Q2 2024 Emergent BioSolutions Inc Earnings Call

August 6, 2024

Unknown Executive: Investors should consider this cautionary statement as well as the risk factors identified in Emergent's periodic reports filed with the SEC when evaluating its forward-looking statements. During today's call, Emergent may also discuss certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Emergent's emergency operating performance. Please refer to the tables found in today's press release.

Coronary statement as well as the risk factors identified in emergence periodic reports filed with the SEC when evaluating their forward looking statements.

During today's call emergent may also discuss certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding emerge.

Emergent <unk> operating performance.

Speaker Change: Please refer to the tables found in today's press release, turning to slide four at the agenda for today's call will include Joe Papa President and Chief Executive Officer, who will comment on the multiyear plan update key product highlights and future catalyst rich Lindahl, EVP and Chief Financial Officer, who will speak to the current state of the company financials.

Unknown Executive: Turning to slide four, the agenda for today's call will include Joe Papa, President and Chief Executive Officer, who will comment on the multi-year plan update, key product highlights, and future catalysts. Rich Lindahl, EVP and Chief Financial Officer, who will speak to the current state of the company, financials for the second quarter, as well as 2024 full year guidance, including guidance for the third quarter. This will be followed by Q&A. Finally, and for the benefit of those who will be listening to the replay of this webcast, this call was held and recorded on August 6, 2024. Since then, Emergent may have made announcements related to topics discussed during today's call. And with that, I would now like to turn the call over to Joe Papa for opening remarks. Joe? Hello, everyone.

For second quarter as well as 2020 for full year guidance, including guidance for the third quarter.

Speaker Change: This will be followed by Q&A finally, and for the benefit of those who will be listening to the replay of this webcast. This call was held and recorded on August six 2024.

Joe Papa: Since then emergent may have made announcements related to topics discussed during today's call and with that I would now like to turn the call over to Joe Papa opening remarks, Joe.

Joseph Papa: Hello, everyone, and thank you for joining us today to discuss our second quarter results and our 2024 Financial Outlook. I am joined today by Richard Lindahl, our Chief Financial Officer.

Joseph Papa: Following my opening remarks, Richard will detail our quarter two performance, provide guidance for the third quarter, as well as our full year guidance. I will then review our future growth drivers, providing summary thoughts on our multi-year plan, and then we'll open it up for Q&A. First, I would like to start by thanking our emerging team members who have been hard at work executing on our multi-year plan to stabilize, turn around, and transform the business.

Joseph Papa: It has been a great team effort in the first half of this year, and specifically our quarter two efforts enabled us to exceed our quarter two revenue guidance without a significant ACAM 2000 shipment that we were able to recognize in early July. I appreciate the dedication of our team, especially their support for our mission and our values.

Joseph Papa: Turning to slide six, I'd like to review our progress against our multi-year plan focused on stabilizing emergents. Based on the first half performance, we are raising the midpoint of our 2024 revenue and adjusted EBITDA guidance, which Rich will walk through in great detail. While there are some one-time items in Q2 numbers, we made great progress against our plan, including making a significant reduction to our debt, as well as operating performance and working capital improvements.

Joseph Papa: We focused on our product's core business drivers and delivered for our customers and patients. We created a customer-focused, leaner, more flexible organization, and we streamlined our site network. And finally, leveraging our product and internal capabilities to support future growth. Turning to slide 7, I'd like to call out several activities that have been critical during the initial stabilization phase of our multi-year plan. We successfully amended our credit agreement, expanding the runway to execute on our operational plan.

Joseph Papa: Following our May 1st restructuring announcement and after the transaction with Bora closes for our Kansas site this quarter, combined, we will have reduced our workforce by approximately 50% since January of 2024. We will also have a total of approximately $110 million in expense savings from these combined efforts. In July, we resolved our contract dispute with Janssen and received a $50 million payment from the settlement.

Joseph Papa: We successfully completed an FDA inspection at the Kansas facility in July, which is a full GMP surveillance inspection of our biologic products. This underscores our commitment to ensuring the highest standards of patient safety and product quality. I thank the team again for all these great efforts.

Joseph Papa: Now on slide eight, I walk through a series of strategic actions taken in the second quarter to reduce our total quantum of debt this year. In our previous earnings calls, we discussed divesting certain products and assets. To date, we have achieved a $75 million divestment of RSDL to serve pharmaceuticals and $30 million from the sale of our Canvas facility to Bora Pharmaceuticals, which is expected to close this month and will result in a 350% headcount reduction.

Joseph Papa: The net proceeds from these two transactions are expected to more than satisfy the junior capital rates requirement under Emergent's amended credit facility. We also sold an empty, underutilized warehouse at our Canton site for $7 million. We received $50 million from Johnson following our contract dispute settlement, and we expect $10 million in the third quarter related to the Bavarian-Nordic milestone and anticipate another $20 million by year-end. Additionally, we have generated operational cash flow following our May business update and have improved working capital to contribute to debt pay-down. Rich will have more comments on that.

Joseph Papa: Turning to our product business slide on slide nine, we continue to make progress delivering on our commitments. I'll start with the key highlights around Narcan nasal spray. We are continuing to invest in the expansion of Narcan nasal spray, which is more crucial than ever as the opioid crisis continues. Last year, more than 100,000 lives were lost to a drug overdose, of which nearly eight in 10 were caused by opioids or synthetic opioids. This is an unacceptable number of American lives lost every year.

Joe Papa: Well number of American lives lost every year as the leading naloxone product. We are determined to increase access points of Narcan to help get the lifesaving product into the hands of more people and in Canada with the opioid related deaths continue to increase we are working closely with health, Canada to distribute convenience kits containing archaea, which are.

Joseph Papa: As a leading naloxone product, we are determined to increase access to Narcan to help get the life-saving product into the hands of more people. And in Canada, where opioid-related deaths continue to increase, we are working closely with Health Canada to distribute convenience kits containing Narcan, which are critical to first responders and people in a position to help save a life. We also believe our efforts to broaden access and increase awareness are contributing to the impact we're seeing across several hard-hit areas. For example, States like New Jersey reported 1,007 suspected drug deaths in the first six months of 2024. But that's down 26% from last year.

Joseph Papa: And Maine had an expected 12% decrease in opioid-related overdose deaths. Well, it's not promising to see the number of opioid deaths decreasing. Unfortunately, opioid deaths still remain high. Therefore, we believe that expanding access to Narcan is needed. Annually, we expect to deliver NARCAN to about 18,000 individual patients across the U.S. and Canada through our NARCAN Direct Program. We strive to serve as the best-in-class provider to all of our public interest customers.

Joe Papa: Critical to first responders and people in a position to help save the life.

Joe Papa: We also believe our efforts to broaden access and increase awareness are contributing to the impact we're seeing across several hard hit areas for example.

Speaker Change: <unk>, New Jersey reported 1007 suspected drug versus the first six months of 2024, but that's down 26% from last year and made at <unk>.

Joe Papa: <unk>, 12% decrease in opioid related overdose deaths.

Speaker Change: What's up with promising to see the number of opioid deaths decreasing Unfortunately opioid deaths still remain high we believe that expanding access to narcan is needed.

Speaker Change: Annually, we expect to deliver narcan to about 18000 individual patients across the U S and Canada through our <unk> direct program, we strive to serve as the best in class provider to all of our public interest customers. In fact, we announced just earlier today, a new distribution center in Nevada. This.

Joseph Papa: In fact, we announced just earlier today a new distribution center in Nevada. This new facility allows Emergent to further meet the increased demand for Naloxone by now having faster, more efficient delivery for NARCAN to all of our customers. We continue to tackle the many barriers to increased consumer access by offering online availability through Amazon and pharmacy websites, where you're creating an easy access avenue for people who have an easy way to get it delivered right at their doorstep.

Speaker Change: New facility allows the merchant to further meet the increased demand for naloxone by now having faster more efficient delivery for narcan to all of our customers.

Speaker Change: We continue to tackle the many barriers to increase consumer access by offering online availability through Amazon and pharmacy websites.

Joseph Papa: To date, we have distributed boxes of Narcan to 32,000 retailers. OTC status for NARCIN has also enabled our business-to-business and workplace efforts. We have secured five major businesses that have ordered NARCIN, including United States Gypsum, Coppers, and leading financial services companies, just to name a few. We launched NARCAN.com Workplace, which enables businesses to order NARCAN and have it shipped to their offices and worksite. We continue to engage with new partners like the National Safety Council to educate and reach businesses about the importance of workplace safety.

Joseph Papa: And just last month, The American Medical Association shared their support to put nalaxone next to defibrillators in public places. To pull this thread together, we understand that approximately 1,700 lives are saved by defibrillators each year, and the device costs about $18 on average.

Joseph Papa: We also believe putting nalaxone, which is a fraction of the defibrillator costs, alongside this life-saving measure could help tens of thousands of lives lost to opioid overdose each year. Our country is facing a public health crisis that has bipartisan support, and continuous federal and state funding helps increase access to Narcan for first responders. Just last week, a study in the Lancet reported that fatal opioid overdoses contributed to a lower American life expectancy by nearly a year.

Joseph Papa: The burden of these deaths and life expectancy and years of life lost is due to the high burden among younger adults. We clearly have more work to do here. In a new survey we conducted, it was found that younger generations aged 18 to 34 and those with a high school education were less likely to be aware that nalaxone can reverse the effects of fentanyl, putting the already vulnerable population at further risk.

Joseph Papa: This includes over $250 million in contract modifications with the U.S. government for our MCM business, including a $30 million order to supply Syphensis, $99.9 million to supply ACAM2000, and a new contract option totaling $122.9 million to supply the U.S. government of Big and Bad. We believe that these milestones reaffirm our place as a trusted biodefense partner and demonstrate the strength of our total portfolio. Contracts also indicate continued runway for potential future procurement. In fact, we expect to receive approval from the FDA on our SBLA to expand ACAM for MPOPS by the end of the quarter.

Joseph Papa: We have a strong line of sight to future procurement levels for our existing portfolio and look forward to pursuing additional opportunities for contract awards in the second half of the year. Next on slide 11 is a look at our streamlined footprint of sites in Lansing, Michigan, and Winnipeg. This is driven by our previously announced decision to scale back our bioservices work while maintaining our ability to manufacture and deliver our products to customers.

Joseph Papa: We are winding down our efforts at the Bayview and Rockville sites, further reducing our manufacturing footprint and our working capital. As mentioned, we sold our empty facility in Canton, Massachusetts, for $7 million, which is demonstrative of our efforts to explore strategic alternatives for sites that are not linked to our core capabilities. In summary, on slide 12, we have a diverse portfolio of products linked to our manufacturing network that we expect will continue to meet demand both in the U.S. and abroad. I'll now hand it over to Rich to review our financials.

Richard Lindahl: Thanks, Joe. And good afternoon, everyone.

