Q3 2019 Earnings Call
And gentlemen, thank you for standing by welcome to the third quarter 2019, emergent Biosolutions Inc. earnings Conference call. At this time all participants are in listen only mode. After the speakers presentation. There will be question and answer session to ask a question. During this session you'll need to press star one on your telephone as a reminder to these programs.
<unk> is being recorded and now I'd like to introduce your host for todays program, Bob Burrows, Vice President Investor Relations. Please go ahead.
Thank you Jonathan and good afternoon, everyone again, it's Bob Burrows VP of Investor Relations for the company. Thank you for joining US today as we discussed the operational and financial results for the third quarter nine months of 29 team.
Customary today's calls up and all participants and in addition, the calls being recorded and is copyrighted by emergent biosolutions.
Just spending on the call with prepared comments will be Bob Kramer, President and Chief Executive Officer, and Richmond Hill, Chief Financial Officer.
Members of the senior team are present in available during the Q and especially in that will follow our prepared comments.
Before beginning I will remind everyone that during today's call either in our prepared comments for the Q and a session management may make projections on a forward looking statements related to our business future events, our prospects for future performance. These forward looking statements are based on our current intentions beliefs and expectations regarding future events.
And I guarantee that any forward looking statement will be accurate investors should therefore realize that underlying assumptions proven accurate unknown risks or uncertainties materialize.
Actual results could differ materially from our expectations any forward looking statements speak only as of the data This conference call and except as required by law, we do not undertake to update any forward looking statements to reflect new information events or circumstances investors should consider this cautionary statement as was the risk factors identified in our Paratek reports filed with the S. You see.
When evaluating our forward looking statements.
During my prepared comments as well during the June recessionary meals refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding emergence operating performance. Please refer to tables found in today's press release regarding our use of adjusted net income.
EBITDA and adjusted EBITDA in the reconciliations between our GAAP financial measures and these non-GAAP financial measures.
A benefit or those who maybe listening the replay of the webcast. This call was held and recorded on November six 2019. Since then emerging may have made announcements related topics discussed during today's call. Your once you get encourage you referred to our most recent press releases and I see filings all of which may be found on the investors homepage ever website.
And with that introduction of and I want to turn the call over to Bob Kramer merger past listens, President and CEO Bob.
Thank you Bob and good afternoon, everyone. Thank you for joining our call today.
Last quarter I'll provide a brief overview of our financial performance for the quarter and year to date periods, and then I'll discuss select operational accomplishments achieved since our second quarter earnings call.
The areas of near term focus which are key for US include first an update on our medical countermeasure business and including the state of our anthrax vaccine franchise and the ongoing shift from Biothrax to the next generation vaccine candidate 87 nine.
The status of our smallpox franchise, including our award during the quarter of a 2 billion dollar 10 year procurement contract by HHS for eight Cam 2000.
And a new award as noted in our press release from HHS to deliver that are botulism antitoxin product into the stockpile over the next 10 years.
Secondly, I'll provide an update on our devices business and in particular, our nor can nasal spray and auto injector platform opportunities third I'll provide an update on our CDMO business and finally I'll touch upon our development pipeline.
I mean again by putting these updates into context. Many of you will recall that we entered the year with a number of goals critical to achieving our guidance numbers for 2019. These included the transition of our anthrax vaccine program from Biothrax to Avi 799.
The renewal of our contract for smallpox vaccine and Cam 2000, as well as the contract for treatment for smallpox vaccine complications the GE Ivy I'm pleased to say that we successfully achieve all of these milestones in the first nine months of the year.
With these contracts in place we now have an unprecedented portfolio of long term procurement contracts facilitating continued growth of our medical countermeasure business.
With that as background I'm glad to note that we achieved strong financial and operational performance during the quarter keeping us on track to achieve our goals for this year.
Turning to our key businesses first lets touch upon our anthrax vaccine franchise and the transition from our ft. A license vaccine biothrax to our next generation vaccine candidate Abby seven now nine currently in development.
If you'll recall that we began the process of manufacturing 87 nine earlier this year and in July BARDA exercised its first contract option to procure a 10 million doses under an existing 1.5 billion dollar development and procurement contract with BARDA.
