Q3 2022 Emergent BioSolutions Inc Earnings Call

November 8, 2022

Good day and thank you for standing by welcome to the emergent Bio solutions third quarter 2022 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 to ask a question during the session.

You will need to press star one one on your telephone please be advised that today's conference is being recorded I would now like to.

And the conference over to the company.

As is customary today's call is open to all participants on the call is being recorded and is copyrighted by emergent bio solutions. In addition to today's press release. There is a series of slides accompanying this webcast available to all webcast participants.

Slides three and four during today's call, we may make projections and other forward looking statements related to our business future events. Our prospects reports future performance. These forward looking statements are based on our current intentions beliefs and expectations regarding future events.

Any forward looking statements speak only as of the date of 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 well as the risk factors identified in our periodic reports filed with the SEC when evaluating our forward looking statements.

On today's call. We may also 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 the tables found in today's press release regarding our use of adjusted net income adjusted EBITDA and adjusted gross margin and the reconciliations between our GAAP financial measures and these non-GAAP financial measures.

Turning to slide five the agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company and Rich Lindahl, Chief Financial Officer, who will speak to the financials for <unk> 2022, which will also discuss the updated 2022 guidance. This will be followed by Q&A session, where additional number that they got to get the leadership team are present and available as needed.

Finally for the benefit of those who may be listening to replay of the webcast. This call was held and recorded on November eight 2022. Since then emergent may have made announcements related to topics discussed during today's call some of that.

Introduction I would now like to turn the call over to Bob for his comments begin with slide seven Bob.

Thank you Bob and good afternoon, and thank you all for joining the call today, we will provide an update on our business, including significant recent developments as well as thoughts on the road ahead for emergent let.

Let me first begin with our medical countermeasures business, which as you all know is a cornerstone of our strategy.

We continue to work closely with the U S government to deliver medical countermeasures focused on dangerous public health threats in line with our country's biodefense priorities.

Case in point last month, we shipped the first doses of Tim Baxter to the U S government under the BARDA procurement contract. Our second delivery is scheduled to occur in the next few weeks.

This product continues to expand our smallpox franchise and further diversifies, our medical countermeasure portfolio.

I'm incredibly proud of the team for the seamless integration and management of the <unk> acquisition.

The collaborative work that's been accomplished in support of integrating its products into our portfolio, including being able to ship product to our customer in short order. Following the closing of the acquisition has been remarkable.

We also continue to work with the FDA on the BLA filing for <unk> 79 or nine.

We've responded to additional information requests and as a result, we now anticipate a producer date of July of 2023.

Meanwhile, we're continuing to deliver 87, and then on to the strategic.

Dziedzic National stockpile under the existing 18 month procurement contract, thereby ensuring product availability, while the FDA reviews, our BLA submission.

Next let me talk about our smallpox vaccine program and the status of the government's contract option for <unk> 2000.

We're currently in discussions with the department of Health and Human services, and specifically the administration for strategic preparedness and response.

Regarding the fiscal year 2022 procurement options and.

In prior years, the government has exercised its procurement option in Q2 or Q3, and we expected the same timing for this year.

Reflecting the government's failure to exercise the option to date, we're adjusting our 2022 forecast for ATM, which rich will discuss in his remarks shortly.

The delayed exercise of the 2022 procurement option for AECOM is disappointing, but let's keep the following in mind. Since 2017 immersion has worked closely with the U S government to help execute its strategy to protect all Americans from smallpox.

Today that would suggest that more than 330 million doses of vaccine would be needed.

By the government's own admission, we're not there yet and.

And supported the government strategy, we entered into a 10 year contract in 2019 to provide the government with a vaccine that will be domestically produced consistent with one hundreds of millions of dollars invested in onshoring of manufacturing process.

Also a vaccine that was administered in a single dose and has a 16 year shelf life and importantly, a vaccine that can be cost effectively stockpile and deployed in the volumes necessary.

And also addresses the threat posed by an X or intentional smallpox event.

Based on public statements from across the administration, including testimony by the assistant Secretary of preparedness and response before the Senate Health Committee in September we believe the government remains committed to its preparedness strategy. We also believe it doesn't wish to lose access to domestic.

<unk> capability and supply of our key counter measure in the nation's biodefense strategy.

Importantly, we stand ready to deliver doses immediately upon the governments exercising of the option.

Next let me speak about our commercial products business. The continued need for greater access to naloxone, including Narcan nasal spray has grown as the opioid epidemic continues to worsen.

Our year long commitment to increasing awareness, improving affordability and driving access to naloxone continues to benefit millions of patients with.

We continue to see significant demand for naloxone from the public interest market with the demand for Narcan nasal spray, specifically being more durable than we originally expected.

Based on the feedback we've received the infrastructure, we've established for Narcan with state and local governments has been an important element in their efforts to address the opioid crisis more broadly.

Conversely in the retail pharmacy market, where most states have automatic generic substitution unsurprisingly, we're seeing lower demand for branded narcan nasal spray and expect that to continue in 2023.

Given the ongoing devastation caused by the opioid crisis and consistent with our mission to protect and enhance slides. Our principal aim here is to continue putting resources towards expanding awareness of and access to naloxone consistent with the market demand.

Also within commercial products business, the steady return of global travel as a resulted in a stronger than anticipated demand for our typhoid vaccine <unk>.

We're also in the process of ramping up the supply chain for our cholera vaccine that score for the U S market and introducing it into select European markets. We're targeting early Q1 of 2023 to make supply available.

Let's now turn to our <unk> business.

As an example at our Rockville drug manufacturing.

Product manufacturing facility, where.

Or preparing to open our newly expanded site later this year with a new state of the art Groninger Integra fill finish line. These state of the art investments along with our investments in quality controls helped strengthen our <unk> manufacturing capabilities, a growing area of focus in demand within <unk>.

The <unk> market.

Our efforts to stabilize operations and bring new capacity online will be a multiyear process to be clear and warm that holds meaningful long term strategic value to our business.

On the product development front. In addition to progress toward licensure of 87 nine we're pleased to have fully enrolled our primary phase III trial for our chikungunya vaccine candidate and expect to have top line data in the first half of next year.

Additionally, our team presented data at the American Society of tropical Medicine, and Hygiene Conference last week from a study evaluating the safety of our <unk> thousand smallpox vaccine and previously vaccinated healthy volunteers with more than 3000 vaccinations administered the <unk>.

Study demonstrated that serious adverse events were uncommon and no cases of pericarditis or myocarditis were reported.

And lastly, we're pleased to have announced the initiation of our phase one study for our Lassa fever vaccine candidate, which is co funded by <unk> the coalition for epidemic preparedness innovations.