Richard Lindahl: We appreciate you joining us on the call today. As Jo has just discussed, we're making significant progress against our near-term priorities of stabilizing the business and strengthening our financial foundation. Our report today reflects several key proof points. We delivered solid second-quarter results with continued momentum for Narcan, shipments of Anthrax, and an international sale of ACAM2000. We received over $250 million in contract modifications to continue supplying Siphendis, ACAM2000, Vig, and Bat to the U.S. government. We announced a confidential settlement agreement with Janssen Pharmaceuticals which resulted in a $50 million payment to Emergent on July 31st.

Richard Lindahl: We announced $112 million in asset sales. We entered into a definitive agreement to divest our Baltimore Camden facility to Bora Pharmaceuticals for $30 million, sold an underutilized warehouse at our Canton facility for $7 million, and sold our chemical decontamination product, RSDL, to CERB Pharmaceuticals for $75 million. These transactions, once fully completed, will satisfy the capital raise requirement in our amended credit facility. Furthermore, we received notification that the EMA accepted the Bavarian Nordic submission for the Chikungunya vaccine, which was part of the travel health divestiture in 2023.

Richard Lindahl: This acceptance triggers the first milestone payment of $10 million, which we expect to receive in the third quarter. We'll go into further detail on the balance sheet, but the influx of cash from these items is expected to provide approximately $200 million that can be used for debt repayment this year. Since the beginning of 2023, we have also announced actions to reduce annual expenses by roughly a quarter billion dollars. This reinforces our commitment to improving our overall financial foundation and setting the business up for stronger profitability and shareholder value going forward. And finally, we are again raising the midpoints of our revenue and adjusted EBITDA guidance for 2024.

Speaker Change: Yeah.

Richard Lindahl: Turning to our results, we had another strong quarter with revenue above our previously provided guidance. As indicated on slide 14, highlights for the second quarter include total revenues of $255 million, a decrease versus the prior year due to the timing of the U.S. government order for ACAMP. Total segment adjusted gross margin of 26% versus 43% in the prior year, primarily due to the Janssen Settlement Agreement, the write-down of related assets, and other one-time charges.

Speaker Change: Turning to our results we had another strong quarter with revenue above our previously provided guidance.

Speaker Change: As indicated on slide 14 highlights in the second quarter include total revenues of $255 million a decrease versus the prior year due to timing of the U S government order for ATM.

Speaker Change: Total segment adjusted gross margin of 26% versus 43% in the prior year, primarily due to the Jensen settlement agreement the write down of related assets and other one time charges.

Richard Lindahl: An adjusted EBITDA in the quarter of negative $10 million, a reduction versus the prior year due to the timing of U.S. government procurements and approximately $28 million of one-time charges. Turning to slide 15, you'll note there are a number of non-recurring items in our results for the quarter, many of which are added back as seen in the non-GAAP reconciliation table. A common theme here is that, as part of our efforts to stabilize, turn around, and transform the business, we have taken several decisions that improve our future profitability but result in short-term charges.

Speaker Change: And adjusted EBITDA in the quarter of negative $10 million a reduction versus the prior year due to the timing of U S government procurements and approximately $28 million of one time charges.

Speaker Change: Turning to slide 15, you will note there are a number of nonrecurring items in our results for the quarter many of which are added back as seen in the non-GAAP reconciliation tables.

Speaker Change: A common theme here is that as part of our efforts to stabilize turnaround and transform the business. We have taken several decisions that improve our future profitability, but result in short term charges.

Richard Lindahl: In particular, our actions to reduce our site footprint and significantly deemphasize our bioservices business required us to evaluate the related asset values, which in turn led to the impairments and write-offs shown on the slide. We also resolved several legacy issues and can now move ahead with the uncertainty of those matters behind us.

Speaker Change: In particular, our actions to reduce our site footprint and significantly deemphasize, our <unk> business required us to evaluate the related asset values, which in turn led to the impairments and write offs shown on the slide.

Speaker Change: We also resolved several legacy issues and now move ahead with the uncertainty of those matters behind us.

Richard Lindahl: Diving deeper into quarterly revenues, important items on slide 16 include Narcan sales of $120 million, which reflects continued robust demand for opioid overdose reversal products. Compared to the prior year, we had a slightly unfavorable price-volume mix in the U.S. public interest channel, partially offset by higher sales of over-the-counter Narcan. Anthrax MCM sales of $39 million, an increase of $18 million versus the prior year, driven by the timing of syphendis and biothrax sales. Smallpox MCM sales of $18 million, representing the international order of ACAM2000 in the second quarter. The decline year-over-year is due to the timing of the U.S. government procurement for ACAM2000, which we delivered in early July.

Speaker Change: Diving deeper into quarterly revenues important items on slide 16 include Narcan sales of $120 million, which reflects continued robust demand for our opioid overdose reversal product.

Richard Lindahl: Other product sales of $7 million, a decrease of $13 million versus the prior year, primarily related to BAT and RSDL sales timing, and total bioservices revenues of $65 million, which includes the $50 million attributed to the arbitration settlement from Yancey. The remaining bioservices revenue in the quarter was primarily related to our CAMBIT facility. Turning to operating expenses on slide 17, the cost of commercial product sales in the quarter was $53 million, influenced by the continued strong sales of Narcan.

Speaker Change: Compared to the prior year, we had a slightly unfavorable price volume mix in the U S public interest channel, partially offset by higher sales of over the counter narcan.

Speaker Change: Anthrax MCM sales of $39 million, an increase of $18 million versus the prior year, driven by timing of <unk> and <unk> sales.

Speaker Change: Smallpox MCM sales of $18 million, representing the international order of <unk> 2000 in the second quarter the.

Speaker Change: The decline year over year is due to the timing of the U S government procurement for <unk> 2000, which we delivered in early July.

Speaker Change: Other product sales of $7 million, a decrease of $13 million versus the prior year, primarily related to bat and <unk> sales timing.

Speaker Change: In total bio services revenues of $65 million, which includes the $50 million attributed to the arbitration settlement from Janssen.

Speaker Change: The remaining <unk> revenue in the quarter was primarily related to our Camden facility.

Speaker Change: Turning to operating expenses on slide 17 cost of commercial product sales in the quarter was $53 million influenced by the continued strong sales of Narcan.

Richard Lindahl: Cost of MCM product sales in the quarter was $31 million, driven by sales of Suchendis and Biofract. Cost of bioservices, up $212 million reflecting the asset write-down related to the Janssen Settlement Agreement offset by a decrease in overhead costs at our Maryland facility, are in the expense of $33 million, which includes project termination costs and restructuring costs associated with the May 1st announcement.

Speaker Change: Cost of MCM product sales in the quarter was $31 million driven by sales of <unk>.

Speaker Change: Cost of bio services of $212 million, reflecting the asset write down related to the <unk> settlement agreement offset by a decrease in overhead costs at our Maryland facilities.

Speaker Change: R&D expense of $33 million, which includes project termination costs and restructuring costs associated with the may 1st announcement outside of those items. Our core R&D costs are currently focused on the funded Ivanka development program.

Richard Lindahl: Outside of those items, our core R&D costs are currently focused on the funded Ibanga Development Program, and SG&A spend of $86 million, including restructuring costs offset by lower employee and marketing-related expenses. With that, let's move to slide 18 and review segment performance during the quarter. In the commercial segment, revenues were $120 million, comprised entirely of NARCAN, and segment adjusted gross margin was $67 million, or 56%. In the NCM segment, revenues were $62 million, driven primarily by Antfrax and an international sale of ACAM2000. Segment Adjusted Gross Margin was $35 million or $55 million. As for the services segment, revenues were $65 million, and segment adjusted gross margin was negative $36 million.

Speaker Change: In SG&A spend of $86 million, including restructuring costs offset by lower employee and marketing related expenses.

Speaker Change: With that let's move to slide 18, and review segment performance during the quarter.

Speaker Change: In the commercial segment revenues were $120 million comprised entirely of Narcan and segment adjusted gross margin was $67 million or 56%.

Speaker Change: And the MCM segment revenues were $63 million, driven primarily by anthrax and an international sale of eight <unk> 2000 <unk>.

Speaker Change: Segment, adjusted gross margin was $35 million or 55%.

Speaker Change: As for the services segment revenues were $65 million in segment adjusted gross margin was negative $36 million.

Richard Lindahl: I'll now take a moment to summarize our 2024 year-to-date performance, as shown on slide 19. First half revenue was $555 million, up 11% versus the prior year, driven by MCM and Bioservices. Year-to-date adjusted gross margin was $213 million, or 39%, reflecting our prior efforts to reduce costs, as well as MCM sales timing. First-half EBITDA was $57 million, an improvement of roughly $100 million versus the prior year. Turning to slide 20, we ended the second quarter with $70 million in cash and $83 million of total liquidity, including availability under our revolving credit facility.

Speaker Change: I'll now take a moment to summarize our 2024 year to date performance as shown on slide 19.

Speaker Change: First half revenue was $555 million up 11% versus prior year, driven by MCM and bio services.

Speaker Change: Year to date, adjusted gross margin was $213 million or 39%, reflecting our prior efforts to reduce costs as well as MCM sales timing and first half EBITDA was $57 million, an improvement of roughly $100 million versus the prior year.

Speaker Change: Turning to slide 20, we ended the second quarter was $70 million in cash and $83 million of total liquidity, including availability under our revolving credit facility.

Richard Lindahl: And as of June 30, 2024, our net debt position was $794 million, a roughly $40 million reduction versus the first quarter. Networking capital was $380 million at June 30, a $53 million improvement versus the prior quarter, and $71 million lower than the second quarter of 2023. We remain focused on continuing to optimize our working capital position to free up capital for debt repayment. Turning to 2024 guidance, please see slide 21. While our efforts to improve operating performance will not happen immediately, we are making significant progress.

Speaker Change: And as of June 32024, our net debt position was $794 million, a roughly $40 million reduction versus the first quarter.

Speaker Change: Net working capital was $380 million at June $30 million to $53 million improvement versus the prior quarter and $71 million lower than the second quarter of 2023.

Speaker Change: We remain focused on continuing to optimize our working capital position to free up capital for debt repayment.

Speaker Change: Turning into 2024 guidance, please see slide 21.

Speaker Change: While our efforts to improve operating performance will not happen immediately we are making significant progress.

Richard Lindahl: As announced in our press release this evening, we're updating our outlook for the full year 2024, for both revenue and profitability. As we did in May, we are raising the midpoint of our revenue and Adjusted EBITDA guide. For your guidance, the midpoint is as follows, and the details are shown on slide 29 in the appendix. Total revenues of $1.05 billion to $1.125 billion, and commercial product sales of $450 to $480 million. We continue to see strong demand for Narcan in the U.S. public interest, Canadian, and OTC channels.

Speaker Change: As announced in our press release. This evening, we're updating our outlook for the full year 2024.

Speaker Change: For both revenue and profitability as we did in May we are raising the midpoint of our revenue and adjusted EBITDA guidance.

Speaker Change: Full year guidance is as follows in the details are shown on slide 29 in the appendix.

