Emergent BioSolutions Inc.

Good day and thank you for standing by. Welcome to the Emergent Biosolutions first quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to the company. Please go ahead.

Thank you, Jada, and good afternoon, everyone. My name is Bob Burrows. I'm Vice President of Investor Relations for the company. Thank you for joining us today as we discuss the operational and financial results for the first quarter of 2023. 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 webcast participants. Turning to slides three and four, during today's call, we may make projections and other forward-looking statements related to our business, future events, our prospects, or 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, as accepted 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 emergency operating performance. Please refer to the tables found in today's press release and in the slides regarding our use of adjusted net income and loss, 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 Cramer, President and Chief Executive Officer, who will comment on the current state of the company, Paul Williams, SVP and Head of the Products Business, who will comment on the state of the Nellie Kahn nasal spray franchise, as we migrate to our non-prescription form of this key medical countermeasure. And Rich Lindahl, EVP and Chief Financial Officer, who will speak to the financials for Q1 2023, and then pivot to our revised forecast for full year 2023, as well as Q2 2023 total revenues. This will be followed by a Q&A session where additional members of the executive leadership team are present and available as needed. Finally, and for the benefit of those who may be listening to the replay of this webcast, this call was held and recorded on May 9, 2023. 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 Bob Kramer. Bob?

Thanks, Bob, and good afternoon to everybody. Thank you for joining the call. My comments this afternoon begin on slide six. Our first quarter performance was generally in line with expectations as revenues came in above our guidance range but were offset by higher than expected operating costs that had a bearing on our profitability for the period. And Rich will provide more detail in his prepared remarks. We continue to strengthen our core businesses and build a foundation for sustainable long-term growth. And today, I'd like to walk you through some of the progress since the beginning of the year and where we're going to go for the rest of 2023 and beyond. First, we expect the sale of our travel health business to Bavarian Nordic to close as planned in the second quarter of this year. Upon closing, the deal will provide an upfront cash payment of approximately $270 million and a potential additional $110 million in sales and development-based milestones. As I said when we made this announcement earlier this year, this deal achieves two significant outcomes. First, it allows us to further sharpen our focus on our core products and contract manufacturing services businesses while allowing continued supply of these important vaccines to patients and customers. Second, and before discussing Narcan nasal spray in more detail, I'd like to mention that today is Fentanyl Awareness Day. Every day, the opioid epidemic cuts short innocent lives. This epidemic shows no signs of abating, and we remain committed to working with federal, state, and local governments and advocacy groups across the nation to ensure more naloxone reaches communities, patients, and those in need to help reverse the trend of increased opioid-related overdose deaths. That's one reason why we view the FDA's approval of our application to make Narcan nasal spray the first and only opioid reversal treatment approved for over-the-counter use as a significant step forward in our efforts to expand access and availability of this life-saving medicine. Since acquiring the product in late 2018, we've consistently supported efforts to expand awareness of and access to naloxone. We've also maintained our commitment to affordability and support for public interest partners who often are responsible for responding to opioid overdose emergencies. We believe greater access to Narcan nasal spray as a result of the OTC designation will help save countless lives. As we said following approval, we're targeting a late summer launch for the OTC product and are in discussions with potential retail partners to support this critically important initiative. We continue our commitment to making Narcan nasal spray affordable while pricing the OTC product in a sustainable manner to support our continuous manufacturing, and unique distribution capabilities. As a result of the ongoing epidemic, we're seeing continued growth in demand from the U.S. public interest channel as well as in Canada. Paul Williams, our senior vice president of the products business, will join us today to provide more details about Narcan following my remarks. Third, we continue to sustain a strong partnership with the U.S. government focused on preparedness and response into helping provide medical countermeasures for the public health threats it has identified and prioritized. With respect to our smallpox franchise, we recently received a notice of intent to procure ACAM2000, our smallpox vaccine, for delivery in 2023. This follows a similar notice of intent to procure for our VIGIV therapeutic product, The exact details are not yet final, but the values for each are reflected in our guidance for smallpox. Similarly, we've also received a notice of intent to procure our botulism antitoxin or BAT product, which is reflected in the other products guidance. These notices demonstrate our continued support of and partnership with the U.S. government as they seek to address potential public health threats. These would be the second, third, and fourth contract awards in the last six months following the January contract announcement earlier this year with the U.S. Department of Defense to procure RSDL. With respect to the biologics license application or BLA for anthrax vaccine candidate AB7909, we continue to have constructive engagement with the FDA and believe that we remain on track for the PDUFA date in July. We're working closely with the government to transition this product to post-exposure or post-approval procurement. As a reminder, in 2019, AB 7909 was the subject of a pre-emergency use authorization package submitted to the FDA, and since then, the US government has been procuring this product for placement into the Strategic National Stockpile. These actions are consistent with the repeated comments and budget recommendations from the Department of Health and Human Services and specifically the Assistant Secretary for Preparedness and Response about the necessity of maintaining America's preparedness and response capabilities. As we've noted previously, government contracting does not always work on the schedule private industry sets or suggests. Understanding that, we remain confident in the value placed by the US government in maintaining domestic medical countermeasure manufacturing capabilities in the important role of public-private partnerships in addressing known and unknown public health threats. Fourth, we continue to implement our strategy of improving and strengthening our quality and compliance infrastructure and culture. While not largely visible externally, This work is fundamentally critical to our success in delivering for our current customers and ensuring both our products and services businesses are positioned for sustained growth well into the future. And finally, we're actively managing our business and the balance sheet to improve efficiencies while securing and maintaining sufficient liquidity and access to capital. We've completed the organizational changes announced in January. which are expected to result in approximately $60 million in annualized savings. The anticipated sale of the tribal health business will provide an additional $270 million in cash proceeds, and we're actively working with our lenders to restructure and extend our debt obligations. We expect to have an agreement in place by May 17th of this year. I've said it before, but it bears repeating. While our strategy is already driving improvements, The full benefits of the actions we have taken in a plan will not be realized overnight. For 25 years, emergent has been at the forefront of helping protect Americans from serious public health threats. Our intention is to continue doing so for another 25 years and more, and the actions we're taking will help make that a reality. With that, I will now turn the call over to Paul to speak briefly about our plans for Narcan nasal spray before Rich shares more on our financial performance for the first quarter of this year. Paul?