Finally, I want to update you on our commitment to further strengthen our culture of quality and compliance improved the effectiveness of our quality management system and further embed controls into our processes.

Through our recently realigned quality and compliance organizations, we have moved swiftly to address observations made by the FDA in the warning letter issued in August related to our Camden facility.

We've begun to regularly updating the FDA on our progress and continue to operate the facility at a reduced capacity as we make necessary improvements.

We understand that confidence in our ability to meet our regulatory commitments as we continue to ensure the safety and efficacy of our products.

Is paramount to convergence success, we're committed to building upon in some cases rebuilding that confidence one dose at a time.

These activities will take time to implement but are critical to the important work, we do every day to protect and enhance life our.

Our employees embrace and take pride in maintaining high standards of product quality and product safety that everyone's number one priority at emergence.

In closing as we look ahead, we remain focused on the following priorities.

First we want to continue to be a dependable partner to our clients, including the U S government and deliver on their strategic objectives and the commitments we have agreed upon.

Second we're investing in our people our facilities quality systems and culture. So we have the necessary skills and tools to compete long term.

Third we are actively evaluating opportunities for growth through strategic partnerships and acquisitions as evidenced by our deals on Tim Baxter and our Bongo and advancing our internal development pipeline to address diseases like chikungunya and lassa fever.

Fourth we're sharing our experience for more than 20 years, helping governments prepare for public health threats and advocating for proper funding and improved planning and response to the public doesn't end up paying for the cost of complacency down the road and finally, we continue to be guided by financial discipline.

As we execute our strategy of building leadership positions in select segments of the growing public health threat market.

This includes carefully managing our opex and Capex investments, while we seek to create value for our shareholders.

I remain confident in emergence ability to deliver results for our patients customers and shareholders by focusing on these critical priorities.

The important role we play in niche public health markets is more critical than ever given the ongoing emergencies, we face such as COVID-19.

Monkey pox.

And the biologic weapons threat posed by Russian aggression in Ukraine, and the need to be better prepared for future threats.

With that I'll turn it over to rich to review, our financial performance for the quarter and I look forward to answering your questions rich.

Thank you Bob Good afternoon, everyone. We appreciate you joining the call.

Please turn to slide 10, as I begin my commentary today.

Overall, our financial performance in the third quarter was mixed.

The positive side total revenues were in line with our quarterly guidance as our product segment continued to deliver solid contributions and the CMO services business was a modest top line contributor.

Late in the third quarter, we closed on the <unk> acquisition and in October began shipping doses to the U S government.

We also further advanced several programs in our R&D portfolio.

At the same time, our profitability measures remained pressured primarily by Underutilization of our CMO capacity as we continue to re baseline that part of our business.

And incremental costs, we are incurring to address the Camden warning letter and further strengthen our systems processes and culture of quality and compliance in our manufacturing plants and across the enterprise.

Looking ahead as.

As Bob mentioned, we are adjusting our forecast to reduce the expected full year contribution of our AGM 2000 smallpox vaccine.

While we remain in active discussion with the U S government as of today. This year's auction exercise under our 10 year procurement contract has not yet occurred.

So the reasons Bob shared we believe the U S government remains committed to its prior smallpox preparedness strategy and the maintenance of the domestic production capability that has been established.

However, since the timing of the exercise is uncertain, we are adjusting our ATM guidance to remove the revenues associated with the option exercise.

Accordingly, I would note that this change was partially offset by the inclusion of <unk> revenues and our updated forecast.

With that let's turn to the numbers.

As indicated on slides 11, and 12 highlights in the third quarter include total revenues of $240 million.

Decrease over the prior year, driven primarily by lower Narcan and ATM sales.

As expected our key profitability measures declined versus the prior year with adjusted EBITDA of negative $15 million and adjusted net loss of $63 million.

Diving, a little deeper into quarterly revenues important items include continued steadiness in our anthrax vaccine franchise with sales of $24 million.

Higher than the prior year due to timing of deliveries of 87 909 to the U S government strategic national stockpile.

<unk> 2000, smallpox vaccine generated sales of $49 million driven by non U S customers and reflecting the growing attention to smallpox around the globe.

Our nasal naloxone franchise realized sales of $88 million, demonstrating the continuing durability of narcan and addressing the ongoing opioid epidemic, especially in the U S public interest segment.

And combined senior most service and lease revenues were $36 million slightly lower than the prior year as we continue work primarily for existing customers.

Turning to operating expenses cost of product sales in the quarter was $86 million lower than the prior year due to the lower volume of product sales.

Cost of CMO was $63 million significantly lower than the prior year due to reduced production across the <unk> network, partially offset by higher costs at the Camden site, resulting from additional investments in quality enhancement and improvement initiatives largely in response to the FDA warning letter issued on August 10.

R&D expense of $39 million lower than the prior year, reflecting our move to cease development on Covid related therapeutics and redirect development resources to other infectious disease focus programs and.

In SG&A spend of $80 million in line with the prior year.

With that let's move to slide 13, I'll review segment performance during the quarter.

In the products segment revenues were $186 million, which while down significantly from the prior year also refract reflect strong ex U S sales of <unk> solid narcan deliveries and continuing contributions from our anthrax franchise.

GAAP and adjusted gross margin was $101 million or 54% both decreases over the prior year, reflecting the impact of reduced sales volume and product mix.

As for the services segment revenues were $36 million a decrease from the prior year as the Rebase lining continues and adjusted gross margin was negative $27 million an.

An improvement from the prior year, principally reflecting the reversal of lease revenues in 2021 that did not recur in the current period.

Slide 14 presents a review of segment performance for the nine month periods revenues and adjusted gross margin gross margin. Both showed solid gains in the product segment, whereas the services segment saw year over year declines in both measures.

Moving on to slide 15, I'll touch on select balance sheet and cash flow highlights.

We ended the third quarter with $241 million in cash and available available revolver capacity of $361 million.

Our net debt position was $821 million and net.

Average was two four times.

Regarding our credit agreement as you are aware of this portion of our capital structure matures in October 2023.

We have initiated discussions with our lenders to refinance the related debt outstanding and extend the maturity of the facility.

We plan to complete these actions before the end of this year.

Because the maturity is now less than 12 months away under.

Under the accounting rules, we will be putting some additional disclosure to this effect in our 10-Q filings.

We will provide further updates as appropriate.

During the third quarter, our operating cash flow was negative and capital expenditures were $28 million, we did not repurchase any more shares pursuant to the authorization approved by the board of directors last year.

Cumulatively as of September 30, we have spent $188 million to repurchase four 4 million shares. This authorization terminates later this week.