Speaker Change: Total revenues of $1 5 billion to $1 $1 billion to $5 billion.

Speaker Change: Commercial product sales of $450 million to $480 million, we continue to see strong demand for narcan in the U S public interest Canadian and OTC channels.

Richard Lindahl: Having said that, we're taking a more conservative view on 2024, given developments in the competitive environment. MCM product sales are $455 to $490 million. Since our last report on May 1st, we received the $250 million award for Siphendis, Acam, Bat, and Vig.

Speaker Change: Having said that we're taking a more conservative view on 2024, given developments in the competitive environment.

Speaker Change: MCM product sales of $455 million to $490 million.

Speaker Change: Since our last report on May 1st we received the $250 million award for <unk>, a can bat and vig. We now have a large portion of our MCM revenue committed for 2024.

Joseph Papa: We now have a large portion of our MCM revenue committed for 2024. Services Segment revenue of $120 to $130 million, an increase versus our prior guidance due to the impact of the Yansen Settlement. Shifting to profitability metrics, we're forecasting adjusted EBITDA of $140 to $180 million. The increase at the midpoint reflects the improved visibility of our MCM revenues, as well as our continued focus on operating expenses. It's important to note that this guidance reflects the sale of RSDL, which we completed last week, but it does not yet reflect the impact of the upcoming Camden facility sale, as that transaction is not yet closed.

Speaker Change: Services segment revenue of $120 million to $130 million, an increase versus our prior guidance due to the impact of the <unk> settlement.

Speaker Change: Shifting to profitability metrics, we're forecasting adjusted EBITDA of $140 million to $180 million increase at the midpoint reflects the improved visibility of our MCM revenues as well as our continued focus on operating expenses.

Speaker Change: It is important to note that this guidance reflects the sale of <unk>, which we completed last week, but does not yet reflect the impact of the upcoming Camden facility sale as that transaction is not yet closed having said that there is currently 15% to $20 million of revenue and negative $5 million to $10 million of adjusted <unk>.

Joseph Papa: Having said that, there is currently 15 to 20 million dollars of revenue and negative 5 to 10 million dollars of adjusted EBITDA related to Camden in our forecast for the second half of the year. For the full year of 2024, we're forecasting a total segment adjusted gross margin of 42 to 45%. Shifting to the third quarter, we're forecasting revenue in a range of $265 to $315 million. That's all for the financial update. I'll now turn the call back over to Joe for some final thoughts.

Speaker Change: EBITDA related to Camden in our forecast for the second half of the year.

Speaker Change: For the full year of 2024 were forecasting total segment adjusted gross margin of 42% to 45%.

Speaker Change: Shifting to the third quarter, we're forecasting revenue in a range of $265 million to $315 million.

Speaker Change: That's all for the financial update I'll now turn the call back over to Joe for some final thoughts.

Joe Papa: Thank you rich our hard working team at emergent made significant progress executing on the strategic operational changes to stabilize our financial position and position us well for the future. This is critical to our turnaround, but as we look forward, we see meaningful opportunities for emergent growth drivers have the potential to impact <unk>.

Operator: Thank you, Rich. Our hardworking team at Emergent made significant progress executing on the strategic operational changes to stabilize our financial position and position us as well for the future. This is critical to our turnaround. But as we look forward, we see meaningful opportunities for emerging growth drivers that have the potential to impact lives around the world. Turning to slide number 23, I'd like to focus on the future growth drivers for our organization based on the potential expansion of our in-line products.

Joe Papa: <unk> around the world turning to slide number 23, I'd like to focus on the future growth drivers for our organization based on the potential expansion of our in line products. This will look like international expansion and line extensions of our current product strategic partnerships that leverage our own capabilities are identify unique public.

Operator: This will look like international expansion and line extensions of our current product, strategic partnerships that leverage our own capabilities or identify unique public-private partnerships, and an increased focus on public health preparedness and funding and willingness to address the opioid epidemic. In closing, our transformation will take time; it's not linear, but that said, I'm pleased with the progress our team has made and the value created over the past month, and importantly, the debt paydown that we have achieved.

Joe Papa: Private partnership increase.

Speaker Change: Increased focus on health public health preparedness, and funding and willingness to address the opioid epidemic.

Joe Papa: In closing our transformation will take time, it's not linear but that said I am pleased with the progress our team has made and the value created over the past months and importantly, the debt Paydown that we have achieved we are planning to finish out the year strong by paying down a significant amount of additional debt, while we prepared to enter our turnaround.

Operator: We are planning to finish out the year strong by paying down a significant amount of additional debt while we prepare to enter our turnaround phase and move towards an exciting future. With that operator, let's open up the line for questions.

Speaker Change: They move towards an exciting future with.

Operator: Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question. Our question will be from Jessica Fye of J.P. Morgan. Your line is open.

Speaker Change: With that operator, let's open up the line for questions.

Speaker Change: Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster and one moment for your first question.

Speaker Change: Our question will be coming from Jessica Fye of Jpmorgan. Your line is open.

Nicholas Lorusso: Hey, this is Nick on behalf of Jess. Thanks for taking our questions. First, with the decision to expand NARCAN distribution capabilities with the new center in Nevada, you're going to talk about the long-term growth opportunity for NARCAN and both the OTC as well as the PIP market. Kind of what are you thinking about the overall market opportunity across OTC and PIP? What do you see as the current and future growth driver there? And maybe could you comment on potential peak sales for NARCAN?

Speaker Change: Hey, this is Nick on for Jeff. Thanks for taking our questions first with the decision to expand Narcan distribution capabilities with a new center in Nevada.

Speaker Change: Talk about the long term growth opportunity for Narcan in the OTC as well as the Pip market.

Speaker Change: Kind of how are you thinking about the overall market opportunity cross OTC and pit what do you see as the current and future growth driver. There. It may be could you comment on potential peak sales for Narcan.

Speaker Change: Sure you got a lot of questions there.

Joseph Papa: Sure, you've got a lot of questions there. I'm also joined by Paul Williams who's here who can help us to address these questions. This is Joe Papa. I'll start, Paul, then feel free to add in.

Joe Papa: I'm also joined by polio is here, who can help us to address these questions. This is Joe Papa.

Speaker Change: Feel free to add I think first and foremost what we're most excited about is that this is a real public health problem and that we've got to solve it we've got to help solve it. We believe Narcan has showed some good progress in solving this.

Joseph Papa: I think first and foremost what we're most excited about is that this is a real public health problem and that we've got to solve it. We believe NARCAN has shown some good progress in solving this. The fact I point to is that there was a three percent reduction in the total amount of deaths in the United States last year, but that still means there's a lot more to do when you're talking about still remaining a hundred thousand deaths.

Speaker Change: I point to that there was a 3% reduction in total amount of deaths in the United States last year, but that still means there's a lot more to do when you're talking about still remaining a 100000 deaths. We think it's going to get solved by a number of things number one in terms of our ability to continue to expand access to Narcan, we believe that the.

Joseph Papa: We think it's going to get solved by a number of things. Number one, in terms of our ability to continue to expand access to NARCAN, we believe that the amount of funding that will go towards the public interest market from some of the opioid drug settlements from the big pharma companies will come into this category, and that will help the states expand their educational programs, but also the purchase and the ability to make NARCAN more available to all the markets.

Speaker Change: The amount of funding that will go towards the public interest market from some of the opioid.

Speaker Change: Drug settlements with a big pharma company will come into this category and that will help the state expand their educational program, but also the purchase and now the ability to make <unk> more available to all the markets. I think is first and foremost one of the big item for us beyond that we clearly are working very.

Joseph Papa: I think it's first and foremost one of the big items for us. Beyond that, we clearly are working very closely with the states, and we believe that our NARCAN, and our NARCAN Direct program is embedded into many of these public interest markets, and that's going to allow us, we believe, to continue to be a very important provider of NARCAN to all the states. So I think that those are probably the first and foremost things I would add. We clearly believe the brand itself is a very important part of it, but Paul, are there any other things you want to add to answer that question? Yes,

Speaker Change: Closely the states and we believe that our narcan or Nokia direct program are embedded into my public interest market and that's going to allow us. We believe to continue to be at a very important provider of narcan to all those states. So I think that those are probably the first and foremost thing that I would add we clearly believe the brand.

Speaker Change: Itself is a very important part of it but what other things you want to add to answer that question, Yes, maybe Joe I think a couple of things.

Joseph Papa: Yeah, maybe, Joe. I think a couple of things. One is, I think you can understate the emphasis coming out of the White House, and we recently attended the Office of National Drug Control Policy Naloxone Roundtable discussion where they were really talking about, we're barely just starting to see a decrease in deaths, but 100,000 deaths is, is way too much. And we've got to solve that one through the states. We've started to address that by expanding access to over-the-counter medication, which is going to allow us, I think, to expand into businesses.

Joe Papa: One is can understate the emphasis coming out of the White House and we recently attended the office of National Drug control policy Naloxone Roundtable discussion.

Speaker Change: We're really talking about.

Speaker Change: Really just starting to see a decrease in deaths by the 100000 desk is way too much and we've got to solve that one three of the states.

Speaker Change: Started to address that by expanding access with over the counter which is going to allow us I think can expand into businesses. Obviously, we're online and on retail shelves and continue to drive the level of awareness and understanding around platinum poisoning around accidental overdose as well as in the addiction space and I think all of those point to we've got a long way to go.

Joseph Papa: Obviously, we're online and on retail shelves, and we continue to drive a level of awareness and understanding around fentanyl poisoning, around accidental overdose, as well as in the addiction space. And I think all of those point to that we've got a long way to go before NARCAN before we actually start seeing a plateau in the market and the demand for naloxone.

Speaker Change: For Narcan.

Speaker Change: Before we actually start seeing a plateau in the market and the demand for naloxone.

Joseph Papa: And I think what Paul is saying is one of the things you have to comment on in the world we live in today, but the U.S. has bipartisan support for solving this problem. I mean, it's not often we get bipartisan support, but we get bipartisan support for solving the opioid epidemic that we see out there right now. And I think that's an important part of it. And I think one doesn't have to look any further than the Lancet article that came out a week ago that says the overall impact of opioid-related death is reducing the life expectancy of the United States population by almost a year, just because of opioids.

Speaker Change: And I think Paul is saying is what I think you have to comment on in the world. We live in today, but the U S has bipartisan support for solving this problem.

Speaker Change: Not often we get bipartisan support, but we do have bipartisan support for solving the opioid epidemic that we see out there right now and I think that's an important part of it and I think when does it have to look any further than the lancet article that came out a week ago that says.

Speaker Change: The overall impact.

Speaker Change: <unk> related debt is reducing.

Speaker Change: Life expectancy of the.

Speaker Change: I'd state populations by almost a year just because the opioid.

Joseph Papa: That just says volumes about how important this issue is and volumes about why we believe Narcan can make a real difference. So I think that's what's going to help us with the growth. We clearly believe our distribution capabilities are why we added the Nevada Distribution Center, and we announced that today. It just allows us to be faster and more customer responsive, which is what we're trying to do for the future. Become a leaner, customer-focused organization that has more flexibility. So I think all those things are the reasons why we see Narcan as being a great opportunity for the future.

