting a we're look once in observations. FDA set working the response a to So that expect forward that if durable follow-up they again, the certainly It's with as

Jessica Fye

Okay. new And the there? Or the timing to it is on timing else? raxi due at back what's Bayview? to in the going shift reason the then the something contract, Is made is because product shift

Robert Kramer

association It's with - no Jess. Yes. due not Bayview, to

be government have issue. I simply and think discussions. it's by longer-term We're the with would those what they're the RFP a expected, would priority have ready to ready looks through do And we now, working again, solution to been when we issued like. as Rich described, that that that

Jessica Fye

a just couple I Okay. Great. guidance. have And clarifying of just

lower part. that timing it this the CDMO contract mean a that the delayed XXXX? the of That's means revenue year? we revenue to still we think Or opportunity And as you just such reason from collect is Does of about talked written revenue You behind guidance. the into overall? the the to cut timing should shifting expected expect then being should first second, AstraZeneca

Richard Lindahl

should range contemplated what there. would be, we FDA's are the terms key not but we variable of to into XXXX scenarios, I to year. it's that that which we've at the really next shift by comment Bob out right timing say degree in that we range have we steps would obviously, this the can't are the put developed guidance recognized relates CDMO of So revenue now anticipating as of on shift, referenced, Bayview. And the a wider

determining about So year. how going that's AZ next the we revenue our That's in really AZ working that incremental and the contemplated we're kind ramp this guidance. forward. far through as thinking as down And We're from concerned, with them. then recognizing of process anticipate steps is do

Operator

Keay Nakae.

Keay Nakae

the are actions, corrective time appreciate what will First, With you kind to of take XXX transparency and findings. actions? proposed corrective the anticipating implement those frame it your publicizing you

Robert Kramer

Thanks thanks question. not as to able to very say robust commit thorough, to Okay, we J&J, I'm the that be get do way to and have going whatever with into for we possible. for partner back of do get the respond into in to production the a joining. as quickly to response, nitty-gritty only

#X that. and soon, into So to after anything the than obviously, necessary identified our corrective priority appropriate to only completely but it's to back inappropriate other But committing production again, reinforcing really speculate by as actions on is FDA. and get responding

Keay Nakae

me let ask question, another Well, right. Bob. you All

While appreciating things accommodate, that happened, key say given the from the had everything you that's learned experience? what changes the you you've rapid would are to

Robert Kramer

Yes, it's that of a question. for debated internally We've while. great kind a

think importance in lessons mean, learned, we way clearly, at the this are We a raised situation transparent readily where communications. ran year, we that quite in did. this I forward. this if the of our other few, We were again, frankly, any time in opportunity open last pandemic hand. I organizations stepped

clear, one the for of how this to or was. and learned critically and So work of what I chemical are that the we in biologic preparedness on that infectious fact the matter. threats importance think that comes is it stepped and diseases And No again, I'm the just important proud outcome lessons when way. have an anticipated, have up to could be into aggressive stepped the emerging

fact stabilize I'm we do right this we we into So And now it of could, And the everything everything did chain. can preparedness and the again, absolutely we up jumped and to stand that supply again. counts, response counts. would proud

Operator

for your that's Lisa Instructions]. [Operator Springer. speaker And last

Lisa Springer

I the on a line some you've that the what's travel question have European lot for pickup for cruise starting you your back, think? for and regarding any a of the do just Certainly, call, And vaccines. outlook quick With in year, covered travel are you demand the the vaccines? seeing

Robert Kramer

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

you business. space. pandemic, late year your yet in commercial have know year revenue plays we're development. products as that how of out. we know, remain We from XXXX. contributor earlier we well travel because we we'll the as about doing not to anticipating opening can be as that lines don't health don't last cruise contribution As see commented to COVID everything But in we a up, huge what both and the huge We in interested And into in a again, question quite that candidates other specific expect read in the

Operator

no to there turn like the are for And time. at further closing this time. now from the over at call the company I'd this to back questions comments public

Robert Burrows

Great.

an of archived the of With your conclude today's Okay. webcast well website. and will that, version speaking the again, slides today's PDF call all Please with Then call, to the available for we thank used later Cindy. future. thanks, you, the be version note thank ladies page forward everybody, and through accessible gentlemen, company Investors the Once you of as the as we on you in landing today, participation. and look now during Goodbye.

Emergent BioSolutions (EBS) 30 Apr 212021 Q1 Earnings call transcript