Please turn to slide 16, and 17 for a review of our updated 2022 forecast and associated assumptions.

We are updating our guidance for the full year 2022 to reflect revenue reductions related to <unk> offset by the inclusion of <unk> and an increased nasal naloxone forecast.

We have provided the following updated ranges in today's press release.

Total revenues of 105 going into $1 $1 billion anthrax vaccine sales of $260 million to $275 million.

<unk> 2000 sales of $63 million.

For the first time, we're including <unk> sales forecast of $110 million to $115 million.

Nasal naloxone product sales of $350 million to $365 million.

Other product sales plus <unk> revenues of 167% to $172 million.

<unk> revenues of $100 million to $110 million.

Adjusted net loss of 100 million to $70 million adjusted.

Adjusted EBITDA of zero to $30 million.

Gross margin of 33% to 34% and.

And adjusted gross margin of 39% to 41%, which reflects the add back of the $58 million onetime inventory step up related to the <unk> acquisition.

This full year 2022 forecast reflects the following key considerations.

Anthrax vaccines reflect anticipated deliveries of 870 909 in <unk> and the impact of the FDA warning letter on certain batches fill finished at the Camden site.

<unk> 2000 reflects the removal of revenues associated with the next option exercise under the existing 10 year BARDA procurement contract as the timing is now uncertain.

<unk> reflects the initial revenues related to deliveries under the existing 10 year BARDA procurement contract and following our September 2022 acquisition from <unk> of the worldwide rights to this product.

Nathan Naloxone products, primarily reflects continued strong demand in the public interest channel in the U S as well as continuing demand in Canada.

And <unk> reflects the continued rebase lining of the services business overall, and specifically the impact of reduced production output from our Camden facility.

To conclude please turn to slide 18 for some summary comments.

Our results in the third quarter reflect a mix of strong performance in certain core areas of our business.

Our products business.

Offset by ongoing challenges in the services business.

And despite the near term uncertainty associated with the ATM contract option exercise, we remain confident in the impact we're having on patients and customers focused on health security and pandemic preparedness.

That completes my prepared remarks, and I'll now turn the call over to the operator, so that we can start the question and answer session operator.

As a reminder to ask a question you will need to press star one one on your telephone.

Please standby or compile the Q&A roster.

Our first question comes from the line of Jessica Fye from Jpmorgan. Your line is open.

Great. Thanks for taking my question.

Sure.

On a cam I know you've removed it from this option from guidance. This year, how would you handicap the possibility of an order by year end and do you think the government might just be skipping this year's option or do you think theres risk they may not exercise future option.

And then second on the.

Anthrax vaccines.

Can you elaborate on the timeline you would project to resolving the warning letter.

Any reason to think that this could impact the.

<unk> share of AB seven 909.

No.

Yes, Thanks, Josh I appreciate that.

Questions and participating on the call.

So let me address the <unk> question first.

So it's really difficult.

To handicap.

Likelihood of working through.

And having conversations with.

With HHS by the end of the year, obviously, where is both rich and I have acknowledged we're in active discussions with them.

We hope to have resolution soon but it's really.

Difficult to predict I think it's important to remember.

A couple of things first of all the government has.

Reaffirm the importance of preparing for a smallpox events.

John .

Both to us as well as public through statements.

Where they've expressed their commitment to the preparedness strategy.

Including protection against smallpox.

As I included in my prepared remarks.

It's pretty obvious that AGM 2000 provides the government with a vaccine that is.

Easy to administer with a single dose.

Domestically manufactured cost effectively stockpiles.

And even by the governments own recent words.

Including.

Yes.

The assistant Secretary.

In response, they referred to they can Miss the first line of defense to Vaccinate Americans in the event of an external for intentional release in smallpox.

We know it's a priority for them Jeff.

We hope to.

Resolved soon.

But it's really too early to speculate I think we will be updating folks as soon as we make progress.

And hopefully that's in short order.

On the on the 80 799 front.

Okay.

The warning letter.

Implication just to be clear.

With Camden Camden is one of the sites, where we used to fill and finish a sub 99. In addition to a third party.

Contract service provider. So we don't see significant risk right now in terms of the supply chain for AB 700 909.

Think the.

The extension of the Paducah date.

For AVP 799 was primarily driven by some additional analysis on the data that we provided to the FDA and now that we've provided that to them. They simply like more time to digest and understand the analysis that we performed and gave to them.

Alright, thank you.

One moment for our next question.

Okay.

Our next question comes from the line of Kay Mackay from Chardan. Your line is open.

Great Bob.

Is there any pushback in the negotiations by the government for the Ecu.

Sure.

Yes, okay. Thanks for the question.

And I wouldn't characterize it as pushback okay.

And clearly they have stated.

Need and reemphasize the priority of protecting American civilians from the potential threat of a smallpox.

It's now a matter of.

Timing and allocation of funding to support their continued procurement, but now.

We are advancing those discussions as quickly as we can and we will keep you updated as we as we.

Make progress and have appropriate updates.

Okay.

That said the O U S sales for <unk> are encouraging.

Should we think of this.

As onetime in nature or could this lead to recurring sales of this magnitude are greater going forward.

Yes.

As you know we've had over the last.

Several years interest from international governments.

Continue there.

Stockpiling strategies.

Much like the U S government has but at a smaller scale to protect.

Segment of their civilian population and military personnel from the threat of <unk>.

Smallpox. So we expect that to continue I think the bump in 2022 was primarily the result of.

Foreign governments.

<unk>.

Access to <unk> for potential use.

As it relates to the monkey pox threat.

And while <unk> is not indicated or approved for use against Monte pockets really.

Government decision based on there, they're a risk benefit analysis.

So is that something that is sticky going forward it could decay.

It's really too early to tell based on the state of the Monkey pox threat.

Okay, Great and then finally, a calm down.

You got the warning letter I'm sure it's spelled out very specific.

The efficiencies in other areas of concern.

Sure.

How would you characterize how far along you are.

Towards Remediated those defined concern.

Yes, it's a great question and thanks for asking it.

We are doing a lot in Camden across.

Well across the site as well as other sites to strengthen our.

Profile and culture of quality and compliance and while there is a lot more work to do there will be ongoing I'm really pleased with the fact that.

As an example, there are tangible.

Benefits and proof that we're making progress, including things like harmonizing, our quality management systems across the enterprise.

Was implemented to the credit of <unk> <unk> and her team.

Executive level governments reviews on a periodic basis across can Venezuela as the other manufacturing sites.

Supplementing our quality and compliance teams with additional resources and extra and.

And we have a very disciplined and robust.

