Emergent BioSolutions Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the In-Market BioSolutions, Inc. 3Q 2020 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star then the number 1 on your telephone keypad. Please note that today's – I would now like to hand the conference over to your speaker, Bob Barr is Vice President of Investor Relations. Please go ahead.

Thank you, Amanda, and good afternoon, everyone. Thank you for joining us today as we discuss the operational and financial results for the third quarter of nine months ended September 30, 2020. As is customary, today's call is open to all participants, and the call is being recorded and is copyrighted by Emerging Biosolutions. In addition to the webcast, there's a series of slides accompanying the webcast that we are pushing out to all webcast participants. During today's call, we may make projections and other forward-looking statements related to our business, future events, our prospects for future performance. These forward-looking statements are based on our current intentions, beliefs, and expectations regarding future events. Any forward-looking statement speaks only as of the date of this conference call and, except as required by law, we do not undertake to update any forward-looking statement to reflect new information, events, or circumstances. Investors should consider this cautionary statement as well as the risk factors identified in our periodic reports filed with the SEC when evaluating our forward-looking statements. During today's call, we may also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding emergence operating performance. Please refer to the tables found in today's press release regarding our use of adjusted net income, adjusted EBITDA, and adjusted gross margin and the reconciliations between our GAAP financial measures and these non-GAAP financial measures. The agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company, Rich Lindahl, Chief Financial Officer, who will speak to the financials for 3Q and year-to-date 2020, as well as our updated guidance for full year 2020, and given the acceleration and the growth of our contract development and manufacturing services business, my colleague Saeed Hussain, SVP and head of the CDMO business, will provide a combination refresher as well as progress report on the status of this key BU. This will all be followed by a Q&A session where additional members of the senior team will be present and available as needed. Finally, for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on November 5, 2020. Since then, Emergent may have made announcements related to topics discussed during today's call.

With that introduction, I would now like to turn the call over to our President and CEO, Bob Kramer. Bob? Thank you, Bob, and good afternoon to everyone. Thank you for joining today's call. First and foremost, I want to take a minute at the beginning of the call here to acknowledge my emergent colleagues for their hard work and dedication in their ongoing efforts to combat the global COVID-19 pandemic. In this challenging environment, our team has continued to excel. For more than 20 years, Emergent has prepared for threats like COVID-19. Our experience in addressing public health threats including our capabilities, our products, technologies, and people, is unparalleled. Also, it's worth noting a very special anniversary for Emergent. Fifty years ago yesterday, BioThrax, The company's vaccine for immunization against disease caused by anthrax was approved for use becoming the first. And to this day, only vaccine approved by the FDA for protection against anthrax. This important approval is a legacy that inspires all of us here at emergent still today. So let's get started with the quarterly review. Overall, we continue to experience strength in our core business, including continued deliveries of our medical countermeasure products, coupled with substantial growth in the CDMO business, resulting in quarterly revenues of $385 million. Clearly, our strategy of diversification and profitable growth is fueling this strength as reflected in our strong quarterly and nine-month financial performance. Taking into consideration our year to date results and our visibility through to the end of the year, we also updated 2020 financial guidance, maintaining the same midpoint of $1.55 billion for total revenue for the year, as well as increasing our profitability ranges. Rich will discuss all of this in greater detail in a minute. Beyond 2020, we remain well positioned and confident in our ability to achieve the long-term revenue and profitability guidance outlined late last year at our Analyst and Investor Day. With that as a backdrop, let me first turn to the CDMO business. And without stealing too much of Said's thunder, we've experienced accelerated growth in CDMO revenues through the deployment of our capabilities in three key areas. First, development services. Second, drug substance manufacturing. And third, drug product manufacturing. We signed approximately $1.5 billion worth of CDMO contracts since March in response to COVID-19 and continue to build upon that by securing approximately $60 million in new collaborations in existing product extensions, project extensions during the quarter. which has led to continued revenue growth for the business during these last two quarters. We will continue to invest in this business unit and our facilities to increase our capabilities to meet the long-term expected demand and growth in this area. The CDMO business is well positioned for significant long-term growth, and you'll hear much more about this from Saeed in a moment. Turning to the devices business unit, there have been several recent events that provide additional confidence in the long-term prospects and value-creating potential for Narcan nasal spray. Recently, we completed two important product lifecycle improvements that we expect will provide meaningful value for our customers. First, we launched the Generation 2 Narcan nasal spray device, which is identified by a red plunger. It also has a claim for enhanced temperature excursions and storage below 25 degrees centigrade. Secondly, we gained FDA approval for an extension of the shelf life of Narcan nasal spray from 24 months to 36 months. We expect these product enhancements to be meaningful factors in the product's long-term durability and