This 10 million Dos contract Award was in addition to an earlier commitment by BARDA for 3 million doses under the based portion of the same BARDA contract.
The third quarter would began shipping 80 799 to the strategic National stockpile and we remain on target to ship all 13 million doses currently under contract by the Middle of next year.
Turning to our smallpox franchise, we achieved a major milestone with the receipt of a contract award by the U.S. government for the ongoing procurement of a camp 2000 valued at approximately $2 billion over the next 10 years or a camp 2000 vaccine is the only F.D.A.
Washington, smallpox vaccine administered in one dose.
It's also the primary smallpox vaccine designated for use in a bioterrorism emergency and forms the majority of the U.S. government smallpox vaccine stockpile.
Kemper announcement of the camp 2000 contract followed the June .
2019 announcement of an award from HHS that approximately 535 million over the next 10 years for their continued supply VI G.I.D. enter the stockpile in support of smallpox preparedness.
Now, let me turn to our botulism antitoxin or bad opportunity.
As we announced in our press release today, we've been awarded a new procurement contract with HHS for back the only F.D.A. approved treatment for botulism that covers all seven serotypes.
The contract is valued at up to $490 million and consists of two deliverables, which we expect to begin delivering in 2020. The first valued at approximately $90 million is for the delivery of 100000 doses of final drew.
Our product into the strategic National stockpile during the next 10 years.
Second deliverable, which may be worth up to 400 million is for the production of an additional 100000 doses of bulk drug equivalent and other related activities to sustain supply chain for bad over the same 10 year period.
The value of the second deliverable will be negotiated and finalized over the next 180 days. This contract like other recent contract awards continues our long standing partnership with the U.S. government in support of their commitment to preparedness and response.
In summary, these four contract awards totaling in excess of $3 billion or procurement potential establish the solid foundation for future growth of our medical countermeasures business.
Turning next to the devices business over the last few quarters would been sharing with you. Our continued progress that we've been making in order to help fight the opioid crisis in America sales of nor can nasal spray in the most recent quarter clearly indicates continued robust demand for this critically.
And the Arsenal combating the tragic epidemic.
We remain focused on raising awareness of the risk of opioids and the threat of opioid overdoses, while increasing access to and maintaining the affordability of nor can nasal spray.
To that end in the area of awareness and education. There are now nine states that have adapted co prescription legislation for high risk opioid prescriptions, we continue to work with retail pharmacy chains.
Covenant and community organizations to help educate and raise awareness on the affordability front, former 97% of insured lives have coverage, including Medicare and Medicaid what the national average copay of $19 for a carton of two devices, we continue to.
Expand access through expanded distribution to state and local governments public health community based organizations and first responders.
In addition to our focus on addressing opioid overdose reversal treatments were also working on new treatments for options associated with opioid use disorder. Specifically, we received a two year research grant awarded by the National Institute on drug abuse or NEDA valued at approximately.
$6 million for their continued development of APC 007, a sustained release formulation of now almost thing.
Another at opioid antagonist, specifically for the treatment of opioid use disorder.
We also made progress in expanding our portfolio of drug device combination development candidates addressing chemical threats, specifically nerve agent.
During the third quarter, we were awarded by 20 million dollar contract to develop and manufacturer in the auto injector containing diazepam to treat nerve agent induced seizures under the multiyear agreement awarded through that part Department of Defense is medical CBR and defense concern.
Jim we will develop a device conduct studies to demonstrate consistent manufacturing functionality and usability of the final device and complete regulatory activities required to obtain FDA approval of the combination product.
Next let me turn to our CDMO business before I begin this discussion I like to take a moment to welcome the newest member of our executive team Saeed Hussein. So he was recently appointed to head or CDMO business unit, joining us from Alchemy Corporation, where he was chief commercial office.
Sure.
Earlier in his career side gain experience at Lonza Wyeth as well as Pfizer.
Excited to welcome Saeed and look forward to his execution of our strategic vision to grow this business unit and the years ahead.
So we'll be sharing his thoughts on the CDMO business during the upcoming Investor Day in New York later this month.
For now let me comment on one of this projects that being the expansion of our drug product capacity and capabilities and our Camden facility in Baltimore.