Our process to measure and monitor progress against all of the work streams that were incorporated into our warning letter response to the FDA.

I acknowledged in my prepared remarks, we are now in a regular cadence of updating the FTE and progress so theres some very simple.

Quantitative measures that we're following and tracking.

And then there are some more simple qualitative measures.

Including the fact that yes.

This week as an example.

We have initiated a integrity and action week across our network and the enterprise, which will really reinforcing the importance of prioritizing behaviors supportive of a culture of quality and compliance that we aspire to achieve so overall, we're making good progress.

Long road.

Long Road ahead.

Im pleased and satisfied with what we're doing so far.

Bob.

Capacity constraints and the lifting of that is that.

More dependent on you.

You folks feeling you've got things corrected the way you want or is there still some.

Resolution of the warning letter by the FDA.

Kind of Green lights increased capacity utilization I.

I think as we talked about on the last call Ken. It's a great question first of all but as we've talked about in the call.

Last time in the last quarter.

We're taking a very disciplined measured approach to turning up and.

And growing youre looking to our opportunities in the <unk> area in general, but specifically in Camden, which was there.

The subject of the warning letter so our growth. If you will is going to be measured and determined by our internal quality and compliance profile in progress not based on opportunities that we see because the opportunities are are out there today, we're not acting upon them.

Because we're again focused on making sure that we.

Thoroughly address all of the issues that were identified by the FDA and that we made commitments to our response to the to the FDA warning letter. So it's more of an internal measure.

Metric K as opposed to <unk>.

Kind of FDA mandated actions.

Got it thanks.

Thank you.

A moment for our next question.

Our next question comes from the lineup Boris <unk> from Cowen Your line is open.

Hey, Thanks for taking my question. This is Nick on for Boris.

I have a quick question on Narcan.

<unk> mentioned previously today that there are some jurisdictions that have been.

Matt it's over it's a narcan.

Over to a generic from Dr. Kam is this a process that occurs over time or is this like an automatic process, where they quickly within a couple of months take over the generic fully or is it like one to two year thing and then we'll continue to see this impact over the next couple of years and then for the jurisdictions that don't have this autumn.

Switch are you seeing decreased usage of Narcan or is this still like.

Narcan is still kind of taking control over the generic yet.

Thanks, Nick appreciate the question so no what we expected to see and what we in fact have seen.

Beginning.

In December of last year, and certainly in January of this year with the formation of the generic market and the entrance of the generic product is in the retail market. So the retail pharmacies.

There is on that almost an automatic switch and all.

All states and jurisdictions at the pharmacy level.

Two automatic switching to generic product in preference over the branded products. So that's already happened.

The comment was really around in the public interest market. So in the state and local and even some federal jurisdictions, where we have a very active commercial support program.

Working with states and local governments for procurement of Narcan, that's where we see us holding onto Cigna.

Significantly greater market share than in that retail space and we've said from day, one that when the generic market was formed we expected the retail market to switch to generic.

Kind of 90% market share, 10% branded ratio of right away. However, in the public interest market space, we expect it to maintain the majority of the market share which in fact, we have.

Hopefully that helps.

Yes definitely thank you and then just a second question on <unk> and Baxter.

As the currently delivered product is that product that was that was previously stockpiled Buckeye marriage or is this additional drug that's been manufactured by emergent.

Yeah, Great question. So this was product.

That was manufactured under <unk> ownership.

Whose title was transferred as part of our acquisition.

And my comment was really in my prepared remarks and acknowledged net net debt.

Both the merchant team and that <unk> team did a remarkable job at number one in getting the product to where it needed to be in order to ship it to BARDA under the procurement contract as quickly as we did so it was up.

A lot of work done under.

<unk>.

Behind the scenes to make this integration to work effectively and kudos to both organizations to work collaboratively to make it happen.

Great. Thanks for taking my questions.

Sure.

One moment for our next question.

Our next question comes from the line of Christopher Sakai from singular Research. Your line is open.

Hi.

The scene.

Sure Chris.

I was wondering if you can give us some flavor for the mix of growth going forward given the significant contribution this quarter, but long term.

We are expecting good both in terms of topline and Bottomline from the private exchange.

Yes, Sam Thanks for the question so.

Under the current contract with.

Uh huh.

With BARDA that by the way still sits with <unk> is going through our innovation process.

The base period of performance.

We expect to deliver on those procurement deliveries and calendar year 2022, we'll talk more about future deliveries.

The contract is part of our 2023 guidance when we talk about that ahead of the JP Morgan Conference in early January .

Okay.

I live in the call probably I missed it.

Sure.

You said that for <unk>.

One 909, the Purdue is now July 23.

This this this has this is the first time.

Adam.

Got it.

Are the police are there it has been changed.

The state.

So.

I'm going to call my colleague Adam is closer to whether this was the first producer date, given or an amendment producer date, Adam you want to weigh in.

I'm, sorry, Bob I was on mute.

Yes.

And it's all correct me here, but the original date was earlier I think this is a recent change so when we had submitted it based on some questions and some feedback. This has been modified so this was not the original.

Okay.

And the <unk>.

Finally.

On the share repurchase program is there any authorization left.

If I can.

Find us.

Yes, rich you want to field that one I think you addressed it in part in your prepared remarks that maybe.

Reiterate.

The comment.

Yes. So the original authorization was for a total of $250 million against which we have purchased $188 million.

And that authorization is expiring later this week.

Okay perfect. Thank you so much.

Thank you.

Minor Thats star one one for questions.

For next question.

Our next question comes from the line of Brandon Folkes from Cantor Your line is open.

Alright, Thanks for taking my question just one for me can you maybe just give us some context about what youre seeing in terms of narcan pricing in the public interest channel. Please.

Please.

<unk> guidance, that's very good but just how is knocking pricing holding up in the public interest channel. Thank you.

Yes, thanks, Brendan so.

As we've discussed and acknowledged.

The price per carton in the public interest market.

Has been.

Under some pressure given the entrance of the generic product.

It's holding its own from a market share perspective on units.

Okay.

But on the price per carton, it's clearly under pressure not so much Brandon as what we've experienced in the retail market.

Where it has been under significant pressure, but clearly there is there is pressure in the public interest market.

Haven't really disclosed what our average selling price is.

But as you will remember prior to the formation of the generic market.

Ken was discounted already 40% disc.

Discount to the average wholesale selling price of $125 in the retail market, making at $75 per dose. So it has gone down from that number.

But we're not really disclosing what new price point is.

Thanks, Bob actually one follow up if I may.

We are proud to report from.

HHS needing to address that.

We get national stockpile requirement that inventory risks.