Speaker Change: That just says volumes about how important this issue is and volumes about why we believe <unk> can make a real difference. So I think that's what's going to help us with the growth. We clearly believe our distribution capabilities as why we added the Nevada distribution center, we announced that today.

Speaker Change: <unk> allows us to be faster and more customer responsive, which is what we're trying to do for the future creative and leaner customer focused organization that is more flexibility. So I think all of those things are reasons, why we see <unk> as being a great opportunity for the future.

Speaker Change: Sure.

Joseph Papa: And with that in mind, a few months ago, a competitor announced a distribution agreement with the state of California to supply OTC Narcan. How are you contemplating that with your current outlook for the OTC or OTC product? And are you seeing any other trends amongst other states?

Speaker Change: Great and with that in mind, a few months back and competitor announced a distribution agreement with the state of California to supply OTC Narcan. How are you contemplating that with your current outlook for your OTT product and are you seeing any other trends amongst other states.

Speaker Change: So we're working very closely we still work very closely with the state of California to be clear, California has some very aggressive opioid reduction targets, which obviously, we support the importance of that we continue to supply product to the state of California. Once again, having a distribution center in Nevada makes it easier for us.

Joseph Papa: We're working very closely, and we still work very closely with the state of California to be clear. California has some very aggressive opioid reduction targets which, obviously, we support the importance of that. We continue to supply products to the state of California. Once again, having a distribution center in Nevada makes it easier for us to deliver to California, and we also believe that, as I said before, the NARCA and DIRECT programs are embedded into the public service process because we make it easier for them to essentially have a one-stop shop for getting access to our products.

Speaker Change: To deliver to the state of California, and we also believe that as I said before the <unk> direct program is embedded into the public service process, because we make it easier for them to essentially have a one stop shop for getting access to our products. So we're going to continue to work with the state of California, just like we work with the other states. We believe the brand arc is important.

Joseph Papa: So we're going to continue to work with the state of California just like we work with the other states. We believe the NARCA brand is important, we believe our manufacturing capacity and capabilities are important, and we believe our distribution capability to 18,000 locations around the United States. They're all very important reasons why we're going to be successful with the state of California but for other states as well, and that's how we're approaching this in terms of, we are the leader. We're going to continue to try to improve overall access, and as that total market expands, we believe we're going to get our fair share of that market expansion as well.

Speaker Change: I believe our manufacturing capacity capabilities is important and we believe our distribution capability to 18000 locations around the nine states are all very important reasons why we are going to be successful with the state of California, but for other states as well and that's how we're approaching this in terms of we are the leader we're going to continue to try to improve the overall.

Speaker Change: Access and as a total market expands we believe we're going to get our fair share of that market expansion as well.

Speaker Change: Yes.

Joseph Papa: Great. And maybe you could provide some additional detail on some of the steps you're taking to improve long-term margins and maybe provide some color on what you see as an achievable margin profile for the current business.

Speaker Change: Great and maybe could you.

Speaker Change: Provide some additional detail on some of the steps you're taking to improve long term margins and maybe provide some color on what you see is an achievable margin profile for the carrier business.

Speaker Change: Are you asking specifically about narcan or just total business. So I understand that the total total business, but narcan.

Joseph Papa: Are you asking specifically about NARCAN or just total business, so I understand just the cost? Total business, but NARCAN as well, if you want to comment on that specifically. Yeah, well, let me start with NARCAN because that's where the basis of your questions is.

Speaker Change: If you want to comment on that specifically.

Speaker Change: Yes.

Speaker Change: Let me start with Darcie, because that's where the base of the proceed with your question. Sir we are clearly working with our partners on the contract manufacturing of our product and continuing to work to reduce the total cost of goods sold for our product. We have a good understanding of what we can do and we've already made some progress this year, we expect to.

Joseph Papa: We are clearly working with our partners on the contract manufacturing of our product and continuing to work to reduce the total cost of goods sold for our product. We have a good understanding of what we can do, and we have already made some progress this year. We expect to, and we've targeted even more progress for the future, but we're working very closely to look at those specific vehicles in terms of where the cost is by, you know, what's the cost for the raw material, what's the cost for the actual nasal device, and then also the assembly, et cetera, looking at all avenues for NARCAN to bring down that cost.

Speaker Change: We've targeted even more progress for the future, but we're working very closely to look at those specific vehicles in terms of where the cost is but whats the cost for the raw material, what's the cost for the actual <unk>.

Speaker Change: Nasal device and then also.

Speaker Change: Et cetera, looking at all avenues for Narcan to bring down that cost I think on the red.

Joseph Papa: I think on the rest of our business, Rich probably may want to make some comments, but I think one of the things we're doing, looking at overall gross margin, is just creating a leaner, more efficient network in terms of our manufacturing sites. We believe that will give us significant reductions in our cost of goods sold just as we become more efficient at each site. As we talked about during the call, we're going to shut down Rockville, we're shutting down Bayview, as we digest the Camden site, and we sell the Canton site.

Speaker Change: Some of our business now rich probably you want to make some comments, but I think one of the things. We're doing is looking at overall gross margin is just creating a leaner more efficient network.

Speaker Change: Manufacturing site, we believe that will give us significant reductions in our cost of goods. So we'll just as we become more efficient at each site as we've talked about during the call we're going to shut down the Rockville, we're shutting down the base U as we divest the Camden site as we sell them all.

Joseph Papa: All those action steps, we believe, are going to help us with our overall gross margin improvement, and I think that's the way we'll mostly get to those relative savings over time. Obviously, each site, the remaining Lansing site, the remaining Winnipeg site, will become much more important and, we believe, more efficient as we go forward.

Speaker Change: All of those actions that we believe are going to help us with our overall gross margin improvement and I think thats the way.

Speaker Change: We get to the relative savings over time, obviously, the remaining listing site the remainder Winnipeg site will become much more important and obviously more we believe efficient as we go forward.

Richard Lindahl: Yeah, I think that's right. And I think sort of the major driver is really the cost that we've taken out in terms of the manufacturing site network so that we have less unutilized capacity or excess capacity in the network, and that's really helping the cost of goods sold as we come through the end of this year and into next year. And then we're being very disciplined about our R&D spending as we go forward.

Speaker Change: Yes, I think thats right and I think sort of the major driver is really the the costs that we've taken out in terms of the manufacturing site networks. So that we have less on utilized capacity or excess capacity.

Speaker Change: In the in the network that is really helping.

Speaker Change: Cost of goods sold as we come through the end of this year and into next year.

Speaker Change: And then we're being very disciplined about our R&D spending as we go forward and then finally on the SG&A side, we are working very hard to reduce our overall level of SG&A, which again will flow through as we come out of this year into next year.

Richard Lindahl: And then finally, on the SG&A side, we are working very hard to reduce our overall level of SG&A, which again will flow through as we come out of this year into next year. Okay, maybe just a little.

Speaker Change: Okay, maybe just a last one from US then could you provide some color on when we should expect an option for <unk> bank and <unk>.

Richard Lindahl: Okay, maybe just the last one from us. Could you provide some color on when we should expect an option for Timbexia in a bongo?

Speaker Change: So I think on on a bond guy that is still.

Joseph Papa: We're still a few years out into the future, based on the nature of the contract, which really had several years of development and commercialization, or scale-up, I should say, followed by procurement options following that. On Tembexa, we continue to have conversations with the United States government about the timing and magnitude of the next option exercise. We don't have anything to report today, but we are working hard to maintain the continuity of supply of that product as we move forward.

Speaker Change: A few years out into the future based on the nature of the contract, which really had several years of development and commercialization of <unk>.

Speaker Change: Scale up I should say followed by procurement options following that.

Speaker Change: On <unk>.

Speaker Change: We continue to have conversations with the United States government.

Speaker Change: About the timing and magnitude of the next option exercise, we don't have anything to report today, but we are working hard to maintain the continuity of supply of that product as we move forward.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you.

Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: Again, if you would like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I'm showing no further questions. I would now like to turn the call back to Jo for closing remarks.

Speaker Change: I'm showing no further questions I would now like to turn the call back to Joe for closing remarks.

Joe Papa: So thank you again, everyone for joining us today as I mentioned on said I'd like to thank our emergent team for all the great work during the quarter to help us to achieve the milestones. We've achieved importantly, we look forward to finishing the second half of the year strong continuing to debt paydowns that were already adding to that.

Joseph Papa: Thank you again everyone for joining us today. As I mentioned, I'd like to thank our Emergent team for all the great work during the quarter. Importantly, we look forward to the second half of the year strong. Paydown Network. Adding to that, that pay down, of course. We support and continue to improve our overall operation. Debt reduction by working capital improvement.

Speaker Change: Debt pay down of course, and then importantly continue to improve our overall operational performance for the business.

Speaker Change: Reduce debt by the working capital improvement so all of those things will be important parts of our future and look forward to any additional questions. As we have a chance to go out and talk to all of you. Thank you have a great day everyone.

Operator: So all those things will be important for our future. Look forward to any additional questions as we have a chance to go out. Thank you, have a great day. Thank you all. 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 today's call will be available later today and accessible through the investor landing page on the company's website.

Speaker Change: Yes.

Speaker Change: Thank you all 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's website. Thank you again, we look forward to speaking with you all in the future.

Operator: Thank you all. 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 today's call, will be available later today and accessible through the investors landing page on the company's website. Thank you again.

Operator: We look forward to it. Thank you all in the future. Goodbye.

Operator: Thank you again. We look forward to it. Thank you all in the future. Goodbye. The Bulletproof Executive 2013, Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc. Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc., No part of this recording may be reproduced without Mooji Media Ltd.'s express consent. Copyright 2020, New Thinking Allowed Foundation.

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Unknown Executive: Hello. Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc Unknown Executive, Unknown Attendee, Joichi Sakai, Elias Lenard, Nicholas Lorusso, Paul Williams, Haywood Miller, Emergent BioSolutions Inc, ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Good afternoon, everyone.

Unknown Executive: I'm the operator for today. Thank you for joining today as Emergent discusses its operational and financial results for the second quarter of 2020. As is customary, today's call is open to all participants, and the call is being recorded and is copyrighted by Emergent BioSolutions. In addition to today's press release, there is a series of slides accompanying this webcast available to all webcasters. Turning to slide three.

Unknown Executive: During today's call, Emergent may make projections and other forward-looking statements related to its business, future events, its prospects, or future. These forward-looking statements are based on its current intentions, beliefs, and expectations regarding future events. Any forward-looking statement speaks only as of the date of this conference call, and, except as required by law, Emergent does not undertake to update any forward-looking statement to reflect new information, event, or circumstance. Investors should consider this cautionary statement as well as the risk factors identified in Emergent's periodic reports filed with the SEC when evaluating their forward-looking statements. During today's call, Emergent may also discuss certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding the emergency. Emergent Operating Performance.