Spansion is a significant capital investment that will generate measurable benefits for our clients as they progress there innovative products through the clinic and through commercialization and accomplish sustains the art flexible technology, using an isolator and close fill line capable of filling viles syringes.
And cartridges.
Before I close I'd like to highlight one of our key development programs as many of you know we're developing a virus like particle vaccine candidate for chicken going you know what is an illness the spreads through mosquito bites and for which there is no vaccine or treatment currently available.
Shortly after the end of third quarter, our vaccine candidate was granted priority medicines for prime designation by the he may have prime designation enhances support the development of medicines that target an unmet medical need that may offer a major therapeutic advantage over existing treatments.
More benefit patients without preventative or treatment options.
This fast track designation. This follows the fast track designation by the FDA for this candidate and reflects our approach to both pursuing U.S. as well as you regulatory path in parallel.
Importantly, within body to represent industry at Ftn coming for a pack meeting to be held this Friday.
The were packed discussion hopefully will provide clarity fun.
The phase three requirements for a chicken going to nearby virus vaccine with particular attention to what expectations will be required in the design of the phase three trial.
As we said, we're working towards initiating our phase three for our product in 2020. So we look forward to sharing our expertise and participating in this important discussion and coming to a more clear understanding of path forward and purchaser of a solution increase to the increasing threat from this viral disease.
Yes.
In summary, the third quarter marked the achievement of numerous operational milestones setting us up for a firm foundation to further grow our medical countermeasure business as well as our commercial business.
Earlier this year, we completed a strategic plan to further diversify and expand our business and to scale over the next five years, we look forward to sharing our plans with you at the upcoming analyst and Investor Day meeting to be held in New York on November 21st and our hope is that you'll be able to join US there with that please let me turn.
Core over to our Chief Financial Officer Rich Lindahl.
Thank you Bob Good afternoon, everyone and thank you for joining the call.
For my prepared comments today, I will walk through our performance for both the third quarter and first nine months of the year, then shipped to the balance sheet and address the state of our capital structure before wrapping up with comments on our guidance for 2019.
Third quarter results reflect the increasing scale breadth and depth of our products and services as evidenced by the following key metrics.
Total revenues of $312 million, an 80% increase versus the prior year largely due to deliveries of eight Cam 2000 under our recently awarded contract and sales of nor can nasal spray, which was acquired in the fourth quarter 2018.
Adjusted EBITDA of $106 million, an increase of $67 million versus the prior year.
And adjusted net income of $63 million, an increase of $35 billion versus the prior year.
Let's now review highlights at the next level of detail starting with revenue.
Our Ken nasal spray sales were $75 million continuing the performance we've seen over the prior two quarters and reflecting the impact of ongoing community access programs addressing the public interest market and to a lesser extent the higher aggregate demand as legislation from each of the nine states that have adopted in the lock suncoke prescription.
Come on line.
It Cam 2000 sales were $112 million, reflecting the benefit of the new tenure contract signed during the quarter and indicating that we have already delivered a majority of the $170 million a product under the base year of performance.
Sales from our anthrax vaccines franchise, a $40 million comprised almost entirely of Avi seven nine or nine.
This outcome reflects the initial deliveries under the $1.5 billion 87, I know nine development and procurement contract with BARDA signed in September 2016.
Thus marks a significant milestones in the anticipated shipped by the U.S. government stockpiling. The next generation Anthrax vaccine candidate.
Other product sales were $29 million, reflecting sales of over half a dozen countermeasure products addressing biological and chemical and emerging infectious disease public health threats as well as our to travel health vaccines.
CMO revenue of $20 million down slightly over the prior year due to the timing of services being performed year over year.
Looking beyond revenue the quarter. The quarterly results include combined product and CMO gross margin of 61%.
Really reflecting the impact of mix, most notably deliveries became 2000 under our new contract as well as continued robust sales of nor can nasal spray.
Operating expenses, both R&D and SDMA at higher levels than the prior year, but continuing to primarily reflect the impact of incremental operating costs from the tax facts and adapt acquisitions completed in October 2018.
Adjusted net income of $63 million.