Can you just talk about your take on that and maybe what youre seeing in Washington in terms of.

Committing more spending to address those risks versus maybe cutting back on some legacy holdings in the strategic national stockpile. Thank you.

Yeah, Great question Brandon So.

The <unk> report I think highlighted.

Couple of inconsistency is.

In terms of is the government following through and executing on the commitments.

Prior to maintain.

And replenish stockpiles of critically needed medical countermeasure is consistent with their strategies and some cases they have in some cases, they fallen a bit short I think they pointed to <unk>.

Lending on an annual basis as being a critical element in supporting element.

The need to again.

Follow through on those.

Strategic initiatives, whether they be anthrax vaccine, our smallpox vaccine related so I think that was a helpful reminder of that if the government sets a strategy that has to have the appropriate congressionally approved funding to support the execution of those strategies and as we've.

About now when you look at the.

Critical.

Roll that these public private partnerships play.

In terms of following through and executing strategies related to public health threat preparedness.

<unk> is at the center of the priority.

Those private public partnerships work when there is clearly transparent communications there is certainty and Theres collaboration and has worked well for us over the years.

The fact that the.

The government has not followed through yet on their exercise of of <unk> 2000.

As I said in my prepared remarks, it's disappointing, but I'm confident that we'll work through and then in the in the near term and be able to report good outcomes here going forward.

Alright, Thank you for taking my question.

Thank you.

And I'm not showing any further questions in the queue I would like to turn the call back over to Robert Burrows for any closing remarks.

Thank you Victor and with that ladies and gentlemen, we now conclude the call. Thank you for your participation. Please note an archived version of today's webcast as well as a PDF version of the slides used during todays call will be available later today and accessible through the investors landing page on the company website.

Once again, and we look forward to speaking with all of you in the future.

Right.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

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Ask a question during the session Healy to press Star one one on your telephone. Please be advised that today's conference is being recorded I would now like to hand, the conference over to the company.

Thank you Victor and good afternoon, everyone. My name is Bob Burrows, VP and IR for the company. Thank you for joining US today as we discuss the operational and financial results for third quarter 2022 as is customary today's call is open to all participants on the call is being recorded and is copyrighted by emergent bio solutions.

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

Turning to slides three and four during today's call, we may make projections and other forward looking statements related to our business future events. Our prospects reports future performance. These forward looking statements are based on our current intentions beliefs and expectations regarding future events.

Any forward looking statements speak only as of the date of this conference call and except as required by law, we do not undertake to update any forward looking statement to reflect new information events or circumstances investors should consider this cautionary statement as well as the risk factors identified in our periodic reports filed with the SEC when evaluating our forward looking statements.

During today's call. We may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding emergence operating performance.

Turning to slide five the agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company and Rich Lindahl, Chief Financial Officer, who will speak to the financials for three Q2 thousand 22, which will also discuss the updated 2022 guidance. This will be followed by Q&A session, where additional number that the leadership team are present and available as needed.

Let me first begin with our medical countermeasures business, which as you. All know is a cornerstone of our strategy. We continue to work closely with the U S government to deliver medical countermeasures focused on dangerous public health threats in line with our country's biodefense priorities.

Case in point last month, we shipped the first doses of Tim Baxter to the U S government under the BARDA procurement contract. Our second delivery is scheduled to occur in the next few weeks.

This product continues to expand our smallpox franchise and further diversifies, our medical countermeasure portfolio.

I'm incredibly proud of the team for the seamless integration and management of the <unk> acquisition.

The collaborative work that has been accomplished in support of integrating its products into our portfolio, including being able to ship product to our customer in short order. Following the closing of the acquisition has been remarkable.

We also continue to work with the FDA on the BLA filing for AB seven 909, we've responded to additional information requests and as a result, we now anticipate a <unk> date of July of 2023.

Meanwhile, we're continuing to deliver 87 and aligned to the strategic national stockpile under the existing 18 month procurement contract, thereby ensuring product availability, while the FDA reviews, our BLA submission.

Next let me talk about our smallpox vaccine program and the status of the government's contract option for <unk> 2000.

We're currently in discussions with the department of Health and Human services and specifically the administration for strategic preparedness and response regarding the fiscal year 2022 procurement option in.

In prior years, the government has exercised its procurement option in Q2 or Q3, and we expected the same timing for this year.

Reflecting the government's failure to exercise the option to date, we're adjusting our 2022 forecast for ATM, which rich will discuss in his remarks shortly.

The delayed exercise of the 2022 procurement oxygen for ATM is disappointing, but let's keep the following in mind. Since 2017 immersion has worked closely with the U S government to help execute its strategy to protect all Americans from smallpox.

Today that would suggest that more than 330 million doses of vaccine will be needed.

By the government's own admission we're not there yet in.

In support of the government strategy, we entered into a 10 year contract in 2019 to provide the government with a vaccine that will be domestically produced consistent with one hundreds of millions of dollars invested in onshoring of manufacturing process.

Also a vaccine that was administered in a single dose and has a 16 year shelf life and importantly, a vaccine that can be cost effectively stockpile and deployed in the volumes necessary.

Also addresses the threat posed by an accidental or intentional smallpox event.

<unk> capability and supply of our key counter measure in the nation's biodefense strategy.

Importantly, we stand ready to deliver doses immediately upon the governments exercising of the option.

Next let me speak about our commercial products business. The continued need for greater access to naloxone, including Narcan nasal spray has grown as the opioid epidemic continues to worsen our year long commitment to increasing awareness, improving affordability and driving access.

<unk> continues to benefit millions of patients.

We continue to see significant demand for naloxone from the public interest market with the demand for Narcan nasal spray, specifically being more durable than we originally expected.

Just on the feedback we've received the infrastructure, we've established for Narcan with state and local governments has been an important element in their efforts to address the opioid crisis more broadly.

Also within commercial products business. The steady return of global travel has resulted in a stronger than anticipated demand for our typhoid vaccine the booties.

We're also in the process of ramping up the supply chain for our cholera vaccine <unk> score for the U S market and introducing it into select European markets. We're targeting early Q1 of 2023 to make supply available.

Let's now turn to our <unk> business.

We continue to be focused on stabilizing and enhancing our <unk> capabilities across the entire network of manufacturing sites. This includes operationalize the investments made during the last few years as an example at our Rockville drug manufacturing drug product manufacturing facility, we are preparing to open our <unk>.

Newly expanded site later this year with a new state of the art Groninger Integra fill finish line. These state of the art investments along with our investments in quality controls helped strengthen our <unk> manufacturing capabilities a growing area.

Focus in demand within the <unk> market.

