Emergent BioSolutions Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Emergent BioSolutions fourth quarter 2020 earnings conference call. At this time, all participants' lines are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. I would now like to hand the conference over to management. Please go ahead.

Thank you, Catherine, and good afternoon, everyone. My name is Bob Burrows, VP of Investor Relations for the company Thank you for joining us today as we discuss the operational and financial results for the fourth quarter and 12 months into December 31, 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's a series of slides accompanying this webcast available to all webcast participants. Turning to slides three and four, during today's call, we may make projections and other forward-looking statements related to our business Future events are 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 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 statement. 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 emergency operating performance. Please refer to the tables found in today's press release regarding our use of adjusted net income, adjusted EBITDA, and adjusted gross margin, and the reconciliations between our GAAP financial measures and these non-GAAP financial measures. Turning to slide five, the agenda for today's call will include Bob Kramer, President and Chief Executive Officer, who will comment on the current state of the company, and Rich Lindahl, Chief Financial Officer, who will speak to the financials for 4Q and full year 2020, as well as our forecast for 2021. This will then be followed by a Q&A session where additional members of the senior team are present and available as needed. Finally, for the benefit of those who may be listening to the replay of the webcast, this call was held and recorded on February 18, 2021. Since then, Emergent may have made announcements related to topics discussed during today's call. And with that introduction, I would now like to turn the call over to our President and CEO, Bob Kramer, whose segment begins with slide six.

Bob? Bob Kramer Thank you, Bob, and good afternoon to everyone. Thank you for joining with us this afternoon. Actually, I'm going to start on slide seven, and I'd like to start the call today by recognizing the extraordinary efforts of the entire emergent team over the course of 2020. In spite of the significant challenges created by the pandemic, we maintain our focus on the business. This has meant not only working on the production of COVID-19 vaccine candidates, but also innovating with the development of novel polyclonal COVID-19 treatments, all the while continuing to protect lives against a broad range of public health threats, including the worsening opioid epidemic. Our focus and strong execution on mission absolutely would not have been possible without the incredible contributions of the entire emergent team that is now more than 2,300 employees strong. And I'm pleased to report that it has resulted in the strongest year in our 22-year history. As you know, in early January, we provided a 2021 financial forecast with total revenues of $2 billion and adjusted EBITDA of $780 million, both at the midpoint, which we are reaffirming today. Our current five-year strategic plan targets $2 billion in revenue by 2024. With a significant growth in our business during last year, 2020, we're now reevaluating our long-term objectives and expect to provide an update later this year. For the majority of my prepared remarks today, I want to focus on four key aspects of our current business, all of which we believe have important potential implications for the continued growth of the company. So turning to slide eight, first, our key priority is to address the immediate need stemming from COVID-19 pandemic. We're playing a critical role in the fight against COVID-19 with the development and manufacturing of clinical and commercial materials across our three CDMO service pillars for a variety of customers, most notably Johnson & Johnson, AstraZeneca, as well as a number of other biotech innovators, including the newest publicly announced partnerships with Humanogen and Providence Therapeutics. In addition, we're developing our own innovative COVID-19 treatments based on our proprietary validated hyperimmune platforms. With multiple coronavirus strains emerging, data suggests that the disease spreads more easily and quickly, which could further burden healthcare resources and potentially lead to an uptick in both hospitalizations and deaths. As a consequence, we believe that vaccination and the development of effective treatments will be needed for many years to come. As part of the arsenal of treatments that will be needed to combat this long-term threat, scientists early on identified the potential value of having polyclonal treatments in the likely case of virus mutation. To address this need, Immersion has focused on the rapid deployment of our polyclonal plasma-derived treatment based on our validated hyperimmune platform. As a reminder, our COVID-19 human hyperimmune or COVID-HIG product candidate contains concentrated consistent amounts of polyclonal antibodies directed against SARS-CoV-2 and is manufactured using plasma from healthy donors with elevated levels of neutralizing antibodies. These antibodies have undergone additional purification and safety steps for viral removal using our proven manufacturing platform that currently supports several FDA-approved products. As a polyclonal treatment, COVID-HIG contains many different antibodies that can bind to the virus at multiple sites, so its efficacy may be less impacted by strain variability or emergence of resistance, unlike monoclonal antibodies that bind to a single site. We believe this may ultimately provide an advantage as a treatment and could deliver a meaningful impact to treat COVID-19 patients. COVID-HIG is currently being evaluated as a treatment for hospitalized patients in a Phase III clinical trial led by NIH. The trial, also known as INSIGHT-13, has an expected data readout within the next two months, and assuming the data is positive, we would file an application for emergency use authorization for this candidate thereafter. A second