This outcome reflects the impact of revenue mix on the period, the fixed cost nature of our expanded operations along with adjustments for acquisition related costs and noncash amortization stemming from the packs packs and adapt acquisitions.
And finally, adjusted EBITDA of $106 million, similarly, reflecting the impact of incremental cash and noncash adjustments, resulting from our most recent acquisitions.
Turning to our year to date performance financial results through the first nine months of 2019 were very strong and reflect the durability of our expanding business model centered on specialty products and services targeting global public health threat market opportunities.
Key highlights include total revenues of $746 million, an increase of $234 million for 46% as compared to last year.
Total product sales of $593 million up 204 million or 52%.
This includes 214 million from nor can nasal spray 164 million from make him 2000, and other products sales of $135 million, all of which were up meaningfully versus the prior year.
Offsetting these increases were lower anthrax vaccine franchise sales, reflecting the plan shift by the U.S. government. The next generation vaccine candidate Avi seven nine or not.
I will comment more on this during my discussion of our full year guidance.
CMO services revenue was $55 million lower than the prior year due to onetime services in 2018, but consistent with our expectations for 2019.
Combined product and CMO gross margin of 54%, reflecting the impact of mix and tracking towards a normalized target annual range, a 55% to 60%.
Net R&D expense was $65 million or 10% of adjusted revenue, reflecting our ongoing discretionary investment in select development programs that are internally funded most notably our chicken grunion vaccine program.
Sta spend of $201 billion or 27% of total revenue reflects the addition of the operations associated with the packs facts and adapt acquisitions as well as costs associated with professional services in support of our strategic initiatives, we anticipate that SDMA as a percentage of revenue will decline to him.
Storable norms by the end of 2019.
And in terms of year to date profitability adjusted EBITDA of $145 million and adjusted net income $67 million for both in line with our expectations.
In terms of the balance sheet, we continue to maintain a solid liquidity position at quarter end as evidenced by cash of $139 million at an accounts receivable balance of $281 million.
Total debt decreased modestly since June as we continue to manage our credit profile and working capital needs balanced against pursuing our long term growth objectives for the business. Our current capital structure continues to position us for sustained growth and expansion.
Let me turn now to guidance.
As a reminder throughout this year, we've been executing on the key objectives. We identified when we provided our guidance in January which among other things included initiating shipments of 87 I know nine.
Working with the U.S. government to exercise the initial $261 million contract option for Avi seven nine or nine.
And securing be 10 year procurement contract award for eight cap 2000, which we value at approximately $2 billion as well as another 10 year contract for VIP valued at approximately $535 million.
As we have come through the year, we've seen our smallpox franchise and nor can nasal spray business exceeded our initial expectations.
Second part by lower revenue from the Anthrax vaccine business related to the U.S. governments desire to shifted stockpile focus from Biothrax to Avi seven nine or nine.
The combination of these factors keeps us on track to achieve our initial guidance, which implies a record performance, including a second consecutive year of 40% revenue growth.
Accordingly as stated in the press release, we again reaffirm our forecast for full year 2019.
Elements of our outlook are as follows.
Total revenue of 1.06 billion to 1.14 billion.
Terms of specific key elements, we anticipate onest, an 80% to 20% mix of product sales for the combination of CMO revenue and contracting grant funding, which is in line with historic norms. So.
Second it came 2000 sales between 210 million and $220 million, reflecting our anticipated delivery of the full $170 million a product under the base year of the recently signed tenure contract.
Third nor can nasal spray sales between 275 million and 285 million up from the previous expectation of 240 260 million from earlier in the year based upon what we have achieved year to date as well as the trends we continue to see in the reversal market.
And fourth anthrax vaccine sales of between 170 million and up $190 million.
As we've discussed we are continuing to work with U.S. government as they shift procurement focus towards Avi seven nine or nine and at the same time, we're continuing to progress on the critical development efforts associated with the 80 799 phase three trial and related initiatives Accordingly, while our 2019 expectation is now lower.
Than in years past, we anticipate that 2020, we'll see a return to previous historical annual levels as we complete the transition.
Returning to our reaffirm guidance additional metrics include net income of 80 million to $110 million. Adjusted net income of 150 million to $180 million EBITDA of 250 million to $280 million and adjusted EBITDA of 280 million to $310 million to wrap.