Our efforts to stabilize operations and bring new capacity online will be a multiyear process to be clear and warm that holds meaningful long term strategic values to our business.

On the product development front. In addition to progress toward licensure of AB seven nine we're pleased to have fully enrolled our primary phase III trial for our chikungunya vaccine candidate and expect to have top line data in the first half of next year.

With more than 3000 vaccinations administered the study demonstrated that serious adverse events were uncommon and no cases of pericarditis or myocarditis were reported.

And lastly, we're pleased to have announced the initiation of our phase one study for our Lassa fever vaccine candidate, which is co funded by Cfe the coalition for epidemic preparedness innovations.

Through our recently realigned quality and compliance organizations, we can boost swiftly to address observations made by the FDA in the warning letter issued in August related to our Camden facility.

We've begun to regularly updating the FDA on our progress and continue to operate the facility at a reduced capacity as we make necessary improvements.

We understand that confidence in our ability to meet our regulatory commitments as we continue to ensure the safety and efficacy of our products.

Is paramount to convergence success, we're committed to building upon in some cases rebuilding that confidence one dose at a time.

These activities will take time to implement but are critical to the important work, we do every day to protect and enhance life.

Our employees embrace and take pride in maintaining high standards of product quality and product safety that everyone's number one priority at emergence.

In closing as we look ahead, we remain focused on the following priorities.

First we want to continue to be a dependable partner to our clients, including the U S government and deliver on their strategic objectives and the commitments we have agreed upon.

Second we're investing in our people our facilities quality systems and culture. So we have the necessary skills and tools to compete long term.

And finally, we continue to be guided by financial discipline as we execute our strategy of building leadership positions in select segments of the growing public health threat market.

This includes carefully managing our opex and Capex investments, while we seek to create value for our shareholders.

I remain confident in emergence ability to deliver results for our patients customers and shareholders by focusing on these critical priorities.

And the important role we play in niche public health markets is more critical than ever given the ongoing emergencies, we face such as COVID-19.

<unk> and <unk>.

And the biologic weapons threat posed by Russian aggression in Ukraine, and the need to be better prepared for future threats with that I'll turn it over to rich to review our financial performance for the quarter and I look forward to answering your questions rich.

Thank you Bob Good afternoon, everyone. We appreciate you joining the call.

Please turn to slide 10, as I begin my commentary today.

Overall, our financial performance in the third quarter was mixed on.

On the positive side total revenues were in line with our quarterly guidance as our product segment continued to deliver solid contributions in the <unk> services business was a modest top line contributor.

Late in the third quarter, we closed on the <unk> acquisition and in October began shipping doses to the U S government.

We also further advanced several programs in our R&D portfolio.

At the same time, our profitability measures remained pressured primarily by Underutilization of our CMO capacity as we continue to re baseline that part of our business.

Looking ahead as Bob mentioned, we are adjusting our forecast to reduce the expected full year contribution of our AGM 2000 smallpox vaccine.

While we remain in active discussion with the U S government as of today. This year's auction exercise under our 10 year procurement contract has not yet occurred.

For the reasons, Bob shared we believe the U S government remains committed to its prior smallpox preparedness strategy and the maintenance of the domestic production capability that has been established.

However, since the timing of the exercise is uncertain, we are adjusting our ATM guidance to remove the revenues associated with the option exercise.

Importantly, I would note that this change was partially offset by the inclusion of <unk> revenues and our updated forecast.

With that let's turn to the numbers.

As indicated on slides 11, and 12 highlights in the third quarter include total revenues of $240 million a decrease over the prior year, driven primarily by lower Narcan and ATM sales.

As expected our key profitability measures declined versus the prior year with adjusted EBITDA of negative $15 million and adjusted net loss of $63 million.

Diving, a little deeper into quarterly revenues important items include continued steadiness in our anthrax vaccine franchise with sales of $24 million.

Higher than the prior year due to timing of deliveries of 87 909 to the U S government strategic national stockpile.

<unk> 2000, smallpox vaccine generated sales of $49 million driven by non U S customers and reflecting the growing attention to smallpox around the globe.

And combined senior most service and lease revenues were $36 million slightly lower than the prior year as we continue work primarily for existing customers.

Turning to operating expenses cost of product sales in the quarter was $86 million lower than the prior year due to the lower volume of product sales.

Cost of CMO was $63 million <unk>.

Significantly lower than the prior year due to reduced production across the CDMA network, partially offset by higher costs at the Camden site, resulting from additional investments in quality enhancement and improvement initiatives largely in response to the FDA warning letter issued on August 10.

In SG&A spend of $80 million in line with the prior year.

With that let's move to slide 13, and review segment performance during the quarter.

In the product segment revenues were $186 million, which while down significantly from the prior year also refract reflect strong ex U S sales of <unk> solid narcan deliveries and continuing contributions from our anthrax franchise.

And adjusted gross margin was $101 million or 54% both decreases over the prior year, reflecting the impact of reduced sales volume and product mix.

As for the services segment revenues were $36 million a decrease from the prior year as the Rebase lining continues and adjusted gross margin was negative $27 million an improvement from the prior year, principally reflecting the reversal of lease revenues in 2021, but did not recur in the current period.

Slide 14 presents a review of segment performance for the nine months periods revenues and adjusted gross margin gross margin both showed solid gains in the products segment.

The services segment saw year over year declines in both measures.

Moving on to slide 15, I'll touch on select balance sheet and cash flow highlights.

We ended the third quarter with $241 million in cash and available available revolver capacity of $361 million.

Our net debt position was $821 million and net leverage was two four times.

Regarding our credit agreement as you are aware of this portion of our capital structure matures in October 2023.

We have initiated discussions with our lenders to refinance the related debt outstanding and extend the maturity of the facility.

We plan to complete these actions before the end of this year.

Because the maturity is now less than 12 months away under the accounting rules, we will be putting some additional disclosure to this effect in our 10-Q filing.

We will provide further updates as appropriate.

Cumulatively as of September 30, we have spent $188 million to repurchase four 4 million shares. This authorization terminates later this week.

Please turn to slide 16, and 17 for a review of our updated 2022 forecast and associated assumptions.

We are updating our guidance for the full year 2022 to reflect revenue reductions related to <unk> offset by the inclusion of <unk> and an increase in nasal naloxone forecast.

We have provided the following updated ranges in today's press release.

Total revenues of $1 5 billion to $1 1 billion.

And for <unk> vaccine sales of $260 million to $275 million <unk>.

<unk> 2000 sales of $63 million for.

For the first time, we're including <unk> sales forecast of $110 million to $115 million.

Nasal naloxone product sales of $350 million to $365 million.