Speaker Change: Yes.

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Unknown Executive: Please refer to the tables found in today's press release. Turning to slide 4, the agenda for today's call will include Joe Papa, President and Chief Executive Officer, who will comment on the multi-year plan update, key product highlights, and future catalogs. Rich Lindahl, EVP and Chief Financial Officer, who will speak to the current state of the company, financials for the second quarter, as well as 2024 full year guidance, including guidance for the third quarter.

Unknown Executive: This will be followed by Q&A. Finally, and for the benefit of those who will be listening to the replay of this webcast, this call was held and recorded on August 6th, 2011. Since then, Emergent may have made announcements related to topics discussed during today's call. And with that, I would now like to turn the call over to Joe Papa for opening remarks.

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Joseph Papa: Hello everyone, and thank you for joining us today to discuss our second quarter results and our 2024 Financial Outlook. I am joined today by Richard Lindahl, our Chief Financial Officer.

Speaker Change: Good afternoon, everyone and the operator for today's call. Thank you for joining today as emerging discusses our operational and financial results for the second quarter 2024.

Speaker Change: As customary today's call is open to all participants in the call is being recorded and is copyrighted by emergent bio solutions in.

Joseph Papa: Turning to slide six, I'd like to review our progress against our multi-year plan focused on stabilizing Emergent. Based on the first half performance, we are raising the midpoint of our 2024 revenue and adjusted EBITDA guidance, which Rich will walk through in great detail. While there are some one-time items in Q2 numbers, we made great progress against our plan, including making a significant reduction to our debt, as well as operating performance and working capital improvements.

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

Speaker Change: Turning to slide three during today's call emerge it may make projections and other forward looking statements related to their business future events, there are prospects or future performance. These forward looking statements are based on their current intentions beliefs and expectations regarding future events.

Joseph Papa: Following our May 1st restructuring announcement and after the transaction with Bora closes for our Kansans site this quarter, combined, we will have reduced our workforce by approximately 50% since January of 2024. We will also have a total of approximately $110 million in expense savings from these combined efforts. In July, we resolved our contract dispute with Janssen and received a $50 million payment from the settlement.

Speaker Change: Any forward looking statement speaks only as of the date of this conference call and as except as required by law emergent does not undertake to update any forward looking statements to reflect new information events.

Speaker Change: Or circumstances.

Speaker Change: Investors should consider this cautionary statement as well as the risk factors identified in emergence periodic reports filed with the SEC when evaluating their forward looking statements during.

Speaker Change: During today's call emerging may also discuss certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding <unk>.

Speaker Change: Emergent <unk> operating performance.

Speaker Change: Please refer to the tables found in today's press release, turning to slide four the agenda for today's call will include Joe Papa President and Chief Executive Officer, who will comment on the multiyear plan update key product highlights and future catalyst rich Lindahl, EVP and Chief Financial Officer, who will speak to the current state of the company financials.

Speaker Change: For second quarter as well as 2020 for full year guidance, including guidance for the third quarter.

Speaker Change: This will be followed by Q&A finally, and for the benefit of note who will be listening to the replay of this webcast. This call was held and recorded on August six 2024.

Joe Papa: Since then emergent may have made announcements related to topics discussed during today's call and with that I would now like to turn the call over to Joe Papa opening remarks, Joe.

Joseph Papa: Now on slide eight, I walk through a series of strategic actions taken in the second quarter to reduce our total quantum of debt this year. In our previous earnings calls, we discussed divesting certain products and assets. To date, we have achieved a $75 million divestment of RSDL to CERB Pharmaceuticals and $30 million from the sale of our Kansas facility to Bora Pharmaceuticals, which is expected to close this month and will result in a 350% headcount reduction.

Joe Papa: Hello, everyone and thank you for joining us today to discuss our second quarter results and our 2024 financial outlook I'm joined today by Richard Lindahl, Our Chief Financial Officer. Following my opening remarks, rich will detail our quarter two performance provide guidance for the third quarter as well as our full year guide.

Speaker Change: I will then review our future growth drivers, providing summarizing thoughts on our multiyear plan and then we'll open it up for Q&A.

Joseph Papa: The net proceeds from these two transactions are expected to more than satisfy the junior capital rates requirement under Emergent's amended credit facility. We also sold an empty, underutilized warehouse at our Canton site for $7 million. We received $50 million from Janssen following our contract dispute settlement, and we expect $10 million in the third quarter related to Bavarian Nordic Milestone and anticipate another $20 million by year-end. Additionally, we have generated operational cash flow following our May business update and have improved working capital to contribute to debt pay-down. Richard will have more comments on that.

Speaker Change: First I would like to start by thanking our emergent team members, who have been hard at work executing on our multiyear plan to stabilize turnaround and transform the business has been a great team effort in the first half of this year and specifically our quarter two efforts enabled us to exceed our quarter.

Speaker Change: To revenue guidance without a significant Ats 2000 shipment that we were able to recognize in early July I. Appreciate the dedication of our team, especially their support for our mission and our values turning to slide six I'd like to review our progress against our multiyear plan focused on stabilizing emerge.

Joseph Papa: Turning to our product business slide on slide 9, we continue to make progress delivering on our commitments. I'll start with the key highlights around Narcan nasal spray. We are continuing to invest in the expansion of Narcan nasal spray, which is more crucial than ever as the opioid crisis continues. Last year, more than 100,000 lives were lost to a drug overdose, of which nearly 8 in 10 were caused by opioids or synthetic opioids. This is an unacceptable number of American lives lost every year.

Speaker Change: Based on the first half performance, we are raising the midpoint of our 2020 for revenue and adjusted EBITDA guidance, which rich will walk through in great detail. While there is some one time items in Q2 numbers, we made great progress against our plan, including making a significant reduction to our debt.

Speaker Change: As well as operating performance and working capital improvements, we focused on our product core business drivers and delivered for our customers and patients. We created a customer focused leaner more flexible organization and we streamlined our site network and finally, leveraging our product and internal capabilities to support.

Speaker Change: <unk> future growth.

Speaker Change: Turning to slide seven I'd like to call. It several activities that have been critical during the initial stabilization phase of our multiyear plan with.

Speaker Change: We successfully amended our credit agreement expanding the runway to execute on our operational plan.

Speaker Change: Following our may 1st restructuring announcement and after the transaction closes for our Kansas site. This quarter combined we will have reduced our workforce by approximately 50%. Since January 2024, we will also have a total of approximately $110 million in expense savings from these combined efforts.

Speaker Change: In July we resolved our contract dispute with Johnson and received a $50 million payment from the settlement we.

Speaker Change: We successfully completed an FDA inspection at the Kansas facility in July which is a full GMP surveillance inspection of our biologic products.

Speaker Change: This underscores our commitment to ensuring the highest standards of safety and product quality and thank the team again for all of these great efforts now on slide eight I'll walk through a series of strategic actions taken in the second quarter reduce our total quantum of debt. This year on our previous earnings calls we discussed divesting.

Speaker Change: Certain product assets to date, we have achieved a $75 million divestment of <unk> pharmaceuticals.

Speaker Change: $30 million from the sale of our Kansas facility for our pharmaceutical which is expected to close this month and will result in a 350% head count reduction.

Speaker Change: The net proceeds from these two transactions is expected to more than satisfied the junior capital raise requirement under emergency amended credit facility.

Speaker Change: We also sold an empty underutilized warehouse at our <unk> site for $7 million, we received $50 million from Janssen following our contract dispute settlement and we expect $10 million for the third quarter related to Bavarian Nordic milestone anticipated another $20 million by year end.

Speaker Change: Also we have generated operating cash.

Speaker Change: Cash flow following our may business update and have improved working capital to contribute to debt Paydown rich will have more comments on that turning to our product business slide on slide nine.

Speaker Change: Continue to make progress delivering on our commitments I'll start with key highlights around narcan nasal spray, we are continuing to invest in the expansion of narcan nasal spray, which is more crucial than ever of the opioid crisis continues last year more than 100000 lives are lost to a drug overdose of which nearly eight and 10.

Speaker Change: Were caused by opioid or synthetic opioid. This is an unacceptable number of American lives lost every year as well.

Speaker Change: A leading naloxone product, we are determined to increase access points of market to help get the lifesaving product into the hands of more people and in Canada with the opioid related deaths continue to increase we are working closely with health, Canada to distribute convenience kit.

Speaker Change: Containing Nokia, which are critical to first responders and people in a position to help save lives.

Speaker Change: Also believe our efforts to broaden access and increase awareness are contributing to the impact we're seeing across several hard hit areas. For example states like New Jersey reported 1007 suspected drug that the first six months of 2024, but thats down 26% from last year and May have expected.

Speaker Change: At 12% decrease in opioid related overdose deaths.

Speaker Change: With promising to see a number of opioid deaths decreasing unfortunately opioids that still remain high we believe that expanding access to narcan is needed.

Speaker Change: Annually, we expect to deliver Nokia to about 18000 individual patients across the U S and Canada through our <unk> direct program, we strive to serve as the best in class provider to all of our public interest customers. In fact, we announced just earlier today, a new distribution center in Nevada.

Joseph Papa: In fact, we announced just earlier today a new distribution center in Nevada. This new facility allows Emergent to further meet the increased demand for naloxone by now having faster, more efficient delivery of NARCAN to all of our customers. We continue to tackle the many barriers to increased consumer access by offering online availability through Amazon and pharmacy websites, where you're creating an easy-access avenue for people who have an easy way to get it delivered right at their doorstep.

Speaker Change: This new facility allows the merchant to further meet the increased demand for naloxone, I know, having faster more efficient delivery, where nokia to all of our customers.

Speaker Change: We continue to tackle the many barriers to increase consumer access by offering online availability through Amazon and pharmacy website, youre, creating an easy axes Avenue for the people who have easy way to obtain delivered right at their doorstep.

Joseph Papa: To date, we have distributed boxes of Narcan to 32,000 retailers. OTC's status for NARCIN has also enabled our business-to-business and workplace efforts. We have secured five major businesses that have ordered NARCIN, including United States Gypsum, Coppers, and leading financial services companies, just to name a few. We launched NARCAN.com Workplace, which enables businesses to order NARCAN and have it shipped to their offices and worksite. We continue to engage with new partners like the National Safety Council to educate and reach businesses about the importance of workplace safety.

Speaker Change: We had distributed boxes in Rps is 32000 retailers.

Speaker Change: OTC status for Narcan has also enabled our business to business and workplace efforts. We have secured five major businesses that have ordered narcan, including United States, Gypsum Koppers, and a leading financial services companies just to name a few.

Speaker Change: We launched <unk> dot com workplace, which enables businesses to already narcan and have it shipped to their offices and work sites. We continue to engage with new partners like the National Safety Council to educate and REIT businesses around the importance of workplace safety and just last month.