Let me conclude with a reminder of our financial priorities for the full year 2019.
They are straightforward and include the following first on key performance metrics, we expect to realize incremental improvements to our key metrics of gross margin SGN any margin adjusted net income margin and adjusted EBITDA margin.
On integration, although now essentially completed we remain focused on ensuring ensuring we realize the full potential of integrating the operations of both packs facts and adapt.
Our capital structure, we seek to maintain a solid credit profile and anticipate our net leverage ratio will trend towards the lower end of our target range of two to three times net debt to adjusted EBITDA and finally on liquidity continue to focus on having sufficient capital to both invest in the business as well as execute on a track.
Active M&A opportunities should they arise.
Finally, as Bob mentioned, we look forward to hosting our analyst and Investor Day on November 20, Onest in New York City, where we will provide further insights into our business and share details on our new 2020 to 2024 growth strategy.
That completes my prepared remarks, and I'll now turn the call over to the operator to begin the question and answer session operator.
Ladies and gentlemen, once again a few other question at this time. Please press Star then one and you touched on telephone. If your question has been answered and you'd like to move yourself from the Q. Please press the pound key our first question comes on line branded folks from Cantor Your question. Please.
All right. Thanks, taking my question congratulation on the progress in the quarter.
Firstly, I think we thought it nor can they there's a lot of noise around not Ken and everyone always and coming out with something for a complete reversal, but can you provide us some color in terms of the feedback you get both from the fish responders and the retail channel and tend to the brand loyalty, Iran, nor can it just.
Seems that it it would be who do take long to people to move away from Malkin itself and then secondly.
The briefing documents that came out today for the chicken Gilenya vaccines meeting on Friday.
Any thoughts on those documents and how this might impact your development strategy and what we may see coming out of that meeting on Friday. Thank you.
Thanks, Brendan so on the first question on our can.
I think as good observation in your part.
I think it's important for everyone to remember Ho.
Easily.
Nor can bid can be used it was designed to be user friendly easy to to apply not requiring any medical training.
We seen great uptake in all the markets, whether it's in the local market the state market by first responders police fire.
So we're really pleased with that but.
Big picture, our focus continues to be on making sure that there is the appropriate level of education by patients in customers, who would benefit from using a new locks on product in our case.
Nor can nasal spray as well as having access to it. So the work that we're doing both with the public interest market at the local community state and federal level is important or work in terms of making product available through the libraries to high schools is important.
And then the last piece is making sure that is affordable and we're doing everything we can by working with the insurance companies and payers too, but again ensure that nor can is affordable to they're very patience and customers who need it.
On the second question about chicken Gunia. So divert packed meeting is the day after tomorrow.
We expect to learn a great deal about what the expectations and requirements of the FDA will be for the phase three clinical trial. So we can plan appropriately our phase three clinical trial for 2020.
I don't know that there's much more to say about that.
Okay. No. That's very helpful. Thank you very much.
Thank you. Our next question comes on line of Chicken cues from Wells Fargo Securities. Your question. Please.
Hi, Thank you.
I Wonder if you could comment on top of as proposed framework to give away pretty naloxone. If this is a receiver business at all and then secondly.
Can you just talk about what drove the lower other product sales in the quarter versus Twoq you.
Sure Jason Thanks for joining the call so on the on the Teva.
Announcement, it's or is it will really be inappropriate for us to comment I don't know, what they're thinking about whether its.
You know what form of bloxom so.
I think they're probably looking at that sub sub walks on for that product.
Donation not our product, but we'll we'll see what they have it it is a treatment it's not a direct competitor to nor can.
On the other question of other product sales, maybe rich you went away on that sure and thank you for the question.
So if you look at the other product revenue in the quarter was really comprised primarily of our travel health products.
Our RF product and our bat product.
And so those were the primary contributors to other product sales in the quarter and it's not uncommon for there to be some lumpiness in the way that various products deliver as we go throughout the course of year. So.
You know nothing unusual there.
Okay. If I could if that's one more question is there an update on on the type of a patent case do you still expect something before the end of the year.