Other product sales plus <unk> revenues of 167% to 172 million seed.

<unk> revenues of $100 million to $110 million.

Adjusted net loss of 100 million to $70 million adjusted.

Adjusted EBITDA of zero to $30 million.

Gross margin of 33% to 34% and adjusted gross margin of 39% to 41%, which reflects the add back of the $58 million onetime inventory step up related to the <unk> acquisition.

This full year 2022 forecast reflects the following key considerations.

Anthrax vaccines, reflecting anticipated deliveries of 870 909 in <unk> and the impact of the FDA warning letter on certain batches fill finished at the Camden site.

<unk> 2000 reflects the removal of revenues associated with the next option exercise under the existing 10 year BARDA procurement contract as the timing is now uncertain.

Nathan Naloxone products, primarily reflects continued strong demand in the public interest channel in the U S as well as continuing demand in Canada.

And <unk> reflects the continued rebase lining of the services business overall, and specifically the impact of reduced production output from the Camden facility.

To conclude please turn to slide 18 for some summary comments.

Our results in the third quarter reflect a mix of strong performance in certain core areas of our business.

Our products business offset by ongoing challenges in the services business.

That completes my prepared remarks, and I'll now turn the call over to the operator, so that we can start the question and answer session operator.

As a reminder to ask a question you will need to press star one one on your telephone.

Please standby or compile the Q&A roster.

Our first question comes from the line of Jessica Fye from Jpmorgan. Your line is open.

Great. Thanks for taking my question.

Yes.

On ATM any removed it from this option from guidance. This year, how would you handicap the possibility of an order by year end and do you think the government might just be skipping this year's option or do you think theres risk they might not exercised future option.

Then.

<unk>.

The anthrax vaccines.

Can you elaborate on the timeline you would project to resolving the warning letter.

Any reason to think that this could impact the.

Full licensure of 87 900 I think.

Yes.

Yes, Thanks, Josh I appreciate that.

The questions and participating on the call. So let me address the ATM question first.

It's really difficult to hear.

Handicap.

Likelihood of those working through.

And having conversations with.

With HHS by the end of the year, obviously, there is both rich and I have acknowledged we're in active discussions with them.

We hope to have resolution soon but it's really.

Difficult to predict I think it's important to remember.

A couple of things first of all the government has.

Reaffirm the importance of preparing for a smallpox events.

<unk>.

Both to us as well as publicly through statements.

Where they've expressed their commitment to the preparedness strategy.

Including protection against smallpox.

As I included in my prepared remarks.

It's pretty obvious that <unk> 2000, <unk> provides the government with a vaccine that is.

Easy to administer with a single dose.

Domestically manufactured cost effectively stockpiles.

And even by the governments own recent words.

Including.

The assistant Secretary.

To response, they referred to <unk> as the first line of defense to Vaccinate Americans in the event of an accidental or intentional releasing smallpox. So we know it's a priority for them Jess.

We hope to.

Resolve this soon.

But it's really too early to speculate I think we will be updating folks as soon as we make progress.

And hopefully that's in short order.

On the on the 80 799 front.

Okay.

The warning letter implication just to be clear.

With Camden Camden is one of the sites, where we used to fill and finish a sub.

<unk> 99 in addition to a third party.

Contract service provider. So we don't see significant risk right now in terms of the supply chain for AB 700 909.

Think the.

The extension of the producer date.

Alright, thank you.

One moment for our next question.

Okay.

Our next question comes from the line of Kay Mackay from Chardan. Your line is open.

Great Bob.

Is there any pushback in the negotiations by the government for the ATM option extension.

Yes, okay. Thanks for the question.

I wouldn't characterize it as pushback okay.

And clearly they have stated.

<unk> and reemphasize the priority of protecting American civilians from the potential threat of a smallpox.

It's now a matter of.

Timing and allocation of funding to support their continued procurement but.

We are advancing those discussions as quickly as we can and we will keep you updated as we as we.

Make progress and have appropriate updates.

Okay.

That said the O U S sales for <unk> are encouraging.

Should we think of this.

As onetime in nature or could this lead to recurring sales of this magnitude are greater going forward.

Yes.

As you know we've had over the last.

Several years interest from international governments.

Continue there.

Stockpiling strategies.

Much like the U S government has but at a smaller scale to protect.

Segment of their civilian population and military personnel from the threat of <unk>.

Smallpox. So we expect that to continue I think the bump in 2022 was primarily the result of.

Foreign governments.

Acquiring.

Access to <unk> for potential use.

As it relates to the monkey pox threat.

And while <unk> is not indicated or approved for use against Monte pockets really a government decision based on there they're a risk benefit analysis.

So is that something a sticky going forward it could decay.

It's really too early to tell based on the state of the Monkey pox threat.

Okay, Great and then finally, a calm down.

You got the warning letter I'm sure it's spelled out very specific.

The efficiencies in other areas of concern.

Sure.

How would you characterize how far along you are.

Towards Remediated those defined concern.

Yes, it's a great question and thanks for asking it.

We are doing a lot in Camden across.

Well across the site as well as other sites to strengthen our profile and culture of quality and compliance and while there is a lot more work to do there will be ongoing I'm really pleased with the fact that as.

As an example, there are tangible.

Benefits and proof that we're making progress, including things like harmonizing, our quality management systems across the enterprise.

<unk> implemented to the credit of <unk> <unk> and her team.

Executive level governments reviews on a periodic basis across Camden as well as the other manufacturing sites we have.

Supplementing our quality and compliance teams with additional resources and expertise.

And we have a very disciplined and robust.

Our process to measure and monitor progress against all of the work streams that were incorporated into our warning letter response to the FDA.

I acknowledged in my prepared remarks, we are now in a regular cadence of updating the FTE and progress so theres some very simple.

Quantitative measures that we're following and tracking.

And then there are some more simple qualitative measures.

Including the fact that yes.

This week as example.

We've initiated a integrity and action week across our network and the enterprise and which were really reinforcing the importance of prioritizing behaviors supportive of a culture of quality and compliance that we aspire to achieve so overall, we're making good progress.

Long road.

Long Road ahead.

Im pleased and satisfied with what we're doing so far.

Bob.

Capacity constrained.

The lifting of that is that more dependent on you.

You folks feeling you've got things corrected the way you want or is there still some.

Resolution of the warning letter by the FDA.

Kind of Green lights increased capacity utilization I think as we talked about in the last call. Ken. It's a great question first of all but as we've talked about in the call.

Last time in the last quarter now, we're taking a very disciplined measured approach to turning up.

And growing youre looking through our opportunities in the <unk> area in general, but specifically in Camden, which was there.