continued growth. In addition to our internal progress, There have also been notable changes in the general naloxone landscape that we believe will be positive for the Narcan nasal spray franchise. First, the recent FDA announcement requiring all labels for opioid pain medication as well as medicine to treat opioid use disorder to be updated to include information about naloxone is an important incremental step at the federal level in pursuit of addressing this significant public health threat. Also, new Canadian national consensus guidelines for proactive naloxone prescribing by pharmacists, the first ever guidelines of this kind of note, were announced. These guidelines, released by a steering committee of pharmacists and recently published in the Canadian Pharmacist Journal, recommend that all Canadian patients dispensed an opioid should also be given a naloxone kit and counseled by a pharmacist. These guidelines were issued in response to a disturbingly high number of opioid related deaths across Canada, coupled with the difficulty for pharmacists in assessing the potential risk for opioid overdose. Unfortunately, the number of opioid overdose deaths continue to rise, due likely in part to the impact of the COVID-19 pandemic. We believe continued efforts to increase awareness, expand availability, and maintain affordability of naloxone products like Narcan nasal spray are more important than ever, and we remain steadfast in our commitment to having an impact in the fight against the threat of opioids. On the therapeutics front, we're committed to using our experience and platforms to rapidly advance treatments for COVID-19 that are intended to augment the natural antibody response to SARS-CoV-2. Our dedicated teams have made significant progress in advancing our COVID-HIG product candidate using our validated human hyperimmune platform. As announced earlier, we secured $15 million of funding from BARDA to develop COVID-HIG for a treatment indication, and we were incredibly pleased to announce initiation of the Phase III clinical trial in partnership with NIAID. This pivotal clinical trial will evaluate the safety, tolerability, and efficacy of hyperimmune product candidates as a potential treatment in adult patients hospitalized with COVID-19. Results from this study are expected in early 2021, depending on the recruitment of approximately 500 patients across multiple sites. Our partnership with BARDA and NIAID will evaluate this potential treatment in patients at risk of progressing to severe disease in a second planned trial. This COVID treatment will also be used to evaluate for a second indication to prevent infections in individuals at high risk of exposure, such as healthcare workers, military personnel, and others. As previously announced, we have partnered with Mount Sinai Health System, Immunotech Biocenters, and the U.S. Department of Defense which is providing approximately 35 million of funding to rapidly advance this clinical program. The initial clinical evaluation of a dose in a PK PD study is planned to initiate soon to be followed by a phase two study to evaluate safety and efficacy of COVID HIG in individuals at risk of exposure soon thereafter. Emergent has committed significant resources and expertise to quickly advance these treatment options for both indications and build a robust data set to support an application for emergency use authorization. In parallel to our efforts with COVID-HIG, we continue to advance our flu IGIV program as a potential treatment for patients hospitalized with severe influenza A. We completed the Phase II clinical trial earlier this year, and the data has been analyzed and reviewed with an external advisory board to inform potential next steps. The outcomes of the trial were generally favorable and supportive of progressing our discussions with regulators for plans for the next phase of development. As we advance both late-stage clinical candidates on the same platform, there are many insights that can be applied across both programs and we're assessing the impact of the ongoing COVID-19 pandemic on the ability to execute on a trial for influenza. Turning next to the Vaccines Business Unit, we've continued to make deliveries of our anthrax vaccine candidate, AV7909, to the Strategic National Stockpile. In July this year, the U.S. government exercised an option to secure additional doses over the next 12 months. In parallel with delivering doses of this candidate into the stockpile, the clinical path continues on schedule. During the quarter, we completed the year one follow-up for the phase three study and remain on track for submitting the BLA in 2021. With respect to our smallpox vaccine, ACAM2000, In May, the U.S. government exercised the second procurement commitment under last year's 10-year contract to secure additional doses for the Strategic National Stockpile. We expect all deliveries related to this action to be delivered in 2021. As to our travel health business, while as a small contributor to our overall total revenue, it continues to be affected by the halt in global travel for the foreseeable future. Given this, we've taken steps to adjust this business accordingly. Specifically, we've restructured commercial components of this business, which has led to cost reductions and some related one-time charges in the third quarter that Rich will discuss in more detail. Longer term, our conviction in the durability and strategic opportunity of travel health remains intact, as we believe that COVID-19 will lead to an increased awareness for the importance of vaccinations for travel-related diseases. The business unit has a strong pipeline of products, and we expect to be well-positioned for significant growth when conditions improve. As part of that effort, our lead travel health vaccines product candidate, CHIC DBLP is progressing and remains on track for initiation of the Phase 3 clinical trial for this single-dose vaccine for chikungunya in 2021. In summary, our diverse and balanced business model is showing its strength as well as its durability. Our operational and financial performance this year are the strongest in our company's history, and I couldn't be more encouraged by the prospects for continued growth and expansion as we continue on our path to protect and enhance the lives of 1 billion persons by 2030. I'll stop here and now turn the call over to Rich. Rich?