Yeah. So what we know Jacob is that the trial is substantially complete.
Say for some closing arguments.
So that is basically done.
We're not going to speculate on the timing of what it will have how long it may take the judge to come to conclusion.
I will share with you is our continued belief in the strength of the overall patent family surrounding nor can.
And our our.
Bullish view of the of the Narcan nasal spray product in general in terms of.
Playing a significant role in reversing this nasty trend for opioid overdose deaths.
Okay. Thanks for taking my questions.
Thank you aren't next question comes from the line Dana Flanders from Guggenheim. Your question. Please.
Hi, This is Devon comment on for Dana Flanders, Congrats on a quarter and thanks for taking my question just a few for me on the Anthrax franchise and a junior vaccine first it seems as though anthrax sales.
Low this quarter given the historical run rates have been circa 250 to 285 million.
Today, you guided to 170 to one 190 million could you provide some additional detail on that.
It's just do the Olympic Ines cadence of the contracting business.
Or the transition between your two products.
Then secondly on on chicken Gunia could you just provide any comments I know payments bio is also working.
On designing a phase three trial, Tony any commentary on that would be helpful. Thanks.
Sure. Thanks for joining the call. So on the first question.
The anthrax vaccine franchise, I guess I'd offer a couple observations.
First of all.
We are just really three months into Operationalizing. The fact that BARDA has now exercised the first option under the contract for the 10 million doses of Avi seven I know nine and while we had been anticipating.
This transition in 2019.
We will be supporting both biothrax as well as 87, nine and nine going forward with Abbey seven nine to nine as a development stage candidates.
We are building the kind of robust infrastructure and supply chain for it.
We have in place for Biothrax.
And we are confident in our ability to deliver on the 13 million doses of 87 and a nine by the middle of of 2020 as well as that continued supply of Biothrax.
And just keep in mind that our anthrax vaccine will continue to be composed or comprised of both of these products Biothrax and Avi 7009 going forward.
As an example, the U.S. Department of Defense will continue to procure biothrax to support their active immunization program for military personnel well HHS is pivoting the procurement to 87 to nine for use in stockpiling anthrax vaccines.
Next civilians from the threat of anthrax so.
Your observation about a relatively light 2019 versus historical is just a matter of timing and building the infrastructure around 87, I know nine.
We would expect 2020 that kind of return to that historical run rate for total anthrax vaccine that you mentioned.
On the on the checked question.
Yes, there is another product in development.
And we expect that.
Both us as well as the other party will be keenly interested in the back discussion on Friday as we'll both be held to kind of the same standard for going forward with our respective phase three activities.
Thank you.
Thank you. Our next question comes from a line of Jessica Phase from JP Morgan Your question. Please.
Hi, Daniel for Jessica Fye, Thanks for taking your question.
For now can can you. Please update us on your latest expectations for the time nontraditional branded and generic competition and what would be your interest level and steadily.
Yes.
Yes, Daniel so thanks, a question and thanks for joining the call. So.
Again, we expect.
Always has that there will be additional competition.
This new OXXO and market.
We model that when we were evaluating the business almost a year and a half ago and whether that first.
Point of entry by a competitor will be a branded product or generic we'll we'll see how that goes but again back to my initial comment our focus is on making sure that nor can nasal spray in particular is made available to the the very patience and customers who need it going.
Forward.
In terms of the the settlement question.
We are not actively in the engaged in the really I'm not going to comment on that.
We'll see how things go and again, we just reiterate our our belief in our confidence and the overall strength to the patent portfolio.
If I ask you can ask one more question.
87, nine or nine can you update us on the progress there and talk about the next milestone for that program.
So the next milestone from a development fresh perspective is the phase three.
Which we completed enrollment on.
And as you're aware that product is being procured by BARDA.
Under emergency use.
Authorization and.
In.
In concert with the 1.5 billion dollar contract that we put in place a number of years ago.
Thank you.
Thank you. Our next question comes in a line of boards from Cowen Your question. Please.
Great. Congrats on the progress just a few more questions on our can I'm just curious what fraction of the drug is actually used for opioid overdose versus what fraction. Just ended expiring kind of do you have a sense of how much the drug in the community is passed its expiration date spoken to see if there is kind of.