Because we're again focused on making sure that we.

Thoroughly address all of the issues that were identified by the FDA and that we made commitments to our response to the to the FDA warning letter. So it's more of an internal measured.

The metric K as opposed to <unk>.

The FDA mandated actions.

Got it thanks.

Thank you one moment for our next question.

Our next question comes from the line of Boris <unk> from Cowen Your line is open.

Hey, Thanks for taking my question. This is Nick on for Boris.

I have a quick question on Narcan.

Mentioned previously today that there are some jurisdictions that have automatics over its narcan.

Over to a generic from Narcan is this a process that occurs over time or is this like an automatic process, where they quickly within a couple of months take over the generic fully or is it like one to two year thing and then we'll continue to see this impact over the next couple of years and then for the jurisdictions that don't have this automatic.

Switch are you seeing decreased usage of Narcan or is this still like.

Narcan is still kind of taking control over the generic yet.

Thanks, Nick appreciate the question so what we expected to see and what we in fact have seen.

Beginning now.

In December of last year, and certainly in January of this year with the formation of the generic market and the and trends of the generic product is in the retail market. So the retail pharmacies.

There is on that almost an automatic switch and all.

All states and jurisdictions at the pharmacy level.

Two automatic switching to generic product in preference over the branded products. So that's already happened.

My comment was really around in the public interest market. So in the state and local and even some federal jurisdictions, where we have a very active commercial support program.

Working with states and local governments for procurement of Narcan, that's where we see us holding onto Cigna.

Significantly greater market share in that retail space and we've said from day, one that when the generic market was formed and expected the retail market to switch to generic.

90% market share, 10% branded ratio of right away. However, in the public interest market space, we expect it to maintain the majority of the market share which in fact, we have.

Hopefully that helps.

Yes definitely thank you and then just a second question on Baxter.

As the currently delivered product that product that was revenue that was previously stockpiled Buckeye marriage or is this additional drug that's been manufactured by a merger.

Yeah, Great question. So this was product.

That was manufactured under <unk> ownership.

Whose title was transferred as part of our acquisition.

And my comment was really in my prepared remarks and acknowledged net net debt.

A lot of work done under.

<unk>.

Behind the scenes to make this integration to work effectively and kudos to both organizations to work collaboratively to make it happen.

Great. Thanks for taking my questions.

Sure.

One moment for next question.

Our next question comes from the line of Christopher Sakai from singular Research. Your line is open.

Hi.

I've seen.

Sure Chris.

I was wondering if you can give us some flavor for <unk> growth going forward given the significant contribution this quarter, but long term how are you.

We are expecting growth both in terms of topline and Bottomline trauma.

<unk>.

Yes, Sam Thanks for the question so.

Under the current contract with.

With BARDA that by the way still sits with <unk> is going through our innovation process.

The base period of performance.

We expect to deliver on those procurement deliveries in calendar year 2022, we will talk more about future deliveries.

The contract is part of our 2023 guidance when we talk about that ahead of the JP Morgan Conference in early January .

Okay.

I live in the call probably I missed it.

Sure.

You said that for <unk>.

One 909, the Purdue is now July 23.

This this this has this is the first time.

Adam.

Got it.

The parties have been it has been changed.

Yes, David.

So I'm going to call my colleague Adam He's closer to whether this was the first producer date, given or an amended producer date, Adam you want to weigh in.

I'm, sorry, Bob I was on mute.

Yes.

So correct me here, but the original date was earlier I think this is a recent change so when we had submitted it based on some questions and some feedback. This has been modified so this was not the original.

Okay.

And the <unk>.

Finally.

On the share repurchase program is there any authorization left.

If I can.

Find us.

Yes, rich you want to field that one I think you addressed it in part in your prepared remarks that maybe.

Reiterate.

The comment.

Yeah. So the original authorization was for a total of $250 million against which we have purchased $188 million.

And that authorization is expiring later this week.

Okay perfect. Thank you so much.

Thank you.

Minor Thats star one one for questions.

For next question.

Our next question comes from the line of Brandon Folkes from Cantor Your line is open.

Alright, Thanks for taking my question just one for me can you maybe just give us some context about what youre seeing in terms of narcan pricing in the public interest channel.

We are raising guidance, that's very good but just how is knocking pricing holding up in that public interest channel. Thank you.

Yes, thanks, Brendan so.

As we've discussed and acknowledged.

The price per carton in the public interest market.

It has been.

Under some pressure given the entrance of the generic product.

It's holding its own from a market share perspective on units.

Okay.

But on the.

The price per carton, it's clearly under pressure not so much Brandon as what we've experienced in the retail market.

Where it has been under significant pressure, but clearly there is there is pressure on the public interest market, we havent really disclosed what our average selling price is.

But as you will remember prior to the formation of the generic market.

Ken was discounted already 40%.

A discount to the average wholesale selling price of $125 in the retail market, making at $75 per dose. So it has gone down from that number.

But we're not really disclosing what new price point is.

Thanks, Bob actually one follow up if I may.

We are proud to report from <unk> about.

HHS needing to address the strategic national stockpile requirement that inventory risks.

Can you just talk about your take on that and maybe what commentary.

In Washington in terms of.

Committing more spending to address those risks versus maybe cutting back on some legacy holding in the strategic national stockpile. Thank you.

Yeah, Great question Brandon So.

The <unk> report I think highlighted.

Couple of inconsistency is.

In terms of is that government following through and executing on our commitments.

Prior to maintain.

And replenish stockpiles of critically needed medical countermeasures consistent with their strategies and some cases they have in some cases, they fallen a bit short I think they pointed to <unk>.

<unk> on an annual basis as being a critical element in supporting element.

The need to again.

Follow through on those.

Strategic initiatives, whether they be anthrax vaccine, our smallpox vaccine related so I think the <unk> report was a helpful reminder of that if the government sets a strategy that has to have the appropriate congressionally approved funding to support the execution of those strategies and as we've.

About now when you look at the.

The critical.

Roll that these public private partnerships play.

In terms of following through and executing strategies related to public health threat preparedness.

<unk> is at the center of the priority.

Those private public partnerships work when there is clearly transparent communications there is certainty and Theres collaboration and has worked well for us over the years.

The fact that the.

The government has not followed through yet on their exercise of of <unk> 2000.

As I said in my prepared remarks, it's disappointing, but I'm confident that we'll work through and then in the in the near term and be able to report good outcomes here going forward.

Alright, Thank you for taking my question.

Thank you.

And im not showing any further questions in the queue I would like to turn the call back over to Robert Burrows for any closing remarks.

Once again, and we look forward to speaking with all of you in the future.

Right.

This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

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