Joseph Papa: And just last month, The American Medical Association shared their support for putting nalaxone next to defibrillators in public places. To pull on this thread, we understand that approximately 1,700 lives are saved by defibrillators each year, and the device costs about $18 on average.

Speaker Change: The American Medical Association shared their support to put now lactose next defibrillators and public places.

Speaker Change: To pull the thread we understand that approximately 1700 lives are saved by the.

Speaker Change: Defibrillators, each year and the device cost by $18 on average we also believe putting that lacks within a fraction of defibrillator plus alongside this life saving measure could help us tens of thousands of lives lost opiate overdose each year, our country is facing a public health crisis that has bipartisan.

Joseph Papa: We also believe putting that laxative, which is a fraction of the defibrillator cost, alongside this life-saving measure could help tens of thousands of lives lost to opioid overdose each year. Our country is facing a public health crisis that has bipartisan support, and continuous federal and state funding helps increase access to Narcan for first responders. Just last week, a study in the Lancet reported that fatal opioid overdoses contributed to a lower American life expectancy by nearly a year.

Speaker Change: Port and continuous federal and state funding helped to increase access to Narcan for first responders just last week. The study in lancet reported that fatal opioid overdoses contributed to a lower American life expectancy by nearly a year.

Joseph Papa: The burden of these deaths on life expectancy and years of life lost is due to the high burden among younger adults. We clearly have more work to do here. In a new survey we conducted, it was found that younger generations aged 18 to 34 and those in high school education were less likely to be aware that nalaxone can reverse the effects of fentanyl, putting these already vulnerable populations at further risk.

Speaker Change: <unk> that in life expectancy and years of life was it due to the high burden among younger adults, we clearly have more work to do here.

Speaker Change: And a new survey we conducted it was found that younger generations, aged 18 to 34 and those in high school level education, we're less likely to be where <unk> can reverse the effects of the panel putting these already vulnerable population at further risk.

Joseph Papa: We will continue to strive to meet and respond to our customers' needs to ensure we maintain our leadership position. Turning to our medical countermeasures portfolio on slide 10, in addition to opioid overdose epidemics, we maintain a leadership position in addressing leading public health threats, including anthrax, smallpox, botulism, and ebola. We are optimistic about the potential of our MCM products, including Convexa, and their ability to contribute to our future growth. This includes over $250 million in contract modifications with the U.S. government for our MCM business, including a $30 million Order to Supply Syphensis, $99.9 million to supply ACAM2000, and new contract options totaling $122.9 million to supply U.S. government big and bad.

Speaker Change: We will continue to strive to meet and respond to our customers' needs to ensure we maintain our leadership position turning to our medical countermeasures portfolio on slide 10. In addition to opioid overdose epidemic, we maintain a leadership position in addressing leading public health threats, including anthrax smallpox box.

Speaker Change: And Ebola, we are optimistic about the potential of our MTM product, including come back for any longer.

Speaker Change: Our ability to contribute to our future growth. This includes over $250 million and contract modifications with the U S government for MTM business, including a $30 million.

Speaker Change: Quarter, two supply side now.

Speaker Change: $99 9 million to supply ATM in 2000, and a new contract options totaling $122 9 million. Despite U S government big bat.

Joseph Papa: We believe that these milestones reaffirm our place as a trusted biodefense partner and demonstrate the strength of our total portfolio. Contracts also indicate continued runway for potential future procurement. In fact, we expect to receive approval from the FDA on our SBLA to expand ACAM for MPOPS by the end of the quarter.

Speaker Change: We believe that these massive reaffirm our place as a trusted biodefense partners and demonstrate the strength of our total portfolio.

Speaker Change: The contract also indicate continued runway for potential future procurement in fact, we expect to receive approval the FDA on our BLA to expand ATM for and Pops by the end of the quarter.

Speaker Change: We have a strong line of sight to future procurement levels for our existing portfolio and look forward to pursuing additional opportunities for contract award in the second half of the year.

Speaker Change: Next on Slide 11 is a look at our streamline footprint sites in Lansing, Michigan and Winnipeg. This is driven by our previously announced decision to scale back our bias services work.

Speaker Change: Maintaining our ability to manufacture and deliver our products to customers.

Joseph Papa: We are winding down our efforts at Bayview and Rockfield sites, further reducing our manufacturing footprint and our working capital. As mentioned, we sold our empty facility in Canton, Massachusetts, for $7 million, which is demonstrative of our efforts to explore strategic alternatives for sites that are not linked to our core capabilities. In summary, on slide 12, we have a diverse portfolio of products linked to our manufacturing network that we expect will continue to meet demand both in the U.S. and abroad. I'll now hand it over to Rich to review our financials.

Speaker Change: We are winding down our <unk> Raphael site further reducing our manufacturing footprint and our working capital as mentioned, we sold our empty facility in canton, Massachusetts for $7 million, which is demonstrative of our efforts to explore strategic alternatives for sites that are not linked to our core capabilities.

Speaker Change: Please.

Speaker Change: In summary on slide 12, we have a diverse portfolio of products linked to our manufacturing network that we expect will continue.

Speaker Change: Meet the demand in both the U S and abroad.

Speaker Change: I'll now hand, it over to rich to review our financials.

Richard Lindahl: Thanks, Joe. And good afternoon, everyone.

Rich: Thanks, Joe and good afternoon, everyone. We appreciate you joining the call today.

Richard Lindahl: We appreciate you joining us on the call today. As Jo has just discussed, we're making significant progress against our near-term priorities of stabilizing the business and strengthening our financial foundation. Our report today reflects several key proof points. We delivered solid second-quarter results with continued momentum for Narcan, shipments of Anthrax, and an international sale of ACAM2000. We received over $250 million in contract modifications to continue supplying Sifendis, ACAM2000, Vig, and Bat to the U.S. government. We announced a confidential settlement agreement with Janssen Pharmaceuticals which resulted in a $50 million payment to Emergent on July 31st.

Rich: As Joe has just discussed we're making significant progress against our near term priorities of stabilizing the business and strengthening our financial Foundation. Our report today reflects several key proof points.

Rich: We delivered solid second quarter results with continued momentum of Narcan shipments of anthrax and an international sale of <unk> 2000.

Speaker Change: We received over $250 million of contract modifications to continue supplying psi fenders, ATM 2000, vig and back to the U S government.

Speaker Change: We announced a confidential settlement agreement with Janssen Pharmaceuticals, which resulted in a $50 million payment to emergent on July 31.

Speaker Change: We announced $112 million in asset sales, we entered into a definitive agreement to divest our Baltimore Camden facility to Bora pharmaceuticals for $30 million.

Speaker Change: Sold an underutilized warehouse at our canton facility for $7 million and sold our chemical decontamination product our STL to serve for a pharmaceuticals for $75 million.

Speaker Change: These transactions once fully completed will satisfy the capital raise requirement in our amended credit facility.

Speaker Change: We received notification that the EMA had accepted the Bavarian Nordic submission for the Chikungunya vaccine, which was part of the travel health divestiture in 2023.

Speaker Change: This acceptance triggers the first milestone payment of $10 million, which we expect to receive in the third quarter.

Speaker Change: We will go into further detail on the balance sheet, but the influx of cash from these items is expected to provide approximately $200 million that can be used for debt repayment. This year.

Speaker Change: Since the beginning of 2023, we have also announced actions to reduce annual expenses by roughly a quarter of $1 billion. This reinforces our commitment to improving our overall financial foundation and setting the business up for a stronger profitability and shareholder value going forward.

Speaker Change: And finally, we are again, raising the midpoint of our revenue and adjusted EBITDA guidance for 2024.

Richard Lindahl: Turning to our results, we had another strong quarter with revenue above our previously provided guidance. As indicated on slide 14, highlights for the second quarter include total revenues of $255 million, a decrease versus the prior year due to the timing of the U.S. government order for ACAM. Total segment adjusted gross margin of 26% versus 43% in the prior year, primarily due to the Janssen Settlement Agreement, the write-down of related assets, and other one-time charges.

Speaker Change: Turning to our results we had another strong quarter with revenue above our previously provided guidance.

Speaker Change: As indicated on slide 14 highlights in the second quarter include total revenues of $255 million.

Speaker Change: <unk> versus the prior year due to timing of the U S government order for Aercap.

Speaker Change: Total segment adjusted gross margin of 26% versus 43% in the prior year, primarily due to the Yens and settlement agreement the write down of related assets and other onetime charges in.

Richard Lindahl: An adjusted EBITDA in the quarter of negative $10 million, a reduction versus the prior year due to the timing of U.S. government procurements and approximately $28 million of one-time charges. Turning to slide 15, you'll note there are a number of non-recurring items in our results for the quarter, many of which are added back as seen in the non-GAAP reconciliation table. A common theme here is that as part of our efforts to stabilize, turn around, and transform the business, we have taken several decisions that improve our future profitability but result in short-term charges.

Speaker Change: Turning to slide 15, you will note there are a number of nonrecurring items in our results for the quarter. Many of which are added back as seen in the non-GAAP reconciliation tables and.

Richard Lindahl: In particular, our actions to reduce our site footprint and significantly de-emphasize our bioservices business required us to evaluate the related asset values, which in turn led to the impairments and write-offs shown on the slide. We also resolved several legacy issues and can now move ahead with the uncertainty of those matters behind us.

Speaker Change: In particular, our actions to reduce our site footprint and significantly deemphasize, our biosciences business required us to evaluate the related asset values, which in turn led to the impairments and write offs shown on the slide.

Speaker Change: We also resolved several legacy issues and now move ahead with the uncertainty of those matters behind us.

Speaker Change: Compared to the prior year, we had a slightly unfavorable price volume mix in the U S public interest channel, partially offset by higher sales of over the counter narcotics.

Speaker Change: Anthrax MCM sales of $39 million, an increase of $18 million versus the prior year, driven by timing of select vendors and <unk> sales.

Richard Lindahl: Smallpox MCM sales of $18 million dollars, representing the international order for ACAM2000 in the second quarter. The decline year-over-year is due to the timing of the U.S. government procurement for ACAM2000, which we delivered in early July.

Speaker Change: Smallpox MCM sales of $18 million, representing the international order of <unk> 2000 in the second quarter, but.

Speaker Change: The decline year over year is due to the timing of the U S government procurement for <unk> 2000, which we delivered in early July.

Richard Lindahl: Other product sales of $7 million, a decrease of $13 million versus the prior year, primarily related to BAT and RSDL sales timing, and total bioservices revenues of $65 million, which includes the $50 million attributed to the arbitration settlement from Yancey. The remaining bioservices revenue in the quarter was primarily related to our cabinet facilities. Turning to operating expenses on slide 17, the cost of commercial product sales in the quarter was $53 million, influenced by the continued strong sales of Narcan.

Speaker Change: Other product sales of $7 million, a decrease of $13 million versus the prior year, primarily related to bat and our STL sales timing.

Speaker Change: In total <unk> revenues of $65 million, which includes the $50 million attributed to the arbitration settlement from Janssen.

Speaker Change: The remaining <unk> revenue in the quarter was primarily related to our Camden facility.