Recurring model, just replacing the expired stuff.
Yes, Boris Thanks, Thanks for the question Thanks for joining the call.
We really don't have any visibility into the quantity of nor can that's in the market and how long. It's I mean, we know that there's a two year shelf life.
I mean, our expectation is this product is being procured and used.
As it should be.
Yes.
So you don't have a sense of what fraction actually end up being used for opioid rehearsal over that we don't we don't.
Gotcha, maybe another question on our can how is the co prescribing legislature impacting sales and is it more of a you viewed as a recurring demand going forward or kind of a one time bolus on a state by state basis.
Yes. Good question. So what our experience has shown in the nine states that have adopted co prescription is that there is an initial spike.
In the first let's say 30 to 60 days following adoption of co prescription and whereas there might be.
And that's why could be six to eight times, the pre adoption run rate for prescriptions being filled.
Then after roughly a 45 to 60 day period, it normalizes back down to a run rate does maybe three to five times the pre adoption rate. So there is an additional spike but it normalizes at a multiple of what the pre adoption rate was.
Great and my last question also on our Ken just curious with the overdoses being more linked to fentanyl going forward for you developing in next formulation in arcana higher dose and if so can you comment on that development.
Yes, so as we stated on the call we are.
Developing a now must seen product.
That is intended to be longer acting and release formula.
And that's made or is that a nasal alison.
No it's not it's not for us that mid.
Going back to your initial question, we know that the four milligram nasal deliberate form of naloxone.
Is the effective dose.
And we and the fact that we have two of those devices in one carton.
Divides.
Individuals with the ability to deliver eight milligrams if needed.
Gotcha, Okay, great. Thanks for taking my question.
Sure.
You are next question comes from the line.
Key Nikkei from chart in your question. Please.
Yes, Bob just a question on all the 2020 expectation for for Anthrax sales.
Sounds like upon.
Hearing you correctly, maybe the.
All of how much product.
Has been deliberate is really due to your operations and Bob.
Be orders for the product from the government is that fair way to do that.
No. Okay first of all thanks for the question thanks for joining the call.
I think what we have learned over 2019.
Is the fact that.
A these 799 is a development stage candidates were three months into.
Establishing a routine.
That is more similar to biothrax in terms of the supply chain in operationalizing that supply chain.
We have essentially with the exercising of that initial option by BARDA. We have 12 months to deliver the 10 million doses. They were exercise and we continue to feel confident in our ability to deliver those 10 million doses between now and the middle of 2020.
We're working through.
Again this this transition with both.
Slowing down Biothrax and ramping up maybe seven nine to meet that ongoing demand for those two anthrax vaccine candidates.
Okay.
Yes. Thanks.
It's always up.
Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press Star then one our next question comes from the line of Lisa Springer from singular research. Your question. Please.
Thank you I apologize if this was already covered because I was little bit late to the call, but where do you stand in terms of negotiated the new contract for a Roxy document.
Yes, Lisa thanks for joining the call so.
We expect the that potentially an RFP for Roxy.
We'll be out in the coming months and we will respond to it as we always do with with opportunities like that but I'm not going to predict the exact timing of that.
Okay.
And then.
Also do you still it's still expect could be releasing some preliminary data from the seasonal flu therapeutic at the year end.
I don't believe so Lisa.
I think that was ever in the cards, but.
Let me check with the team and we'll get back to you.
Okay I thought at one point. It was said that there was going to be some data available by year end plenty 19th.
Hi, This is Adam Havey, So I think our plan as I was always to complete the phase two this year and haven't into phase two meeting with the FDA and published the data. So I think we've completed enrollment doing the data analysis. So if you will hear us talk about food quite a bit in 2020, and actually more we'll be talking about and that the analyst.
You may as well.
Okay. Good thank you.
Thank you and this does conclude the question to answer section of today's program I'd like to hand, the program back to Bob Burrows for any further remarks.
Thank you, Jonathan and without ladies and gentlemen, we now conclude the call. Thank you for your participation. Please note an archived version of the webcast of today's call will be available later today and accessible to the company website. Thank you all again Im and look forward to speaking with all of you and future Goodbye.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.