clinical program is also underway to evaluate COVID-HIG as a post-exposure prophylaxis to prevent infection in individuals at risk of exposure. Over the last 18 months, we've also rapidly introduced and scaled up the infrastructure and processes to support our CDMO service offerings. Our vision for this business has always been more than just maintaining a pandemic response capability. From day one, we've positioned our CDMO as a multipurpose set of offerings for both pharma and biotech innovators and government and NGO partners across multiple sites and multiple technologies. Biologics manufacturing is an exacting process that requires specialized equipment disciplined processes, and a highly trained staff and typically takes years. The timelines related to COVID-19 have been substantially compressed with everything occurring in less than one year. This pandemic has highlighted the growing mammalian and viral vaccines market and shown that service providers must have durable, scalable, and compliant manufacturing infrastructures. Immersion has been able to thrive in this environment Our differentiated CDMO value proposition has been validated by our eight and counting CDMO COVID-19 partnerships and our growing pipeline and portfolio. We've carved out a leading position as a tier one biologics CDMO organization. As you may know, owning and controlling our own manufacturing capacity and capabilities has always been a critical strategic importance to us, particularly for biologics. We, unlike most standalone CDMOs, bring the expertise from manufacturing and handling some of the most complex biologic products in the world and the experience of having to operate in challenging rapid response situations in partnership with the U.S. government. Unlike most embedded CDMOs, this is not a utilization play. Rather, it's a strategic set of offerings across three service pillars and five platform technologies, and we have specifically built a service business with that in mind. All of this has driven expansion of our manufacturing capabilities both organically and through M&A over the last decade and spurred us to create a dedicated CDMO business unit four years ago. We feel that decision is has been validated, particularly over the course of this pandemic, as it has accelerated our position as a Tier 1 biologic option for outsourcing decisions. And we expect our CDMO business to continue to be a significant contributor to our future growth and expansion. As we've seen with COVID-19, public health emergencies can cause significant disruption. They're unpredictable, and you need to prepare in advance. To that end, I would like to recognize the foresight of the U.S. government and its investment in preparedness efforts. As you know, we've partnered with the U.S. government throughout our 22-year history. An important example of this partnership was the 2012 expansion of our Bayview facility in Baltimore that was co-funded by the U.S. government and subsequently used to address the Zika and Ebola outbreaks. And it's now playing a primary role in response to COVID-19, where we are producing drug substance for both J&J as well as AstraZeneca under multi-year CDMO agreements. As critical and successful as our partnership with the U.S. government has been, we can and need to do more to expand preparedness efforts across a broad range of public health threats. The Bipartisan Commission on Biodefense in its most recent report emphasized that being prepared means not only being primed to respond to viral outbreaks like SARS-CoV-2, but also other threats like anthrax, smallpox, botulism, and many others. Further, it recognized the importance of substantial investments to broaden the options available for a rapid response in advance to combat novel threats when they arise. The U.S. government continues to stockpile our preparedness medical countermeasures, including ACAM2000, AV7909, BioThrax, BAT, Anthroxyl, Raxibacumab, and VIG, and we continue to work with them on the development of new medical countermeasures across a variety of biologic and chemical threats. Turning to slide nine, now the opioid crisis. As you well know, it's been significantly worsened by this pandemic. Preliminary data from CDC shows overdoses up 18% as of May of 2020, and soberingly, over 81,000 drug overdose deaths in the 12-month period ending May 2020, the largest number of drug overdose deaths for a 12-month period ever recorded. In its latest health alert, the CDC recommended expanding the provision and use of naloxone and overdose prevention education to combat the opioid epidemic. As a result, it's been essential for us to make sure that there's enough Narcan nasal spray available to reverse overdoses. Our team worked tirelessly in 2020 to ensure that our 6,000 plus public interest customers have had an uninterrupted supply of Narcan nasal spray, and that's been made available to patients and their caregivers despite the disruption of a number of our normal communication, outreach, and awareness channels. We remain as committed as ever to combating this terrible crisis head on. Finally, as you all know, the travel sector has been significantly disrupted through the course of the pandemic, and our travel health business is no exception. However, we continue to believe that as we get through the pandemic, global travel will resume and the health and safety of travelers will be of ever greater importance and focus. We plan to reintroduce Vivotif and Vaxcora to the market as travel resumes and we'll also continue to invest in R&D efforts in this area, most notably with our chikungunya VLP vaccine candidate, which we expect to begin a phase three clinical trial later this year. In summary, over the course of last year, our unique and diversified business model has exhibited both its strength as well as its durability, despite a very challenging environment, and we expect this to continue well into the future. I'm very encouraged at the prospects for continued growth and for continuing to expand our impact and reach in terms of patients and customers. I'm going to stop here and turn the call over to Rich, who will do a deeper dive into the financial performance of the company, both for the fourth quarter as well as total year 2020. Rich?