Speaker Change: Turning to operating expenses on slide 17 cost of commercial product sales in the quarter was $53 million influenced by the continued strong sales of Narcan.

Richard Lindahl: Cost of MCM product sales in the quarter was $31 million, driven by sales of Endosyn bioprime. Cost of bioservices of $212 million, reflecting the asset write-down related to the Janssen Settlement Agreement offset by a decrease in overhead costs at our Maryland facility, are in the expense of $33 million, which includes project termination costs and restructuring costs associated with the May 1st announcement.

Speaker Change: Cost of MCM product sales in the quarter was $31 million driven by sales of <unk>.

Speaker Change: Cost of bio services up $212 million, reflecting the asset write down related to the <unk> settlement agreement offset by a decrease in overhead costs at our Maryland facilities.

Speaker Change: R&D expense of $33 million, which includes project termination costs and restructuring costs associated with the may 1st announcement of.

Speaker Change: Outside of those items, our core R&D costs are currently focused on the funded <unk> development program.

Speaker Change: And SG&A spend of $86 million, including restructuring.

Speaker Change: Restructuring costs offset by lower employee and marketing related expenses.

Speaker Change: With that let's move to slide 18, and review segment performance during the quarter.

Speaker Change: In the commercial segment revenues were $120 million comprised entirely of Narcan and segment adjusted gross margin was $67 million or 56%.

Speaker Change: And the <unk> segment revenues were $62 million driven primarily by an fracs at an international sale of eight <unk> 2000 <unk>.

Speaker Change: Segment, adjusted gross margin was $35 million or 55%.

Speaker Change: As for the services segment revenues were $65 million in segment adjusted gross margin was negative $36 million.

Richard Lindahl: I'll now take a moment to summarize our 2024 year-to-date performance, as shown on slide 19. First half revenue was $555 million, up 11% versus the prior year, driven by NCM and Bioservices. Year-to-date adjusted gross margin was $213 million, or 39%, reflecting our prior efforts to reduce costs as well as MCM sales timing. First half EBITDA was $57 million, an improvement of roughly $100 million versus the prior year. Turning to slide 20, we ended the second quarter with $70 million in cash and $83 million of total liquidity, including availability under our revolving credit facility.

Speaker Change: I'll now take a moment to summarize our 2024 year to date performance as shown on slide 19.

Speaker Change: First half revenue was $555 million up 11% versus prior year, driven by MCM and bio services.

Speaker Change: Year to date, adjusted gross margin was $213 million or 39%, reflecting our prior efforts to reduce costs as well as MCM sales timing and first half EBITDA was $57 million an.

An improvement of roughly $100 million versus the prior year.

Speaker Change: Turning to slide 20, we ended the second quarter was $70 million in cash and 83 million barrels of total liquidity, including availability under our revolving credit facility.

Speaker Change: And as of June 32024, our net debt position was $794 million, a roughly $40 million reduction versus the first quarter.

Speaker Change: Net working capital was $380 million at June 30, a $53 million improvement versus the prior quarter and $71 million lower than the second quarter of 2023.

Speaker Change: We remain focused on continuing to optimize our working capital position to free up capital for debt repayment.

Speaker Change: Turning to 2024 guidance, please see slide 21.

Speaker Change: While our efforts to improve operating performance will not happen immediately we are making significant progress as announced in our press release. This evening, we're updating our outlook for the full year 2024.

Speaker Change: For both revenue and profitability as we did in May we are raising the midpoint of our revenue and adjusted EBITDA guidance.

Speaker Change: Full year guidance is as follows in the details are shown on slide 29 in the appendix.

Richard Lindahl: Total revenues of $1.05 billion to $1.125 billion; commercial product sales of $450 to $480 million. We continue to see strong demand for Narcan in the U.S. public interest, Canadian, and OTC channels.

Speaker Change: Total revenues of $1 5 billion to $1 125 billion.

Speaker Change: Commercial product sales of $450 million to $480 million, we continue to see strong demand for narcan in the U S public interest Canadian and OTC channels.

Richard Lindahl: Having said that, we're taking a more conservative view on 2024 given developments in the competitive environment. MCM product sales are $455 to $490 million. Since our last report on May 1st, we received the $250 million award for Siphendis, ACAM, VAT, and VIG.

Speaker Change: Having said that we're taking a more conservative view on 2024, given developments in the competitive environment.

Speaker Change: MCM product sales of $455 million to $490 million.

Speaker Change: Since our last report on May <unk>, we received the $250 million award for <unk>, a cam bat and Vig, we now have a large portion of our MCM revenue committed for 2024.

Richard Lindahl: We now have a large portion of our NCM revenue committed for 2024. Services Segment revenue of $120 to $130 million, an increase versus our prior guidance due to the impact of the Anson Settlement. Shifting to profitability metrics, we're forecasting adjusted EBITDA of $140 to $180 million. The increase at the midpoint reflects the improved visibility of our MCM revenues, as well as our continued focus on operating expenses. It's important to note that this guidance reflects the sale of RSDL, which we completed last week, but it does not yet reflect the impact of the upcoming Camden facility sale, as that transaction is not yet closed.

Speaker Change: Services segment revenue of $120 million to $130 million, an increase versus our prior guidance due to the impact of the <unk> settlement.

Speaker Change: Shifting to profitability metrics, we are forecasting adjusted EBITDA of $140 million to $180 million.

Speaker Change: The increase at the midpoint reflects the improved visibility of our MCM revenues as well as our continued focus on operating expenses.

Speaker Change: It's important to note that this guidance reflects the sale of <unk>, which we completed last week, but does not yet reflect the impact of the upcoming Camden facility sale as that transaction is not yet closed having said that there is currently 15% to $20 million of revenue and negative $5 million to $10 million of adjusted <unk>.

Richard Lindahl: Having said that, there is currently $15 to $20 million of revenue and negative $5 to $10 million of adjusted EBITDA related to Camden in our forecast for the second half of the year. For the full year of 2024, we're forecasting a total segment adjusted gross margin of 42 to 45%. Shifting to the third quarter, we're forecasting revenue in a range of $265 to $315 million. That's all for the financial update. I'll now turn the call back over to Joe for some final thoughts.

Speaker Change: EBITDA related to Camden in our forecast for the second half of the year.

For the full year of 2024 were forecasting total segment adjusted gross margin of 42% to 45%.

Speaker Change: Shifting to the third quarter, we're forecasting revenue in a range of $265 million to $315 million.

Speaker Change: That's all for the financial update I will now turn the call back over to Joe for some final thoughts.

Speaker Change: Yes.

Joseph Papa: Thank you, Rich. Our hardworking team at Emergent made significant progress executing on the strategic operational changes to stabilize our financial position and position us as well for the future. This is critical to our turnaround. But as we look forward, we see meaningful opportunities for Emergent Growth Drivers that have the potential to impact lives around the world. Turning to slide number 23, I'd like to focus on the future growth drivers for our organization based on the potential expansion of our in-line products.

Joe Papa: Thank you rich our hard working team at emergent made significant progress executing on our strategic operational changes to stabilize our financial position and position us well for the future. This is critical to our turnaround.

Joe Papa: We look forward, we see meaningful opportunities for emergent growth drivers have the potential to impact lives around the world turning to slide number 23, I'd like to focus on the future growth drivers for our organization based on the potential expansion of our in line products. This will look like international expansion and line extensions of our current products.

Joseph Papa: This will look like international expansion and line extensions of our current products, strategic partnerships that leverage our own capabilities or identify unique public-private partnerships, an increased focus on health, public health preparedness, and funding, and willingness to address the opioid epidemic. In closing, our transformation will take time; it's not linear, but that said, I'm pleased with the progress our team has made and the value created over the past month, and importantly, the debt paydown that we have achieved.

Joe Papa: Strategic partnerships that leverage our own capabilities are identify unique public private partnership.

Joe Papa: Increased focus on health public health preparedness, and funding and willingness to address the opioid epidemic.

Joe Papa: In closing our transformation will take time, it's not linear but that said I am pleased the progress our team has made and the value created over the past months and importantly, the debt Paydown that we have achieved we are planning to finish out the year strong by paying down a significant amount of additional debt, while we prepare to enter our turnaround.

Joseph Papa: We are planning to finish out the year strong by paying down a significant amount of additional debt while we prepare to enter our turnaround phase and move towards an exciting future. With that, Operator, let's open up the line for questions.

The move towards an exciting future with that operator, let's open up the line for questions certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster and one moment for your first question.

Operator: Certainly, as a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: Please stand by while we compile the Q&A roster. In one moment for our first question. Our question will be coming from Jessica Fye of J.P. Morgan. Your line is open.

Speaker Change: Our question will be coming from Jessica Fye of Jpmorgan. Your line is open.

Nicholas Lorusso: Hey, this is Nick on behalf of Jess. Thanks for taking our questions. First, with the decision to expand Narcan distribution capabilities with the new center in Nevada, you're going to talk about the long-term growth opportunity for Narcan and both the OTC as well as the PIP market. Kind of how are you thinking about the overall market opportunity across OTC and PIP? What do you see as the current and future growth driver there? And maybe could you comment on potential peak sales for Narcan?

Nick: Hey, this is Nick on for Jeff. Thanks for taking our questions first with the decision to expand our Kansas probation capabilities with the New center in Nevada can you guys talk about the long term growth opportunity for Narcan in the OTC as well as the Pip market.

Speaker Change: Kind of how are you thinking about the overall market opportunity cross OTC and pit what do you see as the current and future growth driver there and maybe could you comment on potential peak sales for Narcan.

Joseph Papa: Sure, you've got a lot of questions there. I'm also joined by Paul Williams here, who can help us to address these questions. This is Joe Papa.

Speaker Change: Sure you've got a lot of questions there.

Speaker Change: I'm also joined by Paul Williams, Who's here, who can help us to address these questions. This is Joe Papa.

Joseph Papa: I'll start, Paul, and then feel free to add in. I think first and foremost, what we're most excited about is that this is a real public health problem and that we've got to solve it. We've got to help solve it, and we believe NARCAN has shown some good progress in solving it. The fact I point to that there was a three percent reduction in the total number of deaths in the United States last year, but that still means there's a lot more to do when you're talking about still remaining hundreds of thousands of deaths.

Paul Williams: Feel free to add I think first and foremost what we're most excited about is that this is a real public health problem and that we've got to solve it we got to help solve it we believe narcan and showed some good progress in solving this the fact that point to that there was a 3% reduction in total.

Paul Williams: Of deaths in the United States last year, but that still means there is a lot more to do when you're talking about still remaining 100000 deaths. We think it's going to get solved by a number of things number one in terms of our ability to continue to expand access to Narcan. We believe that the amount of funding that will go towards the public interest.

Paul Williams: Market from some of the opioid drug settlement from a big Pharma company will come into this category and that will help the state expand their educational program, but also the purchase and now the ability to make Nokia it more available to all the markets I think is first and foremost one of the big items.

Joseph Papa: I think it's first and foremost one of the big items for us. Beyond that, we clearly are working very closely with the states, and we believe that our NARCAN direct programs are embedded in many of these public interest markets, and that's going to allow us, we believe, to continue to be a very important provider of NARCAN to all the states. So I think that those are probably the first and foremost things I would add. We clearly believe the brand itself is a very important part of it, but Paul, are there any other things you want to add to answer that question? Yes,

Speaker Change: Beyond that we clearly are working very closely to the states and we believe that our narcan or Nokia direct program are embedded and debated as public interest market and thats going to allow us. We believe to continue to be a very important provider of narcan to all those states. So I think that those are probably the first and foremost thing.

Paul Williams: I would add we.

Paul Williams: Clearly believes the brand itself is a very important part of it but what other things you want to add to answer that question, Yes, maybe Joe I think a couple of things.

Joseph Papa: Yeah, maybe, Joe. I think a couple of things. One is, I'm going to understate the emphasis coming out of the White House, and we recently attended the Office of National Drug Control Policy Naloxone Roundtable discussion, where we're really talking about, we're barely just starting to see a decrease in deaths, but 100,000 deaths is way too much. And we've got to solve that, one, through the states. We've started to address that by expanding access with over-the-counter, which is going to allow us, I think, to expand into businesses.

Joe Papa: One is.

Speaker Change: You can understate the emphasis coming out of the White House and we recently attended the opposite that National drug control policy Naloxone Roundtable discussion, we're really talking about were apparently just starting to see a decrease in deaths with 100000 desk is way too much and we've got to solve that one three of the states.

Speaker Change: We've started to address that by expanding access with over the counter which is going to allow us I think to expand into businesses, obviously, we're online and on retail shelves.

Speaker Change: They continue to drive a level of awareness and understanding around patent of poisoning around accidental overdose as well as in the addiction space and I think all of those point to we've got a long way to go before Narcan before.

Speaker Change: Before we actually start seeing a plateau in the market and the demand for naloxone.

Joseph Papa: And I think what Paul is saying is one of the things you have to comment on in the world we live in today, but the U.S. has bipartisan support for solving this problem. I mean, that's not often we get bipartisan support, but we do have bipartisan support for solving the opioid epidemic that we see out there right now, and I think that's an important part of it. And I think one doesn't have to look any further than the Lancet article that came out a week ago that says the overall impact of opioid-related death is diminishing...

Speaker Change: And I think what Paul is saying is what I think you have to comment on in the world. We live in today, but the U S has bipartisan support for solving this problem.

Speaker Change: It's not often we get bipartisan support, but we do have bipartisan support for solving the opioid epidemic that we see out there right now and I think thats, an important part of it and I think when does it have to look any further than the lancet article that came out a week ago.

Speaker Change: The overall impact of opioid related debt is reducing.

Joseph Papa: The life expenses of the United States population by almost a year, just because of opioids. That just says volumes about how important this issue is and volumes about why we believe Narcan can make a real difference. So I think that's what's going to help us with the growth. We clearly believe our distribution capabilities are why we added the Nevada Distribution Center, and we announced that today. It just allows us to be faster and more customer responsive, which is what we're trying to do for the future. Create a leaner, customer-focused organization that has more flexibility. So I think all those things are the reasons why we see Narcan as being a great opportunity for the future.

Speaker Change: The life expectancy of the United States population by almost a year just because the opioid.

Speaker Change: <unk>.

Speaker Change: Says volumes about how important this issue is and volumes about why we believe narcan can make a real difference. So I think thats whats going to help us with the growth. We clearly believe our distribution capabilities as why we added the Nevada distribution center, we announced that today.

Speaker Change: It allows us to be faster and more customer responsive, which is what we're trying to do for the future accretive and leaner customer focused organization that is more flexibility. So I think all of those things are the reason why we see market as being a great opportunity for the future.

Speaker Change: Great and with that in mind, a few months back a competitor announced the distribution agreement with the state of California to supply OTC Narcan. How are you contemplating that with your current outlook for.

Speaker Change: Sure OTC product and are you seeing any other trends amongst other states.

Joseph Papa: We're working very closely, and we still work very closely with the state of California to be clear. California has some very aggressive opioid reduction targets, and obviously, we support the importance of that. We continue to supply products to the state of California. Once again, having a distribution center in Nevada makes it easier for us to deliver to California, and we also believe that, as I said before, the NARC and DIRECT programs are embedded into the public service process because we make it easier for them to essentially have a one-stop shop for getting access to our products.

Speaker Change: For us to deliver to the state of California, and we also believe that as I said before the Nokia direct program is embedded into the public service process, because we make it easier for them to essentially have a one stop shop for getting access to our products. So we're going to continue to work with the state of California, just like we work with the other states. We believe the brand arc is important.

Joseph Papa: So we're going to continue to work with the state of California just like we work with the other states. We believe the brand NARC is important, we believe our manufacturing capacity and capabilities is important, and we believe our distribution capability to 18,000 locations around the United States are all very important reasons why we're going to be successful with the state of California, but for other states as well and that's how we're approaching this in terms of we are the leader, we're going to continue to try to improve the overall access, and as that total market expands, we believe we're going to get our fair share of that market expansion as well.

We believe our manufacturing capacity and capabilities is important and we believe our distribution capability to 18000 locations around the United States are all very important reasons why we are going to be successful with the state of California, but for other states as well.

Speaker Change: How were approaching this in terms of we are the leader, we're going to continue to try to improve.

Speaker Change: Prove the overall access and as that total market expands we believe we're going to get our fair share of that market expansion as well.

Speaker Change: Great and maybe could you.

Speaker Change: Provide some additional detail on some of the steps you're taking to improve long term margins and maybe provide some color on what you see isn't achievable margin profile for the current business.

Speaker Change: Are you asking specifically about narcan or just total business. So I understood. The total total business, but <unk>.

Speaker Change: You want to comment on that specifically.

Speaker Change: Yes.

Joseph Papa: We are clearly working with our partners on the contract manufacturing of our product and continuing to work to reduce the total cost of goods sold for our product. We have a good understanding of what we can do, and we've already made some progress this year. We expect to, and we've targeted even more progress for the future, but we're working very closely to look at those specific vehicles in terms of where the cost is by, you know, what's the cost for the raw material, what's the cost for the actual nasal device, and then also the assembly, et cetera, looking at all avenues for NARCAN to bring down that cost.

Speaker Change: And we've targeted even more progress for the future, but we're working very closely to look at those specific vehicles in terms of where the cost is but whats the cost for the raw material, what's the cost for the actual.

Speaker Change: Diesel device and then also the assembly et cetera, looking at all avenues for Narcan to bring down that cost I think.

Joseph Papa: I think on the rest of our business, Rich probably may want to make some comments, but I think one of the things we're doing, looking at overall gross margin, is just creating a leaner, more efficient network in terms of our manufacturing side. We believe that will give us significant reductions in our cost of goods sold just as we become more efficient at each site. As we talked about during the call, we're going to shut down Rockville, we're shutting down Bayview, as we digest the Camden site, and we sell the Canton site.

Rich: Rest of our business now rich probably wanted to make some comments, but I think one of the things. We're doing is looking at overall gross margin is just creating a leaner more efficient network and in terms of our manufacturing sites. We believe that will give us significant reductions in our cost of goods sold just as we become more efficient.

Speaker Change: At each site.

We've talked about during the call we're going to shut down the Rockville, we're shutting down the Bay view as we divest the Camden site as we sell to all of those actions that we believe are going to help us with our overall gross margin improvement and I think thats the way we.

Joseph Papa: All those action steps, we believe, are going to help us with our overall gross margin improvement, and I think that's the way we'll mostly get to those relative savings over time. Obviously, each site, the remaining Lansing site, and the remaining Winnipeg site, will become much more important and, we believe, efficient as we go forward. Yeah, I think.

Speaker Change: We get to the relative savings over time, obviously, the remaining listing site the rebate Winnipeg site will become much more important and obviously more we believe efficient as we go forward.

Speaker Change: Yes, I think thats right and I think so the major driver is really the the costs that we've taken out in terms of the manufacturing site networks. So that we have less on utilized capacity or excess capacity.

In the in the network Thats really helping.

Speaker Change: Cost of goods sold as we come through the end of this year and into next year.

Speaker Change: And then we're being very disciplined about our R&D spending as we go forward and then finally on the SG&A side, we are working very hard to reduce our overall level of SG&A.

Speaker Change: Which again will flow through as we come out of this year into next year.

Richard Lindahl: Okay, maybe just the last one from us. Could you provide some color on when we should expect an option for Timbexia in a bongo?

Speaker Change: Okay, maybe just a last one from us.

Speaker Change: Could you provide some color on when we should expect an option for <unk> bank and <unk>.

Speaker Change: So I think on on a bond guy that is still a.

Joseph Papa: I think that is still a few years out in the future based on the nature of the contract, which really had several years of development and commercialization, or scale-up, I should say, followed by procurement options following that. On Tembexa, we continue to have conversations with the United States government about the timing and magnitude of the next option exercise. We don't have anything to report today, but we are working hard to maintain the continuity of supply of that product as we move forward.

Speaker Change: A few years out into the future based on the nature of the contract, which really had several years of development and commercialization our scale up I should say followed by procurement options following that.

Tim Baxter: On Tim Baxter.

Speaker Change: Continue to have conversations with the United States government about the timing and magnitude of the next option exercise. We don't have anything to report today, but we are working hard to maintain the continuity of supply of that product as we move forward.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you.

Speaker Change: Again, if you would like to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: I'm showing no further questions I would now like to turn the call back to Joe for closing remarks.

Joseph Papa: Thank you again, everyone, for joining us today. As I mentioned on stage, I'd like to thank our Emergent team for all the great work during the quarter to help us to achieve the milestones we've achieved. Importantly, we look forward to finishing the second half of the year strong, continuing to pay down the debt that we've already added to that debt pay down, of course, and then importantly, continue to improve our overall operational performance for the business and to reduce debt through working capital improvements. So all those things will be important parts of our future.

Joe Papa: So thank you again, everyone for joining us today as I mentioned, the onset I would like to thank our emergent team for all the great work during the quarter to help us to achieve the milestones. We've achieved importantly, we look forward to finishing the second half of the year strong continuing to debt paydowns that we've already added to.

Joe Papa: That debt pay down of course, the importantly continue to improve our overall operational performance for the business.

Reduce debt by the working capital improvement so all of those things will be important parts of our future and look forward to any additional questions. As we have a chance to go out and talk to all of you. Thank you have a great day everyone.

Joseph Papa: I look forward to any additional questions as we have a chance to go out and talk to all of you. Thank you. Have a great day, everyone.

Operator: 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 today's call will be available later today and accessible through the investors landing page on the company's website. Thank you again. We look forward to speaking with you all in the future.

Speaker Change: You again, we look forward to speaking with you all in the future.

Q2 2024 Emergent BioSolutions Inc